Case Study: Chipping Away at Intel
CEO Craig Barrett enacted changes, both external and internal, at Intel his first three years. First, he initially expanded into new markets by pouring money into producing information and communication appliances and services. Later he was forced to pull out of these same markets due to lack of growth brought on by weak demand and market saturation. Some of this lack of growth was due to economic conditions occurring after September 11, and some was due to changing customer needs and expectations. In addition, some of Intel’s biggest customers, Dell and Cisco, complained that the chip manufacturer was directly competing against them.
Internally, Barrett initiated a sweeping reorganization by creating new departments and combining others in an attempt to simplify and synergize operations. Barrett’s goal was to make decision processes at Intel more efficient and more nimble through decentralization and delegation. During this process there were also job cuts, with 5,000 leaving through attrition. Barrett has also attempted to shift the culture by bringing in consultants and aiming to improve customer relations and inspire a sense of competition. The jury is still out on whether these sweeping changes will have the desired effect.
Intel’s major environmental pressures fall under the following three categories: Geopolitical
Geopolitical pressures occur in the form of crisis and/or geographic realignments. Nearly every organization was affected by the crisis experienced at the World Trade Center on September 11, 2001, and the following war, and Intel was no exception.
In the aftermath of September 11, there was a major economic downturn negatively effecting Intel. In addition, changing customer needs and market saturation caused some researchers to advise of a potential 34% decline in global sales of chips.
There has always been a fierce...
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