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Intel
Intel Organization Analysis
Spencer Richards
12/8/2014
Bus. 496
University of La Verne

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For over 40 years Intel has been the dominant force in computer chip manufacturing.
They have constantly strived to improve their amazing products. The beginning of Intel is
extremely remarkable story. “Intel’s early history is legendary. The company was established in
1968 by Robert N. Noyce, cofounder of the integrated circuit, and Gordon E. Moore, a colleague
of Noyce’s from Fairchild Semiconductor, to make semiconductor memory more practical and
affordable. The pair quickly won the backing of venture capitalist Art Rock, who raised $2.5
million in less than two days. Because the name Moore Noyce was already trademarked by a
hotel chain, the two called their startup Intel, short for “integrated electronics.” (Santa Clara
Historical Association, 2008) “In late 1969, a Japanese calculator manufacturer, Busicom, asked
the new company to design 12 custom chips for one of its products. The innovative Intel team
came up with a groundbreaking solution: one chip that could do the work of 12.” (Santa Clara
Historical Association, 2008) The company went international in 1972 with its first
manufacturing facility in Penang, Malaysia. In 1975 Intel launched its first personal computer
the Altair 8800 for $439. In 1976 Intel launched the world’s first single board computer, the
ISBC 80/10. (Intel Corporation web site) In 1977 Intel developed the first single chip codec
which became the standard for the telecommunications industry. (Intel Corporation web site)
Intel is a company that strives for innovation. They have continually pushed the
capability and performance of processors, however there is room for improvement. Two
initiatives that would improve their market share are backwards compatibility and a better price
to performance ratio. In this paper, I will conduct a SWOT analysis, apply the 5 forces of

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microeconomics, conduct a Strategic Factor Analysis Summary (SFAS), and analyze business
level strategies for Intel. I will then evaluate their International and Corporate Level Strategies.
Finally in consideration of the above organizational analysis, I will recommend strategies that
would improve Intel’s market share and dominance in the industry.
There are 5 forces that shape industry competition. The first force that I will discuss is the
threat of new entries into the market. (Michael E. Porter 2008) Intel has a very unique position as
it is one of the only two CPU manufactures that are widely accepted in the market. There could
be a new entry to the market, but this would require an incredibly high capital threshold to even
compete in the CPU market for PC’s. The second force is the impact of rivalry among existing
competitors (Michael E. Porter 2008). The singular rival company of Intel is AMD. AMD has
focused its marketing strategy on price to performance ratio, where Intel focuses on performance
and price comes second. This strategy brings me to the third force which is bargaining power of
suppliers. The bargaining power of suppliers for Intel is minimal because there are few
competitor’s in the industry. When it comes to “bargaining power of buyers” (Michael E. Porter,
2008) Intel has leverage over buyers due to the perception of higher quality and performance as
opposed to AMD. Although both of these company’s satisfy the same purpose, making a
computer run, it’s the perceived differentiation that gives rise to demand for one vs. the other.
Price is a large factor when it comes to building an entry level computer and AMD is more
competitive in this market segment. In a strictly gaming scenario Intel is usually the better choice
where AMD is the more budget level or entry level system. “Generally speaking, AMD’s chips
are cheaper than their Intel counterparts. If your budget is tight, an AMD CPU is likely the best
way for you to go.” (Brad Bourque, 2014) The fifth factor is the risk of substitutes which is
minimal due to lack of industry support of applications that would support a completely different

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architecture, examples would include Sun Microsystems. The competitive forces are week at best
for Intel and should provide the opportunity for Intel to continue to have high profits and
dominance in the market. However the CPU industry is a rapidly changing technology based
market and a SWOT analysis should be conducted to identify potential threats to their market
position.
To get a good idea of how a company’s money should be spent it is often beneficial to
look at a SWOT analysis. I will begin with the external environment which consists of
Opportunities and Threats.
Opportunities
1) They are an always expanding market.
2) They could reduce their production cost if they went for forward and backward
integration with their CPU as of right now when a new generation releases there needs to
be a new motherboard as well that goes with it.
3) They can make partnerships with other brands to help move them forward
4) Focusing on customer more could also benefits them in the long run and help improve
brand loyalty.
Threats
1) AMD is Intel’s larges competitor and thusly a very big threat
2) Technology increases rapidly which cause a lot of waste
3) Customers could form different tastes and move away from Intel architecture especially
with a down economy causing a cheaper solution to become more appealing.

