Strategic Management at Intel Corporation.
Contents
. Introduction 3
2. Theoretical Framework 4
2.1 SWOT Analysis 4
2.2 PEST Analysis 4
2.3 The Value Chain 4
2.4 Generic Strategies 5
2.5 Porters Five Rival Forces 5
3. Industrial Environment of Intel Corporation 6
4. Strategic Environment of Intel Corporation 7
4.1 Cost leadership 7
4.2 Differentiation 8
4.3 Focus 8
4.4 Intel Five Rival Forces Strategy 9
5. Intel's environmental analysis Internal & External 10
6. Mission & Vision 11
7. Conclusion 12
8. References 13
. Introduction
Every business uses Strategic Management to make progress, a simple and precise definition of Strategic Management can be as "a process of developing and executing a series of competitive moves to enhance the success of the organization both in the present and in the future" (Answers, 2007). Strategic Management process requires corporations to insure its success, Corporations has to anticipate possible changes in the environment, customers, technology and take Strategic decisions for the success of the organization. In this report we will discuss the followings
* The main strategic decisions taken by Intel Corporation,
* Make use of some common strategic tools to demonstrate the findings.
* In addition to this we will also discuss the mission and vision of Intel corporation's
* Finally a conclusion will be made.
As stated, on Intel's corporate website, Intel Corporation was founded in 1968 by Bob Noyce and Gordon Moore based in Santa Clara, California USA. It is the largest semiconductor company and the inventor of microprocessors; the processors found in many personal computers. In addition to manufacturing processors, it also produces motherboard chipsets, network cards, ICs and various other devices related to communication and computing. Intel's corporate structure holds 11 Board of Directors, which has been divided as 2 Corporate Officers, 2 Executive Vice Presidents and various other corporate levels. As a whole, Intel approximately has 100,000 employees worldwide and has its presence in 54 countries around the globe. (Intel, 2007)
2. Theoretical Framework
We will use different strategic theories to demonstrate our findings in this report.
2.1 SWOT Analysis
SWOT, an acronym of "Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis is a strategy development tool that matches internal organizational strengths and weaknesses with external opportunities and threats". (100ventures, 2007)
2.2 PEST Analysis
An analysis of the external macro-environment that affects all firms: P.E.S.T is an acronym for the Political, Economical, Social and Technological factors of the External Macro Environment. (Netmba, 2007)
2.3 The Value Chain
The Generic Value Chain (Porter 1985: 37)
2.4 Generic Strategies
The Generic Strategies (Porter 1985: 12)
2.5 Porters Five Rival Forces
The Five Competitive Forces (Porter, 1985: 5)
3. Industrial Environment of Intel Corporation
Intel a famous name in technology and has a very competitive industrial environment and yet Intel has managed to be the best in microprocessor makers. With the introduction of the E-Business incentive in 1998 Intel has emerged as the market leader in the design and manufacturer of semiconductors and microprocessors, prior to implementation of E-business "orders were filled through phones, faxes and overnight parcel carriers. Today this system produces nearly $1 billion sales per month" (Chao, 2000). In terms of value chain concept Intel has had remarkable benefits with the help of E-Business. Let us analyze Intel's e-business strategy in terms of Value Chain concept.
Supporting Activities
Infrastructure - Visionary leader, E-business strategy to maintain relationship with customers, suppliers and employees.
HRM - fairly strict meritocracy that rewards work generously and doesn't keep "dead wood" employees for very long (Edwards, 2006), Employee diversity initiatives.
Technology - Up to date system for R&D into new innovative products. Technological infrastructure for E-Business
Procurement - "The E-Procurement program has been highly successful for Intel in the fields of technology, business processes, and people systems for indirect materials and services procurement." (Ghiya and Powers, 2005 )
Inbound Logistics - ...
This is a preview of the whole essay
Supporting Activities
Infrastructure - Visionary leader, E-business strategy to maintain relationship with customers, suppliers and employees.
HRM - fairly strict meritocracy that rewards work generously and doesn't keep "dead wood" employees for very long (Edwards, 2006), Employee diversity initiatives.
Technology - Up to date system for R&D into new innovative products. Technological infrastructure for E-Business
Procurement - "The E-Procurement program has been highly successful for Intel in the fields of technology, business processes, and people systems for indirect materials and services procurement." (Ghiya and Powers, 2005 )
Inbound Logistics - A Digital supply chain. Intel uses e-business to speed the flow of information between itself and its suppliers
Operations - "E-business is used to aid in the quick exchange of information and enquires pertaining to customers order".(Chao, 2000)
Outbound Logistics - Intel uses its web based systems to track order, deliveries to customers and resellers
Marketing & Sales - Web based order management system, Today this system produces nearly $1 Billion in sales per month (Chao, 2000)
Services - Intel provides "Innovative services that enables you to get more out of your Intel(r) technology" (Intel, 2007)
Primary Activities
Analyzing the Value Chain on Intel Corporation both the support activities and the primary activities are carried out with the help of E-business. According to Intel's technology journal it stats that "Intel's E-business environment is becoming increasingly complex. This growth is exponential is the speed of new application being introduced and exciting application being upgraded" (Coyne and Sandeen, 2000). E-Business is a very important and useful business strategy in today's world where computer and internet are essential needs of life. In my point of view I believe Intel's major success or market domination apart from the fact that it is the largest microprocessor in the world is also due to the implementation of E-Business solutions.
