Class 2 PPT: Intel Case Study

27,829 views

Published on

2 Comments
8 Likes
Statistics
Notes
No Downloads
Views
Total views
27,829
On SlideShare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
686
Comments
2
Likes
8
Embeds 0
No embeds

No notes for slide

Class 2 PPT: Intel Case Study

  1. 1. Class 2 Industry, Strategy, Business Model (continued) Intel Case Study
  2. 2. Announcements <ul><li>Attendance list </li></ul><ul><ul><li>Email accounts </li></ul></ul><ul><ul><li>Registration confirmations </li></ul></ul><ul><li>Today: review, Intel case </li></ul><ul><li>Next classes: </li></ul><ul><ul><li>5/13 Sales & Marketing </li></ul></ul><ul><ul><li>5/27 Dell Online Case Study </li></ul></ul><ul><ul><li>6/3 Regional Goods Marketing Project </li></ul></ul>
  3. 3. 4 C’s & 2 S’s Review ___ Company Suppliers Competitors Substitutes Channel Customers Collaborators 協力者/協業者 “ 5 th C”
  4. 4. Channel <ul><li>How customer gets yo ur product / service </li></ul><ul><li>Direct – company’s own network </li></ul><ul><ul><li>Sales Force, Mail, Telemarketing, Vending, Some Internet/Catalog, Company Store </li></ul></ul><ul><li>Indirect – via one or more other companies </li></ul><ul><ul><li>Sales Agents, VAR (value added resellers), Stores (department, convenience, supermarkets, Some Internet/Catalog (e.g. Askul) </li></ul></ul>
  5. 5. Collaborators <ul><li>Partners, helpers, advisors, experts </li></ul><ul><li>Directly or indirectly help the company </li></ul><ul><li>Examples </li></ul><ul><ul><li>Industry experts, user groups, educators, advisors </li></ul></ul><ul><ul><li>Industry or trade groups </li></ul></ul><ul><ul><li>Government, NPOs, universities </li></ul></ul><ul><ul><li>Complementary product/service providers </li></ul></ul><ul><ul><ul><li>Software makers for hardware </li></ul></ul></ul><ul><ul><ul><li>Computer magazines, manuals, websites </li></ul></ul></ul>
  6. 6. In Class Exercise Collaborators ___ Company Suppliers Competitors Substitutes Channel Customers
  7. 7. 5 Forces Affect Industry Profitability Company Supplier Power New Competitor Entry Substitutes Buyer Power Channel / Customer Current Competitor Rivalry Profit = Price – Cost cost price price price
  8. 8. Today’s Drucker <ul><li>A business has 2 basic functions: </li></ul><ul><li>marketing </li></ul><ul><li>and </li></ul><ul><li>innovation. </li></ul>Peter Drucker
  9. 9. Intel Case Study <ul><li>Technology Innovation </li></ul><ul><ul><li>Big idea, new technology/business area: (semiconductors, IC chips) </li></ul></ul><ul><li>Marketing Innovation </li></ul><ul><ul><li>Intel Inside </li></ul></ul><ul><li>Company is more than its products </li></ul><ul><ul><li>“ Platform” (product series, same technology base) </li></ul></ul><ul><ul><li>Strategic Choices </li></ul></ul><ul><ul><li>Sustainable Competitive Advantage </li></ul></ul>
  10. 10. Intel 1968-1977 Case <ul><li>“ Trying to do things nobody else could” </li></ul><ul><ul><li>– Robert Noyce (co-inventor integrated circuit IC) </li></ul></ul><ul><li>Gordon Moore (creator of “Moore’s Law) </li></ul><ul><li>Andy Grove joined, took personal “risk” </li></ul><ul><li>First 2 DRAM products not successes </li></ul><ul><li>3 rd product 1103 became world leader, </li></ul><ul><ul><li>90% of Intel revenues (concentrated) </li></ul></ul>
  11. 11. Intel DRAM Strategy <ul><li>Strategy: push product design, be first to market </li></ul><ul><ul><li>Design & process technology leader </li></ul></ul><ul><ul><li>Investment in plant & equipment </li></ul></ul><ul><ul><li>Costs drop over production volume (scale) growth </li></ul></ul><ul><ul><li>Prices drop with competitive capacity </li></ul></ul><ul><ul><li>DRAM generally not protectable with patents </li></ul></ul><ul><ul><li>Japanese started introducing products more rapidly </li></ul></ul><ul><ul><ul><li>Invested more heavily in production (44% vs. 22%) </li></ul></ul></ul><ul><ul><li>1986 Intel decided to exit DRAM business </li></ul></ul><ul><ul><ul><li>1/3 of R&D, but only 5% of Revs, was small player in market </li></ul></ul></ul><ul><ul><ul><li>Japanese beat Intel on process technology (of commodity) </li></ul></ul></ul>
