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.
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)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. 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. 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).
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). 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.
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.