4. Strategic Environment of Intel Corporation
Every company around the globe has to take strategic decisions to sustain in the market as a business entity in the long run. Intel Corporation is also implementing the generic strategic introduced my Porter in creating and sustaining a superior performance in the market.
Intel Corporation is using the Generic Strategies to gain competitive advantage over its competitors and in becoming the market leader. Let's analyze the Generic Strategy used by Intel Corporation Step By step
4.1 Cost Leadership
Intel Corporation is cutting cost in its supply chain. According to an article by Dean Takahashi he writes. "It's a complex supply chain, with suppliers all over the world, fabs in a lot of places and assembly plants in other places. Building the right product in the right amount is a grueling task. What's changed is Intel's ability to manage this complexity. Intel has re-engineered its supply chain from end to end-from and when it comes to saving money on its supply chain, Intel's numbers are equally impressive. In 2003, the company shaved $1 billion of its costs by re-engineering its internal processes. It saved another $1 billion in 2004, and it is targeting $500 million more in 2005. That's beginning to add up to a lot of money" (Takahashi, 2005).
4.2 Differentiation
Differentiation can be defined as "in a differentiation strategy, a firm seeks to be unique in its industry along with some dimensions that are widely valuable to buyers" (Porter, 1985). Intel is Differentiation into new products dimensions apart from the main products described earlier in the introductory part of this report; Intel is diversifying into different products "including consumer electronics, wireless communications and health care. And rather than just microprocessors" (Edwards, 2006).
4.3 Focus
According to Porter "the focus strategy has two variants. In the cost focus a firm seeks a cost advantage in its target segment, while in differentiation focus a firm seeks differentiation in its target segment" (Porter, 1985). Intel Corporation seems to use the differentiation focus variants of the focus strategy. Intel is still also focused on its core product the microprocessors. In an interview conducted by Business Week Magazine with the CEO of Intel corporation, Intel CEO stats that he "wants to create 'platforms' of microprocessors combining silicon and software that lead to new technologies and devices" ( Edwards, 2006)
Without doubt Intel's is implementing the Generic Strategy in its industry, by cutting the cost in its supply chain to obtain cost leadership, by diversifying into different products such as health care, consumer electronics etc... and yet focusing on its core business of microprocessors. In terms of strategic management these are the approaches a company should take to create and sustain superior performance in the market as well as in the industry.
4.4 Intel's Five Rival Forces Strategy
There is low possibility that a new entrant would enter the microprocessors market and pose a threat to Intel Corporation. According to report it stats "A new entrant would need to develop a relevant microprocessor product, requiring substantial capital expenditures and several years of engineering work, the development of high performance microprocessor comparable to Intel would likely require at least fours year" (Federal Trade Commission, 1998) There is no substitutes for microprocessor but people have a choice of different brands processors. Intel has its own suppliers which supply raw materials and Intel manufactures the processors and other devices. In business the main aim is to satisfy the buyer and Intel has so far done a lot to satisfy its buyers buy providing innovative processors and other devices and yet Intel's competitors are doing the same
The five rival forces are present for every company but the level of impact it has varies from company to company. The level of impact it has on Intel is quite low comparing to similar companies in the same market.
5. Intel's environmental analysis Internal & External
Every organization has internal and external environment factors; these factors do affects the performance of an organization. Companies have to take major strategic decisions to overcome such factors. To analyze the internal environmental factors affecting Intel Corporation we us SWOT analysis.
Strengths
* Intel's famous Brand name
* Introduction of innovative products
* Strong Advertising campaigns
Weaknesses
* Intel's world ranking of most powerful brand has dropped 10 places in 2007
* Decline of Share price.
Opportunity
* Diversifying into Different products
Threats
* Strong competitors such as AMD, IBM.
Intel's famous Brand name is its core strength, and there are some other strengths that it has which is way Intel dominates the world market of microprocessors. "Intel's world ranking dropped in first quarter of 2007 by 10 places mainly due to strong completion by Intel's archrival AMD"(Wikipedia, 2007). Intel's has various opportunities, for example the diversification into different products. That I believe is a major advantage for Intel in the coming years. Intel has strong threats from its archrival AMD, in order to minimize the threat Intel always has to be one step ahead of its competitors, and to do so this requires major strategic decisions to be made and managed.
To analyze the External environmental factors affecting Intel Corporation we us PEST analysis.
