Intel Corporation: Industry Analysis Team #1 Andrew McDaniel Brad Schaefer Brandon Christian Robert Pace Ryan Schafer
Transcript
Slide 1
Team #1 Andrew McDaniel Brad Schaefer Brandon Christian Robert
Pace Ryan Schafer
Slide 2
Chief Business and Economics Characteristics The industry is
driven by an infusion of technological innovation and long term
sustainability. This is achieved through: Factory specialization
Economies of scale Lowers costs for research and development Lowers
costs to implement improvements 93% of Intels revenue is made in
the micro processor market
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Driving Forces of Change The changing market for applicable
technology What technology are people using to complete tasks? What
can make these tasks easier or more efficient for people? PCs vs.
Tablets X86 vs chip sets
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Driving Forces of Change Changing demands for technology Meet
the needed demand Not necessarily about improving technology But
about innovating a product to add value to the consumer DRAM/ SRAM
memory vs. x86 processors Memory was the main focus of Intel x86
processors were a small division Switched focus to processing chips
due to the boom of the PC market
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Competitive Forces Intel has many competitors in the
technological industry. They are: 1 st in the semiconductor
industry 1 st in the x86 micro processing industry 4 th in the
chipset industry (smart phones/tablets) Shift from PC purchases to
tablet/ smart phone purchases
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Competitor Positions in the Industry Intels main stream of
revenue comes through the micro processor industry Their sole
competitor is AMD (Advance Micro Devices) They own 20% of the micro
processing market vs. Intels 80% Samsung is leading the flash
memory market and flat panel display market Intel has chosen not to
compete in this market
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Competitor Positions in the Industry In the semiconductor
industry, Intels main competitors are SEC (Japan) 5.8% of the
market share Toshiba (Japan) 4.7% of the market share Samsung
(South Korea) 4.4% of the market share Texas Instruments (U.S.)
4.4% of the market share Intel currently has 16.1% of the market
share
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Predictions of Competitive Moves To be successful, AMD will
adapt a new, unified strategy just as Intel did during startup
Attempt to acquire a secure customer base Sustain business in the
long-run AMD will become more customer centric Find the needs that
Intel does not meet and try to cater towards these Foster survival
in the Industry
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Predictions of Competitive Moves AMD will try to appeal to
their customers through a lower cost approach They will also target
the end-consumers to appeal to basic needs vs. expensive cutting
edge technology
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Key Success Factors Long-run success is valued much higher than
quick profits This can be achieved through Factory specialization
Economies of scale Consumer relations The ability to add customer
value to innovative technological processes at a low cost Must
focus on added customer benefits
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Industry Attractiveness Will be attractive if: The entrant can
overcome large start up costs Can meet the changing technological
needs of consumers that key competitors are not focusing their
resources on Can achieve economies of scale Can gain and compile
knowledge of technological production
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Strategic Effectiveness Invests Highly in R&D Department
Continually Invests 15-20% of Revenue More than its competitors
Recently developed the atom processor for IPhones and tablets Seeks
the brightest talent to join the company 80,000 employees in over
28 countries Listed in Fortune 100s companies to work for Only 2%
turnover
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Strategic Effectiveness Global Presence Operations in 63
countries Worlds largest Chip supplier Continue to Improve
Manufacturing efficiency High raw material costs Tendency to
oversupply market, needs to become more efficient
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Revenue and R&D Intel Consistency Invests 15-20% of Revenue
into Research
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SWOT Analysis StrengthsWeaknesses Economies of scale Market
Position/Brand Image Advanced Technological abilities Strong
Management Dependence on Microsoft OS Over Supplying the market
Customer Concentration OpportunitiesThreats Launching the Atom
processor Partnerships Growing Global market Increasing Competition
Volatile Industry High Raw Material Costs High Product Prices
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Intels Options High market Pressure Large size and resources
give power. Issue: Post-PC age Lowered stock prices Need for new
technology Best option: Internal Changes Build on previous
investments & techniques Refine strategy Creating new business
value increasing efficiency design, office, manufacturing,
enterprise, and services.
