Strategic Audit Nvidia Corporation STUDENT .docx

Strategic Audit:
Nvidia Corporation
STUDENT NAMES HERE
NAME OF COURSE AND PROFESSOR
DATE
Team 4 – CEO Project
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Table of Contents
I. Current

Situation.................................................................................
............................................................ 3
Current Performance
...............................................................................................
....................................... 3
Strategic Posture
...............................................................................................
............................................. 5
II. Strategic Managers
...............................................................................................
......................................... 8
Board of Directors
...............................................................................................
............................................ 8
Top Management
...............................................................................................
.......................................... 10
III. External Environment
...............................................................................................
.................................. 10
Natural Environment
...............................................................................................
..................................... 10
Societal Environment
...............................................................................................
..................................... 11
Task Environment

...............................................................................................
.......................................... 15
IV. Internal Environment
...............................................................................................
.................................. 17
Corporate Structure
...............................................................................................
....................................... 17
Corporate Culture
...............................................................................................
.......................................... 19
Corporate Resources
...............................................................................................
..................................... 20
V. Analysis of Strategic Factors
...............................................................................................
........................ 25
Situational Analysis
...............................................................................................
........................................ 25
VI. Strategic Alternatives and Recommended Strategy
................................................................................. 29
Strategic Alternatives
.................................................................................... ...........
.................................... 29
Recommended Strategy
...............................................................................................

................................ 33
VII. Implementation
...............................................................................................
.......................................... 34
VIII. Evaluation and Control
...............................................................................................
.............................. 34
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Strategic Audit: Nvidia Corporation
Current Situation
Current Performance
Nvidia’s revenue for fiscal year 2017 grew by 38% to $6.91
billion, compared to $5.01 billion in
fiscal year (FY) 2016; this enormous growth in our revenues
was equally matched by large

increases in net income and return on equity over the same
period. From FY 2016 to FY 2017, net
income increased from 14.9% to 28.0% with an increase in
return on equity from 13.7% to 28.9%
over the same period. Our common stock value has appreciated
sharply by 1812% from January,
2013 to January, 2018, creating value for long-time Nvidia
shareholders (January, 2013: $12.66;
January, 2018: $242.00). Truly, FY 2017 was a landmark year
for our firm, with 2018 continuing
the trend. The long-term stability that Nvidia continues to
experience has brought great satisfaction
to our shareholders, our customers, and our employees (Nvidia
Annual Report, 2017, p. 50).
(Sources: Nvidia Annual Report, 2017, p. 50; Nvidia Annual
Report, 2015, p.51)
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Nvidia has created robust value for shareholders, with EPS
increasing by 238%, from 2013 to 2017.
Report, 2015, p.51)
The most pleasing news for shareholders is the phenomenal
increase in stock value of 1812%, from
2013-2018.
Report, 2015, p.51)
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The pronounced increase in revenue was attributed to strong
growth in most aspects of our
company’s product offerings. Among our firm’s strongest

growth areas, year-over-year, for 20
years, has been the production and sales of our graphics
processing units (GPU); this year has seen
similar robust growth in our GPUs sales, with revenue in our
GPU product line growing by 39%
from $4.2 billion in FY 2016 to $5.8 billion through FY 2018.
The GPU growth was stimulated by
an abundance of new gaming titles appearing on the market; this
in turn has led to gaming
enthusiasts upgrading their computer hardware with Nvidia’s
GPU’s to heighten their gaming
experience. Additionally, heavy demand for Nvidia GPU’s has
occurred in response to the rapidly
developing interest in the cryptocurrency mining industry
(Nvidia Annual Report, 2017, p. 89).
Strong sales of our Tegra CPU have also contributed to the
robust growth in annual revenue, with
sales of Tegra increasing by 47% from FY 2016 to FY 2017,
and totaling $824 million for FY 2017
Strategic Posture
Mission – Our corporate mission at Nvidia is based on our five

core values. The first of these values
is the willingness to take risks. The second is to strive for
excellence. The next core values are
intellectual honesty followed by directness. The final core value
is making a contribution. Nvidia
upholds all of these core values, while striving to maintain our
position as the world’s foremost
supplier of quality graphics processing units and other
innovative products (Nvidia Sustainability
Report, 2017, p. 11).
Objectives - Nvidia’s main objective is to advance the GPU
computing platform while seeking to
advance GPUs as the leading technological chip architecture.
The massive parallel processing
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power of GPU chips can be used to solve very complex
problems. Nvidia will integrate new
processing technology with legacy methods whenever possible

to aid in the compatibility of older
hardware with newer hardware. The target markets are gaming,
visualization, datacenters, and the
automotive industry (U.S. SEC, Form 10-K, Q4- 2018, p. 7).
Our second objective is of nearly equal importance as our
primary objective: to extend our
technology and platform leadership in the research and
applications of artificial intelligence (AI)
(U.S. SEC, Form 10-K, Q4-2018, p. 8). Nvidia seeks to capture
the competitive advantage in the AI
sector by offering a complete end-to-end GPU computing
platform; these offerings include Nvidia’s
GPU’s, the CUDA programming language, algorithms, and
system software. Nvidia will continue
to specialize its GPU chips for AI usage as it will help maintain
its leadership position in this sector
(U.S. SEC, Form 10-K, Q4-2018, p. 7).
Our third object is “extending our technology and platform
leadership in visual computing” (U.S.
SEC, Form 10-K, Q4-2018, p. 8). Nvidia seeks to continue to
increase our role in visual computing.
Nvidia views visual computing as a very important evolutionary

step in the computing world. We
are always expanding our research capabilities, while furthering
development within visual
computing, in an effort to bring life-like immersive computing
experiences to our constituent
markets (U.S. SEC, Form 10-K, Q4-2018, p. 8).
The final objective is “advancing the leading autonomous
vehicle platform” (U.S. SEC, Form 10-K,
Q4-2018, p. 8). Nvidia sees advances in autonomous vehicles
(AV) as the next revolution in
transportation technology. As the global leader in AI research
and applications, Nvidia seeks to
apply this growing technology to the AV segment in order to
seek a first-to-market competitive
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advantage. Nvidia has created the DRIVE brand to integrate the
best of our AI hardware and
software solutions for the automotive market. With an all-

inclusive objectivity toward the
development of AV technologies, Nvidia seeks to poise our
company as the market leader in AV
applications (U.S. SEC, Form 10-K, Q4-2018, p. 7).
Strategies - Nvidia believes that the continued success of our
company is incumbent upon our long-
term commitment to the exploration and innovation of new
computer-based technologies. To
accomplish this goal, Nvidia invests heavily in research and
development (R&D) and our firm is
focused on creating a unified software and hardware
architecture. Currently, research and
development is involved with the creation and improvement of
support software, CUDA platform
development, GPU engineering, Tegra process, very large-scale
design engineering, and algorithms.
The research and development department employs 8,191 full-
time employees. Current R&D
expense for fiscal 2018 is $1.80 billion (U.S. SEC, Form 10-K,
Q4-2018, p. 9). To help reach
Nvidia’s goal, our company is committed to maintaining a
strong supply chain to meet consumer

demand. As Nvidia does not manufacture our own silicon wafers
used in the manufacturing of GPU
units or Tegra processor chips, our firm is very dependent on
industry-leading chip manufactures.
The main two suppliers of these critical inputs are Taiwan
Semiconductor Manufacturing Company
Limited and Samsung Electronics Co. Ltd., with both companies
supplying Nvidia presently with
semiconductor wafers. At the present time, Nvidia does not
have long term contracts with either of
these manufacturers and must secure long term contracts to
ensure continuity within the supply
chain. Also, Nvidia is seeking alternative procurement
strategies in order to limit dependence on
outside suppliers of critical semiconductor wafers (U.S. SEC,
Form 10-K, Q4-2018, p. 13).
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Nvidia’s successful implementation of our strategies also