  12. 12. Intel and Microprocessor <ul><li>1970 CPU chipset order for Busicom calculator </li></ul><ul><ul><li>Technology development “paid by customer” </li></ul></ul><ul><ul><li>Bought rights for “non-calculator” use </li></ul></ul><ul><ul><ul><li>Hard to see future even for Gordon Moore </li></ul></ul></ul><ul><ul><ul><ul><li>“… never gave it another thought” – Moore </li></ul></ul></ul></ul><ul><ul><ul><ul><li>“ We didn’t take it (PCs) seriously” – Grove </li></ul></ul></ul></ul><ul><ul><ul><li>Non-sequential forecasting </li></ul></ul></ul><ul><ul><ul><li>Sometimes easier for outsider to see </li></ul></ul></ul><ul><ul><li>Exit: By 1984 mid-level managers shifting technology </li></ul></ul><ul><ul><ul><li>Hard to leave business that began company </li></ul></ul></ul><ul><ul><ul><li>Especially for long time senior managers </li></ul></ul></ul><ul><ul><ul><li>Mid-level managers closer to daily business realities </li></ul></ul></ul>
  13. 13. Intel Intel Suppliers Competitors Substitutes Channel Customers Kyocera, etc Motorola AMD, TI, Cyrix RISC 日本の DRAM E N D U S E R <ul><li>Licensees </li></ul><ul><li>IBM </li></ul><ul><li>Others </li></ul>Direct IBM Compaq Dell Packard Bell C H A N N E L <ul><li>Software </li></ul><ul><li>Providers </li></ul><ul><li>OS </li></ul><ul><li>Application </li></ul>Equipment (sole/dual) collaborators
  14. 14. Apple/Motorola vs. IBM/Intel <ul><li>First to Market </li></ul><ul><li>Closed architecture </li></ul><ul><li>Sole-provider </li></ul><ul><ul><li>Exclusivity </li></ul></ul><ul><ul><li>Proprietary </li></ul></ul><ul><li>Big, famous name </li></ul><ul><li>Standardized, open architecture </li></ul><ul><ul><li>Components </li></ul></ul><ul><ul><li>Software </li></ul></ul><ul><ul><li>Scale economies </li></ul></ul><ul><li>Intel gets benefit of IBM marketing and strategy (derived demand) </li></ul>INTERDEPENDENCE OF COMPANIES (p.30, 22) “ Value Chain” 1994 Apple/IBM-Motorola PowerPC chip 2006 Apple/Intel
  15. 15. Intel Microprocessor Progression 1989 1985 1982 1978 Year Introduced ? ? $950 80486 (64-bit) 1,200,000 100%-IBM 1 (IBM) $299 80386 (32-bit) 275,000 75% 4 $360 80286 (16-bit) 134,000 30% 12 $360 8086 (8-bit) 29,000 Intel-Chip Market Share Licensees Initial Price Chip (bits) Transistors
  16. 16. 386 Changes Everything (1985) <ul><li>Intel 386 Investments </li></ul><ul><ul><li>$200 million for design </li></ul></ul><ul><ul><li>$800 million for production facilities </li></ul></ul><ul><ul><li>Decides not to license, except IBM </li></ul></ul><ul><li>IBM choice allows Compaq entry and Win </li></ul><ul><ul><li>IBM delays selling, to create more closed architecture </li></ul></ul><ul><ul><li>Compaq enters Desktop market with Intel 386 </li></ul></ul>
  17. 17. 486 and Wintel Collaboration <ul><li>Hardware advance precedes software advance </li></ul><ul><ul><li>Microsoft Operating System (new DOS) not ready for 386 </li></ul></ul><ul><ul><li>Need large installed base of hardware for software upgrade </li></ul></ul><ul><li>Emerging collaboration between MS & Intel </li></ul><ul><ul><li>WINdows + INTEL = “WINTEL” platform </li></ul></ul><ul><ul><li>Software + Brain </li></ul></ul><ul><li>Software investments (past and future) </li></ul><ul><ul><li>Increasing switching costs </li></ul></ul>
  18. 18. “ Intel Inside” – Marketing Innovation <ul><li>Ingredient (材料) /Component (成分) Marketing   </li></ul><ul><ul><li>Another example? </li></ul></ul><ul><li>Intel is “superior to other chips” </li></ul><ul><ul><li>Market maturity, education higher (2 nd , 3 rd PC) </li></ul></ul><ul><ul><li>Buyer Intel preference moved from 60% to 80% </li></ul></ul><ul><ul><li>AMD: “it shouldn’t matter which chip” but it DOES </li></ul></ul><ul><li>IBM, Compaq resisted, but then gave in </li></ul><ul><ul><li>Couldn’t fight Intel </li></ul></ul><ul><ul><li>Better to have branded “Intel Inside” “premium” chip </li></ul></ul><ul><ul><li>6% rebate for use in partner marketing </li></ul></ul><ul><li>Fight competitors with technology, marketing, lawyers and money power (all pointed to same goal) </li></ul><ul><ul><li>1997 spent $750 million </li></ul></ul><ul><ul><li>More valuable than patent </li></ul></ul>
  19. 19. Ending Question <ul><li>Is the internet </li></ul><ul><li>good or bad </li></ul><ul><li>for Intel? </li></ul>