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Locked in? Not locked into old strategy Growing industry Key is
differentiation Strategy & products
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Competitive Advantage 4 factors: Political Economic Social
Technological Invention & Innovation Invention: Creation of new
products and processes through the development of new knowledge of
existing knowledge Innovation: The intentional commercialization of
invention by producing and marketing a new good or service, or by
using a new method of production.
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Competitive Advantage Cont. Expanding business territory
Developing new products Entering new technological markets We are
transforming from a company with a primary focus on the design and
manufacture of semiconductor chips for PCs and servers to a
computing company that delivers complete solutions in the form of
hardware and software platforms and supporting services
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Intel Strategy Invention & Innovation Standardization:
Development of new products. Improvements to existing ones. Combine
and optimize: Manufacturing process technology Product design
Leading-edge capacity Design tools Masks and packaging
in-house
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New Strategic Additions Business Scope: optimizing the whole
business infrastructure including: applications, computing,
storage, networking, and facilities Support: Design, Office,
Manufacturing, Enterprise, and Services. Key Performance
Indicators: Cost per service unit, Resource Utilization Service
Quality steady achievement and innovation
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New Strategic Additions Cont. Goal approach method: Total
transformation NOT incremental changes. Investment decision model:
compares current data center capabilities to a best achievable
model. remove the conventional improvement mindset only focuses on
incremental improvements Using a new unit-costing financial model
that enables us to benchmark ourselves and prioritize our
investments Broaden capability scope by identifying further
groundbreaking innovations.
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Industry Characteristics Strong Corporate Governance and
Ethical Values Provide consumers, vendors, distributors, ect. With
only the best products Unparalleled amount of time and money spent
on developing and producing new products
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Industry Characteristics (cont.)
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Industry Changes Driving Forces Cloud Computing -Shift from a
product focus to a service orientation Two Differences between
Cloud Computing and other computing services 1.) Scalability 2.)
Elasticity
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Industry Changes Driving Forces (cont.) Most cloud computing
services are located in North America Europe has launched a $170
million public-private partnership -To help build the internet of
the future with cloud computing as its key component China has
launched a five year plan - integrating cloud computing as part of
its initiative to develop strategic new industries
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Competitive Forces at Work Constant Need to Keep up with the
updating of technology. -Becomes outdated and antiquated after 6-8
months
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Companies in the Strongest/Weakest Competitive Position Intel
is in the best competitive position -Revenue of $53 billion last
year -Reinvestment of %10 Billion back into the company for R&D
Expansion throughout most of the World
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Companies in the Strongest/Weakest Competitive Position
(cont.)
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AMD is the weaker company -Provides consumers with less
products -Has lesser portion of the market - Has not expanded
across world as well as Intel
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Keys to Competitive Success Creating a demand for a product
when there was not one before -Or; A Blue Ocean Intel is a
technology node ahead of their competitors -How? Transitioning to
lower Geometries
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Industry Attractiveness and Prospects for Above Average
Profitability Ranked 51 on Forbes Fortune 500 Reinvested $10.1
Billion into R&D Stock prices are on the rise about $23 a share
Constant return with quarterly dividend payouts Corporate expansion
and mergers through out the world
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Economic Factors Intels Business cycle Product life cycle
Accurately forecasting demand
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Political factors Code of conduct CSR Suppliers Privacy of
information Legal Issues
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Social Factors Diverse workforce Leadership and development
programs Education programs STAY WITH IT Initiative
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Technological Factors Innovation is KEY NISSAN using the Intel
Atom processor Exploit the market Tap into new markets
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Competitive Factors Competitors AMD, IBM, Oracle, TI, and
Samsung Stay on track with Moores Law Hard to imitate Exclusive
business with DigiPoS EPoS software
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Geographical factors Santa Clara, California (HQ) Washington
City, Oregon Foreign Markets Pros and cons Possible access to
innovation by operating in countries with different cultures