involves attracting, retaining and
motivating our key employees, managers, and executives.
Highly skilled workers are integrally
important at Nvidia in order to successfully implement our
long-term strategies and maintain our
competitive advantage. Our goal is to maintain an effective,
knowledge-based workforce by
utilizing successful recruiting efforts, as well as offering
generous compensation packages. Nvidia
must additionally safe guard against changes in immigration and
work permit laws which could
impair its ability to attract and retain highly qualified
employees (U.S. SEC, Form 10-K, Q4-2018,
p. 16).
Policies – Nvidia will continue its commitment to providing
substantial resources toward continued
R&D, particularly in maintaining or gaining market share within
the GPU and CPU markets.
Substantial R&D funding will be allocated toward maintaining
rapid advances in development of AI
and AV technologies with the goal of capturing a first-to-market
position within these potential
markets. Employment development will always be a primary

focal point for our organization.
Strategic Managers
Board of Directors
Nvidia has eleven board directors and maintains three board
committees: Audit, Compensation, and
Nominating and Corporate Governance. Ten of the eleven
directors are independent with the
exception of CEO and president, Jensen Huang (Nvidia
Sustainability Report, 2017, p. 9). Our
board of directors is committed to strong corporate governance;
moreover, the purpose of our board
is to review the management performance on behalf of our
shareholders and to ensure that the long-
term interests of shareholders are being served.
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The three board committees are overseen by the board of
directors. The audit committee consists of
at least three directors, none of which can be an employee. The
purpose of the audit committee is to
act on behalf of the board to oversee Nvidia’s corporate
accounting practices, financial statements,
and performance and practices (Nvidia Annual report, 2017, p.
22).
The second committee is the compensation committee which
ensures that proper compensation
procedures are followed; this committee is comprised of at least
two members of the board. The
compensation committee does allow for employees to be on the
committee, thereby facilitating
objectivity and freedom from any relationship that would
interfere with the exercise of independent
judgement. The purpose of the committee is to act behalf of the
board to review and approve
compensation for the company’s top management and the
independent directors (Nvidia Annual
report, 2017, p. 22).
The third committee is the nominating and corporate governance

committee. The committee
consists of at least two members of the board; committee
members must meet the same
requirements that are in place for the other two committees. The
purpose of this committee is to
identify, review, evaluate, and recommend candidates to serve
as directors on behalf of the
company (Nvidia Annual report, 2017, p. 22). Nvidia boasts a
very high level of board member
engagement. In fiscal year 2017, all directors of the board
attended at least 75 percent of board and
committee meetings (Nvidia Sustainability Report, 2017, p. 9).
Moreover, to foster board flexibility,
Nvidia’s bylaws and corporate governance policies allow the
roles of chairperson of the board and
CEO to be filled by the same or different individuals (Nvidia
Annual report, 2017, p. 22).
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Top Management
Nvidia’s Executive Team consists of 18 members (Bloomberg,
April 18, 2018). The CEO of Nvidia
is Jensen Huang, a Taiwan-born American entrepreneur and
businessman. Mr. Huang co-founded
Nvidia and has served as its president, chief executive officer,
and a member of the board of
directors since 1993. Mr. Huang has been the principle
protagonist in the company’s rise to
international success. Because of Mr. Huang’s profound insight
and breadth of vision, Nvidia has
been able to dominate the GPU and AI Markets. In 2017, Jensen
Huang was recognized as the 3rd
best performing CEO in the world by Harvard Business Review
(Nvidia Sustainability Report,
2017, p. 7). Through his strategic management, Nvidia made
great strides in sales, revenue,
earnings, and stocks in 2017. Moreover, CEO Jensen Huang’s
fiscal year 2017 total compensation
increased to $12.2 million from $10 million in fiscal year 2016
(Reuters, April 7, 2017).
Nvidia’s significant growth has been made possible by its solid

management structure. The
compensation committee conducts an annual evaluation of the
performance of all executive officers,
including the CEO. The purpose of the evaluation is to ensure
that the executive officers improve
their performance and reduce risk (Nvidia Sustainability Report,
2017, p. 9).
External Environment
Natural Environment
According to Nvidia’s Sustainability Report 2017, “we use a
comprehensive Environmental
Management System (EMS) to identify and control
environmental impacts and continuously
improve our performance. A dedicated Environmental, Health,
and Safety team, along with
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employees in all offices around the globe, execute the system’s
policies and practices, which are
made tangible through solid goals and metrics.” This
proclamation underscores Nvidia’s
commitment to the external environment by virtue of the
establishment of this system of checks and
balances.
Nvidia has clearly stated objectives concerning the company’s
stance as a good steward toward the
natural environment. In accordance with Nvidia’s commitment
to protecting the natural
environment, our firm has taken a stance to increase energy
efficiency within our offices and data
centers; additionally, we encourage a reduction in water usage
within drought-stricken regions.
Nvidia promotes, and helps to provide, transportation
alternatives for our employees at the Silicon
Valley headquarters while also decreasing greenhouse gas
emissions through landfill reductions.
According to Nvidia’s Sustainability Report, 2017, Nvidia has
maintained a commitment to a 15%
reduction in greenhouse gas by 2020, which is a goal that was
originally set in 2014. Another goal,
set in 2013, is to maintain a landfill diversion rate by 80% or

higher each year. Also, the company
has been following a plan since 2010 to reduce annual
electricity usage per employee from 20.4
kWh to 17.4 kWh (Nvidia’s Sustainability Report, 2017, p. 12).
Societal Environment
Economic - According to the Nvidia’s Sustainability Report
2017, Nvidia’s revenue for the fiscal
year 2017 was $6.9 billion, up from $5 billion for the fiscal
year 2016. The reported total operating
expenses for fiscal 2017 was $2.1 billion, an increase from $2
billion dollars in fiscal 2016. Most
importantly, the company reported a massive increase in net
income of over $1 billion from FY
2016 to FY 2017; the reported net income of $1.6 billion in
2017 far exceeded the reported net
income of $614 million for fiscal year 2016.
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Looking at Nvidia’s revenues in the automotive industry,
“Nvidia's automotive revenue rose 52% in
fiscal 2017. Also, Citigroup has estimated that Nvidia's auto
revenue will hit $1 billion in 2018,
owing largely to a partnership with Germany's Audi” (Krause,
2017, p. 10). Being a giant in the
computer chip industry, Nvidia has used its vast resources to
venture into the automotive industry
with the use of artificial intelligence (AI) and driverless
technologies.
Overall, Nvidia has experienced strong economic prosperity
from FY 2016 to FY 2017, with net
income increasing from 14.9% to 28.0% during that time, and
an increase in return on equity from
13.7% to 28.9% over the same period.
Technological - Nvidia has established itself as a technology
leader in the computer component
industry since its inception in 1993. Among the many landmark
innovations and technological
advances that Nvidia has brought to market in recent years are:
Nvidia GeForce GTX, Nvidia
Shield Android TV, Nvidia GeForce Now, Nvidia Drive, Nvidia
Tesla, Nvidia Quadro, Nvidia