Political
* Lawsuits by the competitors
* Antitrust law in America
Economical
* Intel sold its XScale processors business to Marvell Technologies
Social
* Intel's sponsorship of the science talent search.
Technological
* R&D for better performance microprocessors
Intel Corporation was criticized by its competitors as a result; it had to face political crises over a period of time. Intel Corporation sold its XScale processors, on June 2006 according to an article in EEtimes.com "Intel Corp. agreed to sell its communications and application processor units to Marvell Technology, a storage, communications and chip developer, for $600 million" (Chin, S. 2006). The move as I believe was a strategic decision intended to permit Intel to focus its recourses on its core processors and server business. Intel also participates in social attribution of the society in 1998 Intel became the official sponsor of the Science Talent Search held every year in USA. This is to look for new talents for the future of the company. Intel continue to research and develop innovative products, R&D is highly necessary for a company to survive in today's competitive market, and major strategic decision are involved on how, when and what to innovate.
6. Mission & Vision
Every corporation has a mission and a vision Intel's vision & mission can be found at Intel's corporate website. "At Intel, we constantly push the boundaries of innovation in order to make people's lives more exciting, more fulfilling, and easier to manage. Our unwavering commitment to moving technology forward has transformed the world by leaps and bounds. We are a company that's always in motion, fueling an industry that never rests. We inspire our partners to develop innovative products and services, rally the industry to support new products, and drive industry standards. We do this so that we can collectively deliver better solutions with greater benefits more quickly" (Intel, 2007)
Intel has introduced its new marketing campaign and a new logo which I believe is very productive strategic decision.
Intel. Leap ahead.(tm)
"Leap ahead-these two words drive focus at Intel. Our job is to find and drive the next leap ahead-in technology, education, culture, social responsibility, manufacturing, and more-to continuously encourage our customers, partners, consumers, and businesses to join us as we continue to take exciting leaps forward. In the end, it's not just about making technology faster, smarter, and cheaper-it's about using that technology to make life better, richer, and more convenient for everyone it touches." (Intel, 2007)
7. Conclusion
In this report we have analyzed how Intel Corporation has emerged to be the market leader, we have discussed using different strategic tolls and how Intel's management is making use of different strategies to sustain a superior performance in their business. The introduction of E-Business strategy in 1998 has had major effects of Intel's value chain. Intel is also implementing the generic strategy by cutting the cost in its supply chain and also diversifying into different products while focusing in its core processors business at the same time. The impact of five rival forces on Intel is quite low as what we have researched in this report Intel has to put more attention on its buyers to satisfy their needs and demands. The environmental factors do affects the performance of an organization and from this report we have released that Intel does not have much of a problem dealing the environment factors both internal and external. In my opinion Intel Corporation has a long and competitive future in order to create and sustain a superior market performance and also superior to its competitors Intel has to make use of strategic management tolls mentioned in this report and take necessary strategic decisions.
8. References
00ventures (2007) SWOT Analysis [online] Available from <http://www.1000ventures.com/business_guide/crosscuttings/swot_analysis_bybrc.html > [12 July 2007]
Answers, (2007) Strategic Management [online] Available from <http://www.answers.com/topic/strategic-management-1?cat=biz-fin> [14 July 2007]
Chao,L. (2000) Intel Technology Journal Q1 2000 [online] Available from <http://download.intel.com/technology/itj/q12000/pdf/preface.pdf> [12 July 2007]
Chin, S. (27/06/06) Marvell buys Intel's handheld processor unit for $600 million [online]. Avalilable from <http://www.eetimes.com/news/latest/showArticle.jhtml?articleID=189601851> [17 July 2007]
Coyne and Sandeen (2000) . Intel Technology Journa Q4 2000l [online] Available from < http://download.intel.com/technology/itj/q42000/pdf/assetmngt.pdf > [12 July 2007]
Federal Trade Commission, (1998) Intel Corporation [online] Available from < http://www.ftc.gov/os/1998/06/intelcmp.pdf > [12 July 2007]
Intel Corporation, (2007) Our History of Innovation [online] Available from. < http://www.intel.com/intel/index.htm?iid=homepage+hdr_about > [14 July 2007]
Intel Corporation, (2007) Our Vision [online] Available from. < http://www.intel.com/intel/vision/index.htm?iid=about+ln_vision > [17 July 2007]
NetMBA, (2007) PEST Analysis [online]. Available from <http://www.netmba.com/strategy/pest/ > [11 July 2007]
Porter, E. M. (1985) Competitive Advantage: creating and sustaining superior performance. New York: Free Press.
Takahashi, D. (2005). Intel's IT Advantage [online] Available from < http://www.my-esm.com/showArticle.jhtml?articleID=170101686 > [12 July 2007]
Wikipedia Free Encyclopedia, (2007) Intel Corporation [online] Available from <,http://en.wikipedia.org/wiki/Intel > [18 July 2007]
3
