A Report to the senior manager of Intel
Student Number: 1814589
Due Date: 19 Apr. 2010
Date Submitted: 20 Apr. 2010
Intel Corporation is one of chipsets maker who is famous throughout the world. It is Intel who predominate the chipsets industry and the market share of chipsets of Intel is far more than its’ competitors. This report will examine whether there are strategic problems ahead and propose strategies for the future. First the analysis of external environment will be given, which includes macro environment analysis, industry analysis and Key Success Factors analysis. Secondly, an internal environmental analysis will be given which will highlight the strengths and weaknesses of Intel. Finally, some strategic recommendations that are based on the external & internal environmental analysis will be proposed in order to help Intel to make right decision in the future.
2.0 External Environmental Analysis
2.1 Macro Environment
External environmental analysis is crucial and critical to firms’ survival and success because the external environment affects firm growth and profitability.(Miller & Eden, 2006; Williams & Mitchell, 2004) Most firms face complex situation when they made an analysis of external environment. Firm engage in external environmental analysis because it can help firms to identify the incomplete environmental data and can increase understanding of the general environment. According to Ireland,(Ireland, Hoskisson & Hitt, 2007) the continuous process of external environmental analysis includes scanning, monitoring, forecasting and assessing.
A full scan of the remote & near environments has been undertaked.(see Appendix A) Table 1, below, highlights the most relevant and crucial trends.
Table 1: Summary of main trends facing the Chipsets Industry Economic| Major recession (Chang, LA Times, 2010)The slump in the demand for computers.(Flynn, New York Times, 2009)| Technological| Massively turbulent environment; ever changing technologies in the micro processor industry| Legal| Patent and Anti-trust regulations|
According to Table 1, it has been summarized that the key challenges that Intel faced is the change in terms of economic environment, technological environment and legal environment. In terms of economic environment, the demand conditions of Intel chipsets are subject to OEMs business conditions because most chipsets are purchased by OEMs company. Besides, there has a slump in PC/Laptop demand because the major recession. In terms of technological environment, those competitors develop new technologies quickly. So Intel must keep the fast pace and design new generation technology quickly, and keep the ability of innovation in chipsets area. In terms of legal environment, Intel should hold the patent of chipsets, follow the laws and the anti-trust regulations when develop the market share of chipsets. 2.2 Industry Analysis
Michael E. Porter’s well-known framework, known as the five forces model, helps managers to analyze competitive forces in the industry environment in order to identify opportunities and threats.(Porter, 1980) The industry analysis of Intel corporation was undertaken using porter’s five forces framework. Figure 1 summarised the five force of Intel corporation.
Figure 1: Porter’s Five Force Analysis of Intel Corporation
For chipsets industry, the barriers to entry are high due to technical complexity of design and the very high cost of capital equipment. However, there are some alternatives made by other companies like ARM, VIA & Linux. For example, Lenovo produce linux laptop and use ARM CPU in notebook in China. So the threat of new entrants are low but may increase.
The bargaining power of suppliers is relatively low...