GRID, and Nvidia Jetson.
Nvidia has been a forerunner in AI and driverless car (AV)
technologies, with one consumer
reporter stating,“Nvidia's powerful processors are well-suited
for the AI artificial intelligence
software that enables ADAS systems. Self-driving cars map and
monitor their surroundings to
detect hazards” (Krause, 2017, p. 10). Nvidia and Bosch are in
fact collaborating to develop cars
that can sense when drivers are falling asleep or texting on
phones. Nvidia is known for expanding
into different technologies that are derived from our products
and innovations. With the usage of
artificial intelligence technology, there are many endless
possibilities and opportunities.
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Political-Legal – As with many technology-based companies in
the Silicon Valley, Nvidia has also
faced some political issues due to policy changes from the
Trump administration. One restriction
places limits on hiring foreign, skilled technology workers.
Also, with the constant threat of new
entrants by way of expanding global competition, Nvidia must
be diligent in its efforts to scan the
external environment for changes that can affect the company.
Presently, Broadcom is proposing to
buy its rival Qualcomm for $70 per share in a cash and stock
deal valued at $130 billion. If
completed, it would be the biggest ever takeover in the
technology sector and would create a
company with a combined market capitalization of more than
$200 billion.
A potential partnership between long-time rivals, Intel and
AMD, is possibly in the making; the
firms have announced a plan to jointly produce motherboards
which will combine an Intel processor
with an AMD graphics unit in order to counter the competition
from Nvidia (Ruehl, Munshi, &
Nuttall, 2017). Nvidia has held the dominant position in the
GPU market since bringing the original

GeForce 256 GPU to market in 1999. Even with formidable
competition in GPU manufacturing by
other technology giants, such as AMD’s Radeon GPU product
line, Nvidia has been able to
maintain the majority market share in the industry.
Sociocultural – Nvidia has been on the forefront of new
technologies that have brought benefits to
societies throughout the world; the introduction by Nvidia of
the GPU in 1999, for example, has
sped-up graphics rendering times and has provided enhanced
graphics capabilities, creating value
and convenience for millions of users worldwide. As expressed
by Nvidia, “Self-driving cars will
dramatically change the future of transportation, making driving
safer, reducing carbon emissions,
and transforming how cities are designed. At the heart of
autonomous driving, the technology used
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is artificial intelligence, which enables vehicles to learn to
anticipate and respond to, the huge range
of fast-changing conditions on the road” (Nvidia Sustainability
Report, 2107, p. 44).
Nvidia technology is being used in sustainable projects to
support life on land and underwater, and
to benefit inner-city life through various sustainability projects.
As stated in the Nvidia
Sustainability Report, 2017, “Our partners’ efforts align with
the 17 sustainable development goals
developed by the United Nations to address the world's most
pressing problems” (p.44). “Nvidia
technology has opened up new horizons in entertainment, health
care, transportation, space
exploration, and many other social and scientific arenas”
(Nvidia Citizenship Report, 2014, p. 5).
With the powerful capabilities of AI, computer graphics, and
the invention of external GPUs,
Nvidia can seek cures and treat disease, predict and model
tsunamis, and deal with many other
sociological concerns. Additionally, Nvidia provides funding to
other researchers to explore many

environmental issues to further support the sustainability of
Earth’s resources (Citizenship Report,
2014, p.5).
Support for charities is wide-ranging at Nvidia. In 2016 alone,
Nvidia provided funding of $3
million and provided 17,000 volunteer hours to support.
Compute the Cure is a charitable initiative
to provide cancer researchers with funding and computing
resources in order for these researchers
to have access to the latest advances in technology; Nvidia’s
ultimate goal is to play in integral role
in finding a cure for cancer by providing these resources. One
other noteworthy cause is Nvidia’s
educational initiative that provides funding for K-12 grade
students for training and supplies.
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Through these charitable causes around the world, Nvidia has

been able to support community
development through volunteering, corporate giving,
educational initiatives, health-focused
programs, and innovations (Nvidia Sustainability Report, 2017,
p. 45).
Task Environment
Nvidia is the leader in the graphics processing unit market;
growth of the GPU market has been
vigorous as well. The GPU industry has experienced rapid
advances in technology, short product
lives, fluctuating demand and supply, and price competition.
Nvidia is a leading supplier of graphic
processing units for vehicles, virtual reality, and high
performance computing. These blue oceans
have significant demand in the marketplace and are expected to
help grow Nvidia’s business.
Our company faces significant competition from competitors,
such as Intel, Qualcomm, AMD, and
Apple, which design and/or manufacture graphics processing
units or mobile chips as well.
To stay competitive, Nvidia must continue to invest heavily in
research and development. Our

reliance on third party foundries to supply critical inputs for our
products is a weakness for our firm.
Also, relying on outside firms to assemble and package our
products is an additional weakness.
Competitive Rivalry is High (T) - Competition from Intel and
AMD threaten Nvidia’s share of the
GPU market. Rivalry also exists with Nvidia’s other products:
smart televisions, cell phones,
tablets; among the many competitors supplying these products
are Apple, Qualcomm, and Samsung.
A comparison of Nvidia’s select rivals:
1. Intel – Reported revenue of $17.1 billion in Q4FY2017
(Business Insider, 2018).
2. Qualcomm – Reported revenue of $6 billion in Q1FY2018
(Business Insider, 2018).
3. Nvidia – Reported revenue of $2.6 billion for Q4FY2018.
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Since the revenue stream of Nvidia’s largest competitors is up

to 7 times larger than Nvidia’s
revenues, these competitors have significantly greater access to
funding for research and
development. Also, in comparison with its competitors, Nvidia
lacks economies of scale. According
to MarketLine’s SWOT analysis, the biggest challenge ahead
for Nvidia is the partnering of Intel
and AMD to sell solutions jointly (MarketLine, 2017, p. 8).
This joint approach would entail
integrating a CPU and GPU on the same chip. Nvidia may not
be able to compete with this
approach and this may lead to intense pricing competition,
decreased profitability, and a reduction
in market share.
Entry Barriers are High (S) - In order to compete effectively
with Nvidia, rivals require
significant capital resource investment into research and
development. For example, Nvidia
recorded the following expenditures for R&D in corresponding
years (MarketLine, 2017, p. 5):
FY2014, $11.5 billion; FY2015, $12.1 billion; FY2016, $12.7
billion.

During its 2017 fiscal year, Nvidia earmarked nearly $1.5
billion for research and development
expenditures (Nvidia Annual Report, 2017, p. 50). Based on this
information, we can conclude that
significant financial and human capital resources are required to
invest into research and
development in order to supply competitive products to the
marketplace. These examples of costs
demonstrate a high barrier for startups. Additionally, brand
identity and customer loyalty with
Nvidia and other competitors create entry barriers for new
companies.
Buyer’s Power is High (T) - Nvidia operates in a competitive
environment with rapid changes in
technology, product lines, and retail pricing. Rivals are
increasingly competing for market share.
Rapid advancements in technology have resulted in declining
selling prices. The aforementioned
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competitive environment has provided buyers the power to
demand low prices for quality products.
(T)
Supplier’s Power is High (W) - Since Nvidia does not produce
its own products, suppliers can
command more bargaining power and cause a deterioration of
Nvidia’s profits. Due to fluctuations
in the supply and demand for raw materials, supply issues can
raise prices and extract profits from
Nvidia.
Threat of Substitutes is High (W) - Larger competitors such as
Intel can influence computer
manufacturers to utilize their products as substitute inputs,
thereby competing directly with Nvidia’s
components. Since Nvidia has relatively smaller economies of
scale, it must ensure that the supply
of its products matches closely with consumer demand to
minimize excess production and excess
inventories. If demand surpasses supply, it would be difficult
for Nvidia to escalate production
quickly as its suppliers may not have the capabilities or
resources to meet the hastened production

schedule; should this occur, consumers can easily find
substitute GPUs from rivals, such as AMD’s
Radeon line of GPU’s, and switch to the competition.
Internal Environment
Corporate Structure
Divisional structure - Nvidia sells many computer component
products which comprise a global
distribution system. Organized as a divisional structure, the
company is divided by a product line
operating segment. There are three segments which will be
explained separately. Nvidia’s flagship
product, the graphics processing unit (GPU), is a product line
that satisfies entertainment and
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consumer needs. The product line is predominated by its
consumer-level product, the GeForce GPU
(Nvidia Sustainability Report, 2017, p. 8).

