Chipping Away at Intel
Essay by manishkalonia85 • October 31, 2012 • Case Study • 325 Words (2 Pages) • 2,279 Views
Background
* Craig R Barrett after joining as CEO, started production of information and communication appliances, and services related to Internet.
* Company was in bad performance due to 9/11, slowing economy and war threat.
* Internally, problems were compounded by internal problems: product delays and shortages, recalls, overpricing, bugs in the system.
* Barrett invested in new markets but with no results and had to withdraw: Production of network servers and routers, closing of iCat, etc.
* There was also weak demand and overcapacity in semiconductor industry.
* AMD was giving Intel tough competition with its Athlon processor, faster than Pentium III.
* People got more interested in the speed of internet rather than of the processor.
* Due to 9/11, share prices crossed their lowest point by October, 2011.
* Barrett felt the need to reorganize this segmented market to make more nimble, avoid duplication and better coordination.
* Barrett reorganized different business units to enable decentralization and delegation of decision making to make company better coordinated.
o In his first year, he created new wireless unit combining new acquisitions with Intel's flash memory operations.
o In the second, he created Architecture Group, combining development and manufacturing of core processors.
o In the third year, he reorganized the Architecture Group and created new unit consisting of merger of communications and networking operations.
* But the reorganization was so much that it was termed as "shuffling execs like cards in a deck"
* There were layoffs as well in Intel.
* Barrett wanted to change the culture of the company as well, taking help from outside consultants.
* Main aim was to move toward better customer relations rather than market leader.
* Strategically, he decided to invest in R&D into new production technologies to cut chip-making costs.
* Looking towards the future, Barrett thought that he would be able to increase sales and win over his competitors.
Environmental Pressures for Change
* Fashion
* Geopolitical
* Declining Markets
* Hypercompetition
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