Strategy Implementation

Strategy Implementation

Introduction

Intel Corporation has become famous in business circles for its major strategic adjustment in the mid-1980's. The company abandoned its lucrative memory chip manufacturing business in the face of increased Japanese competition ? and focused on the sales of microprocessors for PCs. The company faced a similar strategic inflection point at the beginning of the 21st century ? caused by the threat of diminishing PC sales and increasing competition from its chief rival ? Advanced Micro Devices (AMD). Intel's initial attempts to diversify its portfolio from microprocessors to mitigate these effects largely failed. The company's executive management had to provide a solution to the problem of diversifying a company that had been built on the success of a core product technology. (Burgelman 2004)

Intel's diversification into communications

Strategic logic

The strategic logic of Intel's diversification into communications was two-fold. Firstly ? as a result of the company's disastrous diversification into services ? Intel came to realise that the company's distinctive capabilities lay in the area of silicon and architecture technologies. Intel's leadership thus sought a way to leverage these capabilities and at the same time take Intel away from its dependencies on desktop microprocessors. By focusing on becoming a leading communications building-block supplier ? Intel could still gain advantage from these competencies. (Burgelman 2004) Thus the company could gain competitive advantage by bringing to bear existing assets such as its massive manufacturing advantages and research and development arm and expertise in silicon technologies to create silicon chips and architectures for the communications industry on a chip level.

Strategic challenges

Intel's diversification will take it into new markets and thus expose it to new competitive pressures. Intel would be competing with massive established players such as Texas Instruments. The challenge would be for Intel to obtain leverage advantages with its existing assets to provide it with a competitive advantage in its new fields. (Burgelman 2004) Another competitive aspect is that Intel will have to be wary of alienating its existing customers by competing with them in its new markets. The company will thus need to carefully examine the players in each industry and understand its customers better than ever.

To accomplish this and optimize efficiencies ? Intel would need to overcome the challenge of strategic dissonance ? and obtain complex strategic integration of its communications initiatives with its silicon capabilities. Management would need to lead Intel's development and marketing efforts to encourage industry adoption of standardized architectures based on Intel's silicon products. This 'building-block' approach will allow Intel's manufacturing arm to be brought into full force ? and gain Intel the strategic advantage of maximum capacity utilization ? allowing the company to obtain maximum production efficiencies and capitalise on convergence. (Burgelman 2004)

Intel will need to overcome the strategic challenge posed by a completely different set of key success factors in the communications and wireless communications industries. Intel's past successes in the 'old' key success factors will exert strong pressure to prevent necessary changes and this barrier will need to be overcome. Success in the communications industry ...