Two other smaller, yet lucrative divisions of Nvidia supply
products designed for professionals
within the computing and graphic design markets. One of these
divisions supplies professional
graphics and design products. The other division supplies the
Tesla model, which is high-powered
computing hardware, and its line of Quadro graphics products.
Together these divisions comprise
Nvidia’s professional solutions business (PSB).
The third Nvidia division supplies Ion motherboards (MCPs),
also known as micro graphics
processing units, or mGPU’s; these are produced alongside
computer processing units (CPUs) to
make up Tegra’s “system on a chip” mobile computing
technologies (Nvidia Sustainability Report,
2017, p. 8).
Strategies and policies - The Board of Directors oversees the
strategies, policies, and decisions
made by the chief executives to ensure that the best interests of
Nvidia’s shareholders are being
considered and upheld. There are three committees within the

board in charge of varying tasks: the
Audit Committee, the Compensation Committee, and the
Nominating and Corporate Governance
Committee. The chief executives are CEO Jensen Huang, the
CFO, and three executive vice
presidents, or EVPs. Jensen Huang has served as CEO since
founding the company in 1993 (Nvidia
Sustainability Report, 2017, p. 9).
Decentralized power - Power is decentralized, since each part of
Nvidia’s three product line
operating segments has unique challenges that must be
managed. Each individual division is
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permitted to organize its structure with a semblance of
autonomy, becoming specialized for its own
unique production needs in the interest of individualized
efficiency and effectiveness (Nvidia

Corporate Culture
A strong, clearly defined corporate culture has allowed Nvidia
to remain on the cutting edge of
innovation since its start in 1993. Its reputation for encouraging
risk-taking, open discussion of
ideas, and making an individual contribution lie at the crux of
its success and are stated in the
company’s five core values. The spirit of cutting edge
innovation has resulted in heavy investment
in research and development to foster the growth of competitive
and promising technologies, such
as AI and autonomous vehicles (AV) (Nvidia Sustainability
Report, 2017, p. 11).
Nvidia’s knowledge-based community consists of the industry’s
brightest thinkers which culminate
in an environment of proactive, sustained innovation: the
signature feature of the company. Thus,
recruitment of the best talent is a key success component for
Nvidia. To promote teamwork, Nvidia
stresses a strong sense of professional community, offering
perks such as catered lunches to
emphasize company allegiance and inter-company harmony.
Long hours and a lack of work-life

balance, however, can cause employee burnout and lead to high
turn-over (Nvidia Sustainability
Report, 2017, p. 18).
A cited goal by the Board of Directors for 2018 is to strengthen
hiring and retention of qualified
talent. With offices on four continents, there is a
decentralization of power; delegation based on the
individual needs of each unique setting has nurtured sizable
market penetration within the
technology market. However, maintaining uniformity within a
company that allows for
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decentralized management and decision-making is fraught with
numerous challenges (Nvidia
Corporate Resources

Marketing - When it comes to marketing, at Nvidia we focus
primarily on markets that have a high
demand for our products. There are four large markets where we
direct our marketing efforts;
gaming, professional visualization, data center, and automotive.
We have experienced strong
momentum in these markets and have become the industry
leader and the largest contributor in most
of these markets. Nvidia works with suppliers for all phases of
our manufacturing process. We also
contract with manufacturers to build, test, and distribute our
products.
Nvidia has consistently grown year over year, increasing market
share. Our core gaming segment
has had solid growth and will continue our momentum with
solid new game titles lined-up. Nvidia
also continues to push into the automotive industry and we have
become an integral part of the
industry; our technological innovations in AI and AV will add
corporate value as advanced
computing features are introduced in new car models, such as
self-driving technology.
We also promote our environmental efforts with every

opportunity that presents itself. Each product
or process that we are involved with presents some form of
environmental sustainability issue that
must be addressed in concert with our suppliers. We proudly
share this information during
conference calls, quarterly business reviews, and other forums
(Nvidia 2017 sustainability report;
page 17).
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Finance - Nvidia has benefited from tremendous growth over
the past three years, with revenues
growing by 48% since FY 2015. With this enhanced revenue
stream will come increased
opportunities to intensify R&D. One of our core values,
“innovate”, provides our team the
inspiration needed to create and advance products and services

that delight our customers and help
shape the industry; this potential for additional funding of R&D
will help ensure new product and
process development in the future. All of our product and
design launches are executed with
improving energy and efficiency along the way which not only
helps our environmental
sustainability efforts but increases profitability as well.
The following is a brief synopsis of our financial gains in FY
2017:
increase of 38% from FY
2016.
2016 to FY 2017.
billion to shareholders through
dividends and stock repurchases, up 285% from FY 2016 to FY
2017.
share per share in FY 2017.
In short, we are increasing our profitability and reducing our
long term debt. We expect our gaming,

artificial intelligence, data center, and self-driving car segments
to continue to grow and raise
industry standards (Nvidia Annual Report, 2017, pp. 13 and 24).
Research and Development (R&D) - At Nvidia, research and
development is at the center of our
purpose, and to innovate it takes a lot of research, development,
excellence, and determination.
Innovation is a part of our culture, code, and values. We know
our efforts taken toward value
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creation and excellence will encounter occasional mistakes, but
we will anticipate and avoid the
mistakes the best that we can.
We strive to hire the best talent in the technology industry and
we challenge them to do their best
work every day. This allows us to build products and services
that people don’t know that they need

until they experience them firsthand. All of our products and
designs are executed with improving
energy and efficiency along the way. We have extended our
focus to revolutionizing artificial
intelligence; every major cloud provider has adopted our Tesla
V100 GPU which is capable of
delivering artificial intelligence and high-performance
computing. We have also transitioned more
of our focus toward building a comprehensive next-generation,
self-driving platform built on Nvidia
hardware and software. Approximately 21% of Nvidia’s revenue
went to research and development
in 2017 and we have spent a total of $13 billion since Nvidia’s
inception on R&D (Nvidia
Sustainability Report, 2017, page 17).
Operations and Logistics - In order to understand the risks and
opportunities within our business,
we examine our priority issues from a value chain perspective
and examine the impact of those
issues within our organization. Our primary operational issues
revolve around our innovation, talent
strategies, and supply chain management. We look to build our
operational value through product

designs, development, manufacturing, distribution, and
delivery.
Nvidia prides itself on the positive social impact our products
have on consumers. Our ability to
give back to communities through education and charitable
donations create goodwill for the
organization. All of our processes are designed around reducing
our ecological footprint and finding
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ways to become more effective and efficient to uphold our
environmental responsibility (Nvidia
Sustainability Report, 2017, page 17).
We rely on strategic partners to produce many of our products
and we encourage these partners to
reduce the impact that the manufacturing processes have on the
planet and its peoples. We work
with these companies to share the same vision of becoming

more efficient and conserving scarce
energy resources. To accomplish this we have created a
dedicated environmental, health, and safety
team to execute our goals and objectives of measuring and
reducing our collective footprint. All of
our operations are geared toward increasing energy efficiency,
reducing waste tonnage to landfills,
increasing water efficiency, and promoting alternative
transportation for commuting employees.
(Nvidia Sustainability Report, 2017, p. 24)
Human Resources Management (HRM) - Nvidia has been ranked
within the best 100 companies
to work for. Our human resources department ensures that we
hire the right people for the job. We
take pride in our workforce and are always looking for ways to
improve employee satisfaction,
benefits, and retention. We create a culture around diversity and
inclusion by making sure we have
a diverse team while offering valuable benefits. Our HR
department is always improving our hiring
processes and always mitigating bias within our hiring
practices.