  20. 20. Some Important Strategic Ideas <ul><li>Where is the most “value” in a computer? </li></ul><ul><li>Success attracts competition, company must protect against </li></ul><ul><ul><li>2005 Intel has 82% of PC processor market </li></ul></ul><ul><li>Technology moved so rapidly that patents became obsolete </li></ul><ul><ul><li>protect by know-how, branding, scale, luck </li></ul></ul><ul><li>Small stuff that goes inside other stuff </li></ul><ul><ul><li>Allows focus, expertise, scale, “piggy-backing” </li></ul></ul><ul><li>Thrived on derived demand driven growth and rapid change </li></ul>
  21. 21. Typical Market Positions & Strategies Toyota Nissan Mazda Daihatsu Strategy Goal Position Specialize Find Safe Space Niche -Maintain Base -Grow Quietly Grow Carefully Follower -Target Leader -Target Small Challenge Leader Challenger -Grow Market -Grow Share Most Sales Leader
  22. 22. Fragmented Industries (fragment= 破片) <ul><li>Market divided over many companies </li></ul><ul><li>No dominant leader </li></ul><ul><li>Largest competitor may only have a few percent market share </li></ul><ul><li>Examples: </li></ul><ul><ul><li>Restaurants </li></ul></ul><ul><ul><li>Book stores </li></ul></ul><ul><ul><li>Repair shops </li></ul></ul><ul><ul><li>Publishing </li></ul></ul><ul><ul><li>Pet shops </li></ul></ul><ul><ul><li>Hair Salons </li></ul></ul><ul><ul><li>Hotels </li></ul></ul>ラーメン
  23. 23. Fragmented Industry Strategies <ul><li>Construct formula facility </li></ul><ul><li>Expand geographically </li></ul><ul><li>Increase vertical integration </li></ul><ul><li>Become low-cost producer </li></ul><ul><li>Specialize by product/service </li></ul><ul><li>Specialize by customer type </li></ul><ul><li>Build brand </li></ul>
  24. 24. Company <ul><li>Who are we? Why are we here? </li></ul><ul><li>What are our goals? </li></ul><ul><li>What are our strengths? </li></ul><ul><li>What are our weaknesses? </li></ul><ul><li>What are our key competitive advantages? </li></ul><ul><li>What is our market position? </li></ul><ul><li>What is our strategy? </li></ul><ul><li>What is our business model? </li></ul>
  25. 25. Homework Assignment <ul><li>Design your own personal “life” meishi </li></ul>わし の めいし <ul><li>Your Name (as you want it) </li></ul><ul><ul><li>- Nickname (optional) </li></ul></ul><ul><li>Title (life position) </li></ul><ul><li>Purpose statement </li></ul><ul><li>Ideal living place(s) </li></ul><ul><li>Identifying email address </li></ul><ul><li>Anything else important </li></ul><ul><ul><li>Logo </li></ul></ul><ul><ul><li>Website </li></ul></ul><ul><ul><li>Business Name </li></ul></ul><ul><ul><li>Cool Phone Number </li></ul></ul>Print 15 枚 copies please Send me a file by 5/12 Email: nbc1@bizsmith.com (any languages that fit)
  26. 26. Homework Assignment <ul><li>Design your own personal“life meishi” </li></ul>Jay Andrew Smith International Educator Promoting Growth And Understanding Around the World New York + San Francisco + Kagoshima + Brugge [email_address] SAMPLE www.vistaprint.jp, ppt, Paint, illustrator, etc. by hand all OK color name “ title” Purpose/goal Cool place(s) Meaningful email/HP address logo
  27. 27. 4 Cs + 2s – The Players <ul><li>Company (us) </li></ul><ul><ul><li>Mission, Goals, People, Structure, Strategy, Model </li></ul></ul><ul><li>Customer (goal) </li></ul><ul><ul><li>Who? How many, How strong, How important, Wants & Needs </li></ul></ul><ul><li>Channel (path) </li></ul><ul><ul><li>Sales Team, Distributors, Service, Support, Partners </li></ul></ul><ul><li>Competition (them) </li></ul><ul><ul><li>Who, Current, Future, Advantages, Position </li></ul></ul><ul><li>Substitutes (other choices for customer) </li></ul><ul><ul><li>What, Advantages, Costs, New Technologies </li></ul></ul><ul><li>Suppliers (inputs) </li></ul><ul><ul><li>Who, How many, How strong, How important to us, </li></ul></ul>
  28. 28. 5 Forces <ul><li>Buyer Power (Customer /Channel) </li></ul><ul><ul><li>How many, how big, how valuable, how sensitive </li></ul></ul><ul><li>Supplier Power </li></ul><ul><ul><li>How many, how big, how important to us, to them </li></ul></ul><ul><li>Current Competitor Rivalry </li></ul><ul><ul><li>How many, cost structure, capacity, positioning, exit costs </li></ul></ul><ul><li>New Competitor Entry </li></ul><ul><ul><li>Ease of entry, cost of switching, </li></ul></ul><ul><li>Substitute Products/Services </li></ul><ul><ul><li>Advantages/disadvantages, cost of switching </li></ul></ul>

×