Intel Corporation Essay - 1,740 words

Intel Corporation Intel was founded in 1968; it develops technology to enable the computer and Internet revolution to change the world. The worlds first microprocessor was introduced in 1971. Nowadays, Intel manufactures chips, boards, systems, software building blocks, servers, and networking and communications products. Industry professionals use Intels products to create innovative computing and communications systems. Intel values its customers, and makes excellent customer service, employee and shareholders relationships its mission by being the primary hardware and software supplier in todays digital economy. Intel currently employs 85,000 employees, and its revenues for 2004 reached $34.2 billion. There are currently 294 Intels offices and facilities around the world, making the company 53rd in ranking on the New York stock exchange. The purpose of this essay is to provide a strategic analysis of the adoption of courses of action to carry out long-term goals and objectives of the company. Michael Porters five forces of industry attractiveness will be used to benchmark Intels performance and competitive stand in todays technology market.


Michael Porters 5 Forces of Industry Attractiveness Each companys positioning perspective is based on a 3-4-5 framework. This framework includes the following: three generic strategies, four contexts, and five forces of industry attractiveness. Michael Porter has identified five forces that determine industry attractiveness. Both buyer and supplier power make an industry less attractive from the perspective of the company, because it means the company itself has less power in comparison with its external contacts. Industry competitors determine how much competition the company has to deal with, and the threat of new entrants determine how easy it is for new competitors to emerge. It is also important to keep track of not only competition within the industry in which the company operates, but also other products that may impose a threat of substitution.


This implies that all other products that may satisfy the consumer need should be targeted as potential competition. Bargaining Power of Suppliers Intel believes that by conducting e-business it will not only maximize the companys profitability, responsiveness and innovation, but also improve supply chain management and possible acquire new partnerships. Intel builds its internal infrastructure around its products and technologies by handling numerous transactions online, from processing orders, to managing materials, to computing accounts payable. In fact, more than 60% of Intels transactions and 85% of customer orders are processed electronically. According to David J. Kuck, the author of Platform 2015 Software: Enabling Innovation in Parallelism for the Next Decade, Intels desire to research and invent is driven by an incentive to take over suppliers by winning their loyalty, and in the future, cut supplier intermediaries completely by selling directly to the consumer. Intel also realizes that electronic devices are becoming more advanced and proactive, generating more reasons for new entrants to enter a competitive industry of computing. According to www.supplier.intel.com, INTEL HONORS 17 COMPANIES WITH ITS SUPPLIER CONTINUOUS QUALITY IMPROVEMENT AWARD, Intel has announced 17 winners of the companys most prestigious suppliers on March 15, 2005 in Santa Clara, California.


The Supplier Continuous Quality Improvement (SCQI) award is awarded to suppliers for exceptional assurance of quality and excellence in performance. Some of the 2004 SCQI winners include Dainippon Screen Manufacturing Co., Delta Design, Disco Corporation, and Hitachi Kokusai Electric Inc. Bob Baker, senior vice president and general manager of Intel's Technology and Manufacturing Group, confirms that Intel awards supplier companies for reducing input costs, constantly improving technology, and providing exceptional customer service. Mr. Baker emphasizes that SCQI awards encourage suppliers to build knowledge of supply costs and methods. In order to qualify for an annual award, suppliers must score at least 95% in performance, ability to meet cost, quality, delivery, technology, availability, and goals. [http://supplier.intel.com/quality/.] Such approach to supplier relationships portrays Intels understanding of Michael Porters five forces of industry attractiveness.


Porter suggests keeping supplier power to the minimum in order to ensure the lowest input costs, highest quality of production, and dedication to the company on the suppliers part. Prof. Gary Hamilton of the University of Washington suggests, Moving jobs from the U.S. to Europe and Asia generates massive restructuring of production worldwide. Only lowest cost labour can meet set price points and mandatory targets, meaning that producing in Asia becomes more and more profitable for American companies [http://www.pbs.org/wgbh/pages/frontline/shows/wal mart/secrets/shots.html] Intels establishment of more supplier relations with Asian companies helps the company generate profit margins six times higher than American-made goods do. Economists suggest that such approach lowers the U.S.


rate of inflation by lowering costs and increasing productivity, while increasing bottom-line profits for the company. Intel decreases supplier power by giving the Asian manufacturers specifications for the American market, thereby building supplier dependence; in return, Asian suppliers learn how to export to the U.S. market through large companies like Intel. Such alliances allow Intel to establish supplier loyalty and move suppliers decisions away from price. Bargaining Power of Buyers Since fabricating costs were reduced by 30%, input costs were reduced as well, which allowed Intel to achieve economies of scale. As defined by World Bank, economies of scale is the effect on unit cost of producing large quantities. In distance education, for example, the larger the number of users of a course or the larger the number of users of the system, the lower the cost ...................................................................................................................................................................................................................................................................................................................................................................

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Essay Tags: intel, michael porter, intel corporation, supplier, supplier power

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