In our most recent employee engagement survey, 90% of
employees expressed an appreciation of
diverse perspectives. Our work requires the best talent and we
look to attract and retain that talent
by recognizing their skills, passions, and abilities to collaborate
with others. Our inclusion strategy
involves our recruiting processes, having equality in our hiring
practices, and giving special
consideration to women and under-represented minorities. Also
in place are systems for
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performance analysis and professional development. Lastly,
employee support includes offering
valuable benefits, unconscious bias awareness, and employee
support programs. (Nvidia 2017
sustainability report; page 25)
Information Technology (IT) - Nvidia’s invention of the GPU
and development of expanded

technology is why we are here today. Our technological
advancements have allowed growth of the
PC gaming market by designing modern computer graphics
capabilities while enhancing computer
performance. Through our GPU innovations we have been able
to develop deep learning technology
with artificial intelligence to act as a brain within computers,
robots, and self-driving cars that can
perceive and understand the world.
We are currently researching 18 different areas of computer-
based technology simultaneously, as
we look for ways of improving or advancing this technology.
Currently we have over 120 scientists
and researchers around the globe involved in this endeavor.
Some highlighted areas of development
are high-performance computing, virtual and augmented reality,
machine learning and artificial
intelligence, and robotics, to name just a few. Our technology
strategy, regardless of what we are
designing, is to improve energy efficiency with each step of our
research, development, and design
processes. Furthermore, our primary consideration with partners
and suppliers in the production of

our products and services is to conduct business with
recognized industry leaders that share our
desire to be socially responsible toward environmental
performance.
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Analysis of Strategic Factors
Situational Analysis
(Please see SFAS Matrix exhibit in appendix.)
Strengths – Nvidia has a strong market position and is a very
popular brand globally. Our CEO,
Jensen Huang, knows exactly which direction to take Nvidia in
and has done a very capable job of
leading the company for 24 years. We are now focusing on
various platforms, such as gaming,
professional visualization, datacenter, automotive market, and

OEM & IP. In addition, we started
investing in AI seven years ago (Takahashi, 2017, p. 2); because
of this early AI investment, we
have built a strong foundation and have given the company an
edge in AI technology. Currently,
Nvidia partners with more than 320 automotive manufacturers
to develop and distribute full self-
driving car platforms. This opportunity will enable our
company to reach higher achievement in AI
and self-driving car technology (Nvidia Sustainability Report,
2017, p.8).
Since the Nvidia culture supports innovation, our company has
invested an enormous amount of effort
and money in research and development activities on an annual
basis. According to our EVP David
Shannon, Nvidia has invested over $1 billion annually and more
than $6 billion since the company
first started in R&D. (StreetInsider, 2013, p. 1); as a result, our
company can provide very high quality
products while increasing barriers to new entrants due to the
difficulty of imitating our products.
Today’s iteration of Nvidia does business with many different
customers; this impressive list

includes: original equipment manufacturers, original device
manufacturers, system builders, add-in
board manufacturers, retailers/distributors, internet and cloud
service providers, automotive
manufacturers and tier-1 automotive suppliers, mapping
companies, start-ups, and other ecosystem
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participants. This far-ranging strategy can augment the revenue
stream by increasing the customer-
base substantially, with more potential for profit building as a
result of this varied mix of customers.
According to the 2017 Nvidia Sustainability Report, the level of
employee engagement and retention
is quite impressive; as a result, the report stated, “Our voluntary
turnover rate declined to 5.8 percent
from 7.2 percent, versus 9.1 percent average for semiconductor
companies which have the lowest
voluntary turnover of any sector in the tech industry” (Nvidia

Competition within the technology industry is very intense. Our
company does a great job in retaining
talent by providing great benefits for employees, including our
birth mother policy (which includes
the father), and also a policy for foster parents. We also conduct
global employee surveys every 18
months to track engagement and retention trends. As a result,
participation is at 94 percent in our
employee surveys (NVIDIA report, 2017, p. 30). We will
continue improving our benefits program
for our workplace and our employees in order to promote a
better future at Nvidia.
At Nvidia, our focus is on employee retention. Our human
resources department continually works
toward recruiting talent from many universities and research
institutions throughout the world.
Enticements such as internships and sign-on bonuses are used to
attract new talent. We are perpetually
seeking to fill intern positions in the areas of computer
architecture, programing systems, VLSI,
circuits, networking, computer graphics, display technology,
computational photography, computer

vision, and machine learning, by way of Nvidia research
internships (Nvidia Sustainability Report,
2017, p. 25). We consider talent management to be one of our
highest priorities and talent is one of
our greatest assets. Thus, we go to great lengths to attract and
retain qualified, talented employees.
Weaknesses – Product diversification is not always as varied as
our company has aimed for as one
of our top priorities. Per the FY18Q4 earnings call report, there
was an obvious drop of 84% in
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revenue in one of our product offerings, which resulted from a
disputed patent license agreement with
Intel. Following a more thorough investigation, there was not
much improvement on the revenue
growth rate for this product within the last three consecutive
fiscal years 2015-2017 (Jankowski, 2018,
fig.7). We began to realize that licensing should be explored as
a new strategy to gain profits by

receiving royalty payments from Intel and others for the use of
our intellectual property. Even if
financial results from licensing are not initially impressive,
licensing should remain a minor segment
of our company and might lead to huge profits in a long-term
scenario; this in turn will keep the
company focused on invention and improvement.
Operating expenses increased from $1.3 billion to $1.5 billion
from fy 2016 to fy 2017 due to a
renewed commitment to the development of AI (Tanner, 2017,
p. 1); in other words, R&D activities
require a huge amount of capital to be allocated from company
revenues annually. The main reason
we are investing a huge amount of capital in R&D activities is
because our company is in the
technology industry, which is dependent on innovation for
growth opportunities. It is R&D that is the
most important expense and investment that our company relies
upon for development of future
products. If R&D fails to deliver new and vital products, our
company will face financial challenges
in the future.

Opportunities – There are many opportunities and directions for
Nvidia to partake in to support
growth. One opportunity that Nvidia explores is within the
human resources department which works
to recruit interns at many universities in order to find new talent
for Nvidia.
Secondly, as the popularity of cryptocurrency is on the rise,
there has been a tremendous surge in
demand for our GPU’s from data-miners. We are planning to
develop a new type of GPU that will be
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utilized exclusively for cryptocurrency mining as a result of the
recent surge in demand for GPU’s by
cryptocurrency miners; this new supply strategy will allow our
firm to better fulfill the needs of both
gamers and cryptocurrency miners.
Thirdly, we have partnered with many automotive
manufacturers to develop and distribute self-

driving programs which can bring a huge profit potential to our
company in the future. Furthermore,
the company has also invested in innovations that provide
programs to current employees to facilitate
learning, such as: L&D program, NVLearn portal, the online
platform Deep Learning Institute.
Threats – Although the annual growth rate for Nvidia’s
revenues looks quite impressive, even higher
growth rates may be on the horizon with many innovations still
being developed; however, Nvidia
faces intense competition from Advanced Micro Devices Inc.
and Intel Corporation, who are also
reporting strong growth rates (Nvidia Annual Report, 2017, p.
11). Nvidia may also face intense
competition for the AI and data center markets from strong
enterprises such as Cisco Systems,
Facebook, Tesla Motors, and others. We are following our
mission and vision while striving to stay
ahead of competitors with our advanced technologies; this
endeavor to maintain our position as the
leader in GPU technology and to maintain and grow our market
share will be our enduring challenge.

