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Intel case study
Intel is a US-based semiconductor company founded in 1968. It produces microprocessors, chipsets, flash memory and other products. Intel was initially successful with memory chips but lost market share to Japanese competitors in the 1980s due to stronger manufacturing capabilities. It exited the memory business in 1985. Intel transitioned its focus to microprocessors and used strategic branding and partnerships to dominate the microprocessor market, gaining over 80% share.
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Intel case study
- 2. Industry :Semiconductor Founded : July 18, 1968 Headquarters : Santa Clara, California , US Products : Bluetooth Chipsets Flash memory Microprocessors Motherboard Chipsets Network interface controllers Solid State drivers Central Processing Units First Product : Schottky Bipolar RAM INTRODUCTION
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- 4. JOURNEY TO BEINGINDUSTRY LEADER Strategic decision in 1984 to exit memory As competitors offered substitute products and overall market price decreased, Intel moved to new generations. Intel emphasis was on product design, not so much on process development or realizing efficiencies through manufacturing Intel’s internal selection environment, i.e., “the production rule”that favored microprocessor s, was more adaptively robust that top- down strategy Creating and sustaining competitive advantage in microprocessor s Diversification
- 5. JOURNEY TO BEINGINDUSTRY LEADER- RISE AND FALL OF DRAM Emphasis was on product design, not so much on process development or realizing efficiencies through manufacturing . • Innovative Design • Price High in early life-cycle • Move Quickly to New generations Japanese Entered the Market • Lower interest rates • Sophisticated Demand • More efficient • Manufacturing strength of 80% yield Japanese Strategy • Closer relationships with equipment suppliers • Worked on process and equipment development Increased Complexity • Difficult to understand • Overreliance on product strategy • Lack of access to capital Wrong Strategy • Pushing product design through new features D R A M U N S U C C E S S F U L
- 6. JOURNEY TO BEINGINDUSTRY LEADER- LESSONS LEARNT ! Protect your technological innovations Use current profits to develop complimentary capabilities. Competitive advantage is temporary Higher manufacturing capability win
- 7. JOURNEY TO BEINGINDUSTRY LEADER- WHAT FAVOURED THE TRANSITION? Intel’s successful transition had more to do with unique circumstances (luck) than strategy (brains) Loss of market share in memory (precipitating ultimate exit) predated successful transition to microprocessors – no transforming strategy was articulated. Market for microprocessors developed quickly – little time delay between investment in exploration & sustaining rents (feeding the positive feedback loop) – thus limiting the need for sustained commitment to exploration investment Intel was well positioned with respect to process technology design capabilities to successfully explore microprocessor market
- 8. Disadvantages with DRAM WhatIntel did right with Microprocessors? Easier to Imitate Difficult to patent There is no microcode that can be protected There was little opportunity for a proprietary Standard Intel Branded the Microprocessor Kept the No. of Competitors down Changed Industry structure and dynamics Successful at counteracting threats to sustainability DRAM v/s MICROPROCESSORS
- 9. Market Share Intel gainsthe market share of 80% which seems more or less like a monopoly for Intel Corporation. MARKET SHARE
- 11. Intel Inside Campaign 1991 Intel capturing 90%of world computers MARCOM AWARD (1992), GRAND MARQUIS WINNER (1992)
- 12. Promote awareness ofthe final customers Exploitation of reputation Benchmark of microprocessor industry Business to business behavior Increase worldwide sales
- 13. • Incentive-based cooperativeadvertising program • Co-op fund • 6% rebate on microprocessor purchases • Reduce its offer in half if the PC makers add another logo Leapfrog strategy Pull strategy Derived demand Co-branding(IBM) Ingredient branding Differentiation Greater resources for R&D
- 14. Intel Inside Logo was put outsidePC Name Selection Trademarked Launch ‘INTEL INSIDE’ (1991) INGREDIENT BRANDING MARKETING CAMPAIGN
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- 17. The ad announcethe arrival of the Intel “Pentium” processor. 2007 – Classroom PC for children 2008 – Atom Processor
- 19. SWOT ANALYSIS (STRENGTHS& WEAKNESSES) STRENGTHS WEAKNESSES • Largest market share all over the world • Very technical strategy in response to its competitors • A very strong brand value • Great steep in 2000 because of the emergence of AMD. • Idea of microprocessor, and it has continued that legacy • largest number global technology corporation. • Almost every Computer brand which makes computer uses Intel products in it • People are not familiar with any other brand apart from Intel. • Huge investment in Research and Development department
- 20. SWOT ANALYSIS (OPPORTUNITIESAND THREATS) OPPORTUNITIES THREATS •Market penetration and product Development •Focus on cellular or broadband portion. •Forward and backward Integration •Partnerships •Changes in consumer tastes •Change in currency value • Emergence of new and cheap • local companies.
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