All of our manufacturing, assembly, and testing are dependent
upon subcontractors. We have used
this partnership as a means to curtail operating costs such as
hiring full time labor, purchasing
equipment, maintenance of machines, and risk aversion; this
reliance on subcontractors also carries a
risk of leaked company intellectual properties and the challenge
of finding capable subcontractors for
the projects. Currently we are holding a seat on the EICC board
of directors. We can find solutions to
challenges and opportunities in our global supply chain by
utilizing the EICC Code of Conduct. With
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our participation in EICC, we can obtain access to inside
information which can help the company to
maintain its long-term stability within the computer components
market.
Strategic Alternatives and Recommended Strategy

Strategic Alternatives
As Nvidia’s gross profits continue to skyrocket, with a gain of
45% for FY 2017 versus FY 2016, it
is clearly evident that our strategy is working. Nvidia’s
intensive investment in research and
development and human resource assets has catapulted the
company into a strong leadership
position in the computer component industry. Even though this
current strategy has been very
successful, it is important for Nvidia to consider strategic
alternatives to continue its expansion in
artificial intelligence, autonomous driving, and graphic
processing unit manufacturing. Nvidia can
continue its expansive growth and market leadership by
leveraging its intellectual property, as well
as expanding vertically and acquiring manufacturing plants
Nvidia management names one of its primary goals in 2018 as
the desire to strengthen hiring and
retention. Current strategies entail partnerships with the highest
performing universities in the
country to ensure access to the brightest hiring pool. It is
evident that hiring is proceeding with

success, as Nvidia continues to hold its reputation as one of the
most cutting-edge technology firms
in the industry. However, turnover is an issue that stems from
an intense professional environment
with little work-life balance, which also staves work force
diversity. The best strategies to temper
these factors are to implement culture-emphasizing hiring
practices as well as programs that cater to
a more diverse work force (Nvidia Sustainability report, 2017,
p. 47).
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Strategy 1 – The first strategic alternative Nvidia can utilize is
to leverage its intellectual property.
Nvidia’s intellectual property consists of patents and
trademarks. Nvidia can seek to use this
valuable asset through licenses and development agreements.
The licenses and agreements can be
procured by Nvidia’s customers and partners. With the

agreements and licenses, the customers will
be able to incorporate these features into their own products.
Nvidia can also offer the ability to
integrate their intellectual property into customer’s products
through customized development
agreements (Nvidia “Nvidia-Q4Y18-Form-10k”, p. 8). The
advantage of this strategic alternative is
the opportunity to bring more revenue to Nvidia as well as a
greater adoption of its technologies.
The disadvantage of this strategy is the possibility of Nvidia
competing with itself as customers may
turn into competitors if Nvidia’s intellectual properties are
replicated by competitors. One other
disadvantage is the possibility of piracy and reverse engineering
of its products by competitors.
Strategy 2 - The second strategic alternative Nvidia can utilize
is to vertically expand and acquire a
chip manufacturing facility. The benefits of manufacturing our
own critical inputs for our products
include increasing quality assurance in the manufacturing
process as well as remediating defects or
security vulnerabilities. Nvidia can avoid experiencing a lack of
critical inputs, such as

semiconductor wafers and circuit boards, by manufacturing our
own inputs of production. Supply
fluctuations can be minimized and production scheduling will
be made more streamlined with the
ability to supply our own critical inputs. Nvidia can also avoid
delays in product shipments. This
ability to supply our own inputs will enhance the value chain at
the same time. (Nvidia “Nvidia-
Q4Y18-Form-10k”, p. 14).
The advantages of having in-house manufacturing are better
quality control of the supply chain and
better control over the manufacturing process. The main
disadvantage regarding in-house
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manufacturing is the initial capital investment it would require.
Nvidia will need to analyze how
much of a financial benefit that in-house manufacturing would
provide compared to its cost.

Strategy 3 - The third strategic alternative is aimed at bolstering
hiring and retention by
implementing a rigorous, culture-focused hiring protocol meant
for solid indoctrination into
company culture. Employee turnover, although low compared to
the industry, could be further
reduced by immersive culture techniques set forth by the human
resources department. Currently,
the interview process is rather impersonal.
For a developer, one of the most common job roles within
Nvidia, the hiring process begins with
two phone interviews, one by a superior and one by a technical
associate. Then, the hopeful
applicant will complete five to six technical testing sessions
that include written aptitude tests and
verbal exams on coding technologies such as Java, C++, and C
and D data structures. Then the
candidate meets for a short HR meeting to discuss company
culture and policies before becoming
part of the team (Glassdoor.com, 2018).
The HR part of Nvidia’s hiring process is almost an
afterthought and should instead be at the

forefront of the hiring process. Nvidia could adopt a protocol
that more closely mirrors companies
with famously strong company cultures such as Zappos. To
compare, at Zappos the interview
process could stretch on for many months and takes a company
culture-centered approach. It
initializes an initial “social test” by inviting the hopeful to a
company event. The “nice guy” test
proceeds to test the character of the applicant by testing how he
or she treats the shuttle driver as
they tour the company premises. The two last hiring steps
involve testing the applicant in the core
activities of the firm; at Zappos, a retail shoe firm, this core
activity that is tested entails the
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provision of service. Each new candidate, no matter what job
position, must man the customer
service phones for a week, with the option to take the job or
walk away from the offer with a $3000

severance and an agreement to never come back (Business
Insider, 2015).
As a technology-centered firm, Nvidia could invoke a similar
strategy by leading with technical
testing and interviews, and following with a number of culture-
emphasizing tests including inviting
the hopeful to company social events and issuing personality
tests that reveal qualities of innovation
and leadership. Strategies such as allowing the hopeful to work
for a trial period under a mentor in
addition to other culture-stressing measures, including the brief
HR finale meeting, might help
alleviate some of the surprises that new hires face when coming
to work at such a demanding
professional environment.
Strategy 4 - The fourth strategic alternative targets hiring and
retention as well, by creating
company programs that make Nvidia more attractive to female
applicants. Only a paltry 16% of the
entire Nvidia workforce is female, compared to the remaining
majority of 84% which are male
(Nvidia Sustainability Report, 2017, p. 26). Perhaps this is due

to a lack of work-life balance that is
inherent in the fast-paced technology industry. The spirit of
innovation infuses this fast-paced
workplace, but retention suffers because new-hires struggle to
strike a balance between a
demanding career and personal obligations.
Customarily, familial obligations fall to the responsibility of
women, meaning that Nvidia’s intense
work environment discourages women applicants and stresses
current ones with children. Although
turnover is low, it could be further reduced by implementing
programs that alleviate the problems
that demanding hours cause, such as on-site childcare. Other
company programs to attract women
would entail female-focused recruiting events within the
programs, like STEM, and within the
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universities in which Nvidia recruits new hires. Woman-focused
company measures would increase

hiring diversity and bolster retention, as smart, capable recruits
should not have to pick between a
successful career and the strong family ties that are often tied to
traditional societal gender roles.
Recommended Strategy
Nvidia’s reliance on third-party vendors to manufacture its
products puts the company at risk.
Nvidia must rely on two vendors for silicon wafers, as well as
independent subcontractors to
assemble, test, and package its products (MarketLine, p.6).
These vendors may also assemble, test,
and package the products of Nvidia’s competitors. Additionally,
Nvidia does not maintain long
contracts with its vendors. As a result, we have cited vendors as
having supplier power over Nvidia,
which is a weakness.
We recommend that Nvidia explore the strategic alternative of
expanding and acquiring a chip
manufacturing company. This addition to the company would
allow Nvidia to make quality control
improvements, protect its intellectual property, and have better
oversight of supply and shipping.

While this action will require an investment, Nvidia will realize
significant improvements in
reliable supply, control costs, reduce reliance on vendors, and
quality. These improvements will
increase customer satisfaction and lead to improved profits.
Implementation
Nvidia must analyze and assess existing chip manufacturing
companies that could become a
possible target for an acquisition that would enable Nvidia to
begin to manufacture the critical
inputs of production, such as silicon wafers and circuit boards.
Potential acquisitions should be
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closely aligned with Nvidia’s competitive advantages, strategic
initiatives, core values, and business
needs. These key strategic elements are:

intelligence, and autonomous
vehicles
conomies of scale
After identifying the top three manufacturers that meet Nvidia’s
criteria, Chief Executive Officer
Huang can then present the strategic plan to the Board of
Directors to narrow down the selection
field for final approval. Once approval is secured, Nvidia will
submit its acquisition offer and begin
negotiations. Nvidia should complete the acquisition and begin
integrating the company by the end
of the current fiscal year.
Evaluation and Control
Vertical integration is a strategy to gain control over its
suppliers or distributors in order to increase
the company’s power in the business industry, secure supplies
or distribution channels, and reduce
transaction costs. The strategy of Nvidia’s expansion and

acquisition of a chip manufacturing
company is part of our vertical integration planning. Vertical
integration can have a significant
impact on our business. Through vertical integration, our
company can have many benefits such as
improved coordination within the supply chain, improved
quality of supplies, and lower costs due to
elimination of some market transaction costs. However, vertical
integration is also a difficult
strategy to implement successfully. It will require a relatively
high capital investment to expand and
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acquire our own manufacturing company. Moreover, it will be
hard to reverse. If our company is
incapable of managing the new activities efficiently, it may lead
to higher costs and lower quality
products. In order to prepare for vertical integration, Nvidia
must conduct an analysis of possible
advantages and risks of an expansion and an acquisition of a

chip manufacturing company.
Evaluating the potential benefits and risks, and weighing the
advantages against the risks will be
helpful for making a decision.
Once we reach the decision to implement vertical integration,
Nvidia will hire an expert who has
professional knowledge about the production process that is
involved in manufacturing and
distributing in order to balance various stages of production and
distribution. For efficient
functioning on every stage of the process, Nvidia needs
someone who can control and build enough
upstream capacity to ensure that its downstream operations have
sufficient supply under all demand
conditions. For smooth and effective implementation of vertical
integration, a professional manager
who can manage, control, and evaluate its whole process should
be hired.
Monthly reports will be monitored to ascertain expenses that are
accruing in the integration process.
A gradual reduction in outsourced semiconductor wafers and
circuit boards will be our goal; the
optimal phase-out timeframe for reduction in the dependence on

outside suppliers is a reduction of
10% per month. This timeframe should allow internal capacity
to gradually come online over a
period of 10 months, with the entire changeover happening in
less than one year. If delays occur in
the changeover process, outside suppliers can again be accessed
to meet the immediate demands for
critical inputs to our products. Over a two-year assessment
period, annual costs will be examined to
determine the long-term feasibility of continuing to manufacture
our own critical inputs for our
products.
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Exhibits 1-6 follow:
Wghtd.

Score
Opportunities
Increase in revenue from last year 0.20 4.50 0.90 New
technologies promoted
Energy efficiency in offices 0.10 4.70 0.47 To help the
environment
Reduction in water usage 0.05 3.50 0.18 To help the
environment
Promote transportation alternatives 0.08 3.50 0.28 Supports the
environment
Decrease green house gas emissions 0.07 3.90 0.27 Environment
friendly company
Threats
Competition from Intel, AMD 0.15 4.00 0.60 Top position
presently held
New product advances 0.10 4.80 0.48 Well positioned
Cryptocurrency meltdown 0.05 2.00 0.10 Volatility likely
Changing in GPU market 0.05 2.00 0.10 Competititon from
AMD
Losing the automotive market 0.05 2.50 0.13 Market uncertainty
Losing foreign skilled tech workers 0.10 1.50 0.15 Reduction of
H-1 visas

Total Scores 1.00 3.65
Comments
EFAS Table for Nvidia Corporation
External Factors Weight Rating
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Weighted
Score
Strengths
Trusted name in GPU market 0.10 3.1 0.31 Ranked number one
in graphic cards
High barriers to entry 0.07 2.9 0.20 Requires huge capital
investment
Good employee relations 0.03 2.5 0.08 Lowest turnover ratio in
the industry

Positive corporate culture 0.08 3.5 0.28 Culture of innovation
allows risk-taking
Very strong financial position 0.07 2.0 0.14 High growth in:
revenue, EPS, share value
Commitment to R&D 0.15 3.8 0.57 Approx. 21% of revenues go
into R&D
Weaknesses
Work-life imbalance 0.15 1.0 0.15 Long work hours lead to
employee burnout
Lacking patent licenses 0.15 1.0 0.15 Products are vulnerable to
imitations
Product stagnation risk 0.20 3.0 0.6 Constant innovation needed
Comments
IFAS Table for Nvidia Corporation
Internal Factors WeightRating
Wghtd
Score S I L
S1 Trusted name in GPU market 0.15 3.1 0.47 X Ranked
number one in GPU's
S4 Positive corporate culture 0.03 3.5 0.11 X Culture allows
risk-taking

S6 Commitment to R&D 0.08 3.8 0.30 X Approx. 21% of
revenues go to R&D
W3 Product stagnation risk 0.15 3.0 0.45 X X Constant
innovation needed
W2 Lackng patent licenses 0.07 1.0 0.07 X Products vulnerable
to imitation
O1 Increase in revenue 0.12 4.5 0.54 X X New technologies
promoted
O2 Energy efficency in offices 0.05 4.7 0.24 X X To help the
environment
T1 Competition from Intel, AMD 0.20 4.0 0.80 X Top position
held presently
T2 New product advances 0.15 4.8 0.72 X X Well positioned
Comments
SFAS Matrix for Nvidia Corporation
Strategic Factors WeightRating
* Duration
* Duration: S = short, I = intermediate, L = long
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Liquidity Ratios
Current ratio 4.77 2.57 6.38 5.95
Quick ratio 4.33 2.40 5.84 5.54
Leverage Ratios
Debt to total assets 0.38 0.32 0.32 0.32
Debt to equity 0.65 0.53 0.52 0.52
Activity Ratios
Inventory turnover - sales 8.70 11.99 9.69 10.65
Inventory turnover - cost of sales 3.59 5.26 4.31 4.80
Average collection period - days 44 days 37 days 37 days 38
days

Fixed asset turnover 13.26 10.75 8.4 7.09
Total assets turnover 0.70 0.68 0.65 0.57
Profitability Ratios
Gross profit margin 58.8% 56.1% 55.5% 54.9%
Net operating margin 28.0% 14.9% 16.2% 12.0%
Profit margin on sales 27.6% 14.8% 16.1% 12.4%
Return on total assets 19.9% 10.7% 11.1% 7.2%
Return on equity 28.9% 13.7% 14.3% 9.9%
Ratio Analysis for Nvidia Corporation (2017-2014)
20142017 2016 2015
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Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 41.2% 43.9% 44.5% 45.1%
Gross Profit 58.8% 56.1% 55.5% 54.9%
Research and development 21.2% 26.6% 29.0% 32.3%
Selling, general, admin. expenses 9.6% 12.0% 10.3% 10.5%
Reorganization expenses 0.0% 2.6% 0.0% 0.0%
Operating Income 28.0% 14.9% 16.2% 12.0%
Interest income 0.8% 0.8% 0.6% 0.4%
Interest expense 0.8% 0.9% 1.0% 0.3%
Other income (expense), net 0.4% 0.1% 0.3% 0.2%
Income taxe expense 3.5% 2.6% 2.6% 1.7%
Net Income 24.1% 12.3% 13.5% 10.7%
Common Size Income Statements for Nvidia Corporation (2017-
2014)
20142017 2016 2015
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Trusted name in
GPU market
Continue
promoting
reputation
5 Marketing Dept. Marketing Dept. Quarterly Capital Audits
Positive corporate
culture
Maintain
innovative
atmosphere
3 Management
Middle
Management
Quarterly Employee surveys

Commitment to
R&D
Maintain high level
of commitment
5 Management VP of Operations Quarterly Financial Audits
Product stagnation
risk
Maintain high level
of commitment to
R&D
4 Operations COO Quarterly Financial Audits
Lacking patent
licenses
Apply for patent 3 Legal Dept. Legal Dept. Quarterly Secure
patents
Increase in
revenue
Promote GPU's and
new products
3 R&D VP of R&D Quarterly Sales figures

Energy efficiency in
offices
Communicate plan
to departments
3 Management
Lower
Management
Quarterly
Reduction in
energy expenses
Competition from
Intel, AMD
Develop new
products
3 Operations VP of Operations Quarterly
Gain market share
in new markets
New product
advances

Develop new
products
4 Operations COO Quarterly
Gain market share
in new markets
Strategic Factors Action Plan Priority System
Implementation, Evaluation, and Control Plan
Who will
Implement
Who Will Review How Often Review Criteria Used
MGMT 449-70
41
REFERENCES
2014 Citizenship Report. (2018). Retrieved from
http://www.nvidia.com/object/fy14-gcr-social-
impact.html
2014 Citizenship Report. (2018). Retrieved from
http://www.nvidia.com/object/fy14-gcr-

workforce-performance.html
2017 Sustainability Report. (2018). Retrieved from
http://www.nvidia.com/object/fy17-
sustainability-report.html
Board of Directors. (2018). Retrieved from
http://investor.nvidia.com/governance/board-of-
directors/default.aspx
Company Overview of Nvidia Corporation. (2018, April 18).
Retrieved from
https://www.bloomberg.com/research/stocks/private/people.asp?
privcapId=32307
Corporate Governance. (2018). Retrieved from
http://investor.nvidia.com/governance/governance-
documents/default.aspx
Duggan, W. (2017, June 9). Why Nvidia's Strategy Hints At A
'Fast-Rising' Stock Price. Retrieved
from https://www.benzinga.com/analyst-ratings/analyst-
color/17/06/9588545/why-nvidias-
strategy-hints-at-a-fast-rising-stock-price
Executive Bios. (2018). Retrieved from
https://nvidianews.nvidia.com/bios/jensen-huang
Feloni, R. (2015, December 3). Zappos' sneaky strategy for

hiring the best people involves a van
ride from the airport to the interview. Retrieved from
http://www.businessinsider.com/zappos-sneaky-strategy-for-
hiring-the-best-people-2015-12
INTC. (2018). Retrieved from
http://markets.businessinsider.com/stocks/intc/financials
http://markets.businessinsider.com/stocks/intc/financials
MGMT 449-70
42
Jankowski, S. (n.d.). CFO Commentary on Fourth Quarter and
Fiscal 2018 Results. Retrieved from
http://s22.q4cdn.com/364334381/files/doc_financials/quarterly_
reports/2018/Q4FY18-CFO-
Commentary.pdf
Krause, R. (2017, February 10). Nvidia, TI, Microchip,
Qualcomm Take Automotive Chips For A
Spin. Retrieved from
https://www.investors.com/research/industry-snapshot/nvidia-ti-
microchip-qualcomm-take-automotive-chips-for-a-ride/

Lily, P. (2018, February 27). Cryptocurrency miners bought 3
million graphics cards worth $776
million in 2017. Retrieved from
https://www.pcgamer.com/cryptocurrency-miners-bought-
3-million-graphics-cards-worth-776-million-in-2017/
Marketline Intel SWOT Analysis. (2017, July 21). Retrieved
from
https://store.marketline.com/report/541ae527-5696-4e7e-a674-
2da312dac035--intel-
corporation-strategy-swot-and-corporate-finance-report/
MarketLine Nvidia SWOT Analysis. (2017, October 5).
Retrieved from
https://store.marketline.com/report/2678663--nvidia-
corporation-strategy-swot-and-
corporate-finance-report/
NVDA. (2018). Retrieved from
http://markets.businessinsider.com/stocks/nvda/financials
NVDA’s Comparison of Quarterly Growth Rates to Its Peers.
(2018). Retrieved from
https://csimarket.com/stocks/competitionNO3.php?code=NVDA
NVIDIA. (2017). Nvidia Sustainability Report 2017:
Governance and Ethics, Pg. 9.
NVIDIA Announces Financial Results for Fourth Quarter and

Fiscal 2018. (2018, February 8).
Retrieved from https://nvidianews.nvidia.com/news/nvidia-
announces-financial-results-for-
fourth-quarter-and-fiscal-2018
NVIDIA (NVDA) Changes Business Model; Plans to License
GPU Technology. (2013, June 18).
Retrieved from
MGMT 449-70
43
https://www.streetinsider.com/Corporate+News/NVIDIA+%28N
VDA%29+Changes+Busin
ess+Model%3B+Plans+to+License+GPU+Technology/8428750.
html
NVIDIA Research Internships. (n.d). Retrieved from
https://www.nvidia.com/en-
us/research/internships/
NVIDIA Sustainability Report. (2017). Retrieved from
http://images.nvidia.com/content/crr/2017/sustainability/pdf/20
17-NVIDIA-Sustainability-

Report-Final.pdf
NVIDIA Sustainability Report. Workforce. (2015). Retrieved
from
http://www.nvidia.com/object/fy15-workforce.html
QCOM. (2018). Retrieved from
http://markets.businessinsider.com/stocks/qcom/financials
Quarterly Results. (2018). “Nvidia-Q4Y18-Form-10k” Retrieved
from
http://investor.nvidia.com/financial-info/quarterly-
results/default.aspx
Reuters Staff. (2017, April 7). BRIEF-Nvidia CEO’s 2017 total
compensation was $12.2 million.
Retrieved from https://www.reuters.com/article/brief-nvidia-
ceos-2017-total-
compensatio/brief-nvidia-ceos-2017-total-compensation-was-
12-2-million-
idUSFWN1HF0WV
Ruehl, M., Munshi, N., Nuttall, C. (2017, November 6). Daily
briefing: Saudi Arabia’s purge, tech’s
biggest bid, Queen in Paradise. Retrieved from
https://www.ft.com/content/e64f21e4-c222-
11e7-a1d2-6786f39ef675

Takahashi, D. (2017, November 10). NVIDIA CEO: Gaming
will be huge, but so will AI and data
center business. Retrieved from
https://venturebeat.com/2017/11/10/nvidia-ceo-gaming-
will-be-huge-but-so-will-ai-and-data-center-businesses/
MGMT 449-70
44
Tanner, P. (2017, June 15). Why NVIDIA is Increasing Its
Operating Expenses in Fiscal 2018.
Retrieved from https://marketrealist.com/2017/06/nvidia-
increasing-operating-expenses-
fiscal-2018
The Structure of Price. (2017, March 27). Nvidia: The Greatest
Threats and Vulnerabilities.
Retrieved from https://seekingalpha.com/article/4058214-
nvidia-greatest-threats-
vulnerabilities?page=2#
Create a console application using Visual Studio.
• Name the

Solution
and Project Program07.
• Output appropriate communication messages to the user.
• Output appropriate results. In other words, all requirements
should be
output and identified by number.
Requirements (remember to identify the requirements by
number):
1. Output a header in the console: “This is Program07”
2. Use try-catch-finally statements with classes that implement
the IDisposable
interface.
3. Provide user the opportunity to create multiple directories.
4. Check if directories exist before creating.
5. Provide user the opportunity to create multiple files.
6. Check if files exist before creating.
7. User can enter data into the files.
8. Read data back from the files.
9. Use the FileAttributes enumeration to report status on your
choice of two
attributes (not Directory or Hidden).
10. Output a thank you message: “Thank you for running

Program07.”
TEST – TEST – TEST your application to ensure the specific
program
requirements are met.
• Use the list above and the common requirements as a
confirmation
checklist.
· Not meeting all requirements = No ‘’0” points for the
assignment.
Flowchart
Include a flowchart of your program.
Construct your flowchart using draw.io. Use appropriate
symbols. Use vertical/horizontal connections (NOT
slanted/angled connections).
Export your flowchart to the SVG format (File | Export as... |
SVG)
Submit the SVG file with your assignment

Strategic Audit Nvidia Corporation STUDENT .docx

Strategic Audit Nvidia Corporation STUDENT .docx

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