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5) It could also become too large of a company and external forces like government
regulations could be changed to hinder it.
SFAS Intel How important
0-1
How well does the
company handle
1-5
Weighted Score
Strengths
Strong market share
85% of the market
Large amount of
factory’s
.1
.2
5
5
.5
1
Weaknesses
Lack of backwards
compatibility
No strong budget
friendly CPU
.2
.2
2
3
.4
.6
Opportunities
Expanding markets .1 4 .4
Threats
AMD
Emerging CPU
company’s
.1
.1
5
3
.5
.3
= 3.7

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Intel is a company with many lofty goals there newest is a decade long endeavor “This
decade we will create and extend computing technology to connect and enrich the life of every
person on earth.” (Intel Corporation website) This is a global goal to achieve and one that is
attainable for the corporate giant Intel. To reach all around the world the company must first be
able to provide a product that can be within reach of their consumers. In the processor market
Intel has never been known for a budget CPU. They have always been the better of the two
choices but never the budget choice. To be able to meet that market niche within a particular
country they need to find a way to best market their products to that consumer base without
instilling doubt about cost to potential customers.
This is by far one of the largest short comings that Intel has or one of its major
weaknesses is the price of its product. AMD is the usual go to when cost is a major factor
because not only can you buy a capable CPU for the cost, but also the motherboards are
backwards compatible to an extent. Whereas Intel every generation of CPU you would also need
to change out the motherboard as well. This can be a major issue for many consumers that don’t
have a large amount of cash to work with; and this is the main reason that they would go with
AMD.
As for Intel’s strengths, the largest one they have going for them is no new entries;
making a CPU is an extremely in depth process, but even if you make a CPU, there is still the
matter of making the motherboard for that CPU. Both of these make Intel a company that’s very
close to a monopoly in terms of the market. This allows the company unparalleled market
position.

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One of the major threats that Intel will face if their goal remains the same on trying to
connect everyone, is the changes in currency from one country to another, or currency
fluctuation, “Currency fluctuations are a natural outcome of the floating exchange rate system
that is the norm for most major economies. The exchange rate of one currency versus the other is
influenced by numerous fundamental and technical factors. These include relative supply and
demand of the two currencies, economic performance, outlook for inflation, interest rate
differentials, capital flows, technical support and resistance levels, and so on.” (Investopedia
Staff, 2014) No country has the same financial strength compared to the U.S. in terms of
currency stability. If Intel were to start accepting online payment for a product, prices could
fluctuate greatly depending on the country, in particular countries with weak economies. They
would also have to deal with political issues from one country to another and keep their
technology very secure. Other large company’s like Apple and Microsoft have been sued in the
past due to the fact that they would not give the source code of their software to other countries
like China.
There strongest opportunity to grow global would be their Atom processor because it’s
inexpensive and can work in many different size and form factors. “For well over a year now, the
company has been intensifying its efforts in the mobile space, first with Android phones and later
with both Windows and Android tablets. The chips the company has been using to make these
strides into mobile have all used the Atom branding, which has come a long way since its
inclusion in the low-rent netbooks of years past.” (Andrew Cunningham, Sept. 14 2013) They
can use this in cell phones to netbooks to full computers or even servers. It gives them a very
dynamic form of production and can open up a lot of doors with many countries that their
product would be unreachable otherwise.

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Rating these in terms of importance for this company (on a scale of 1-4 with 4 being the
weakest) would go as follows: Threat of new entries would be the weakest (4), price (2),
opportunities (3), and global currency and issues would be a (1). When it comes to how well they
deal with these issues (on a scale from 1-4), threat of new entries would be a (4), their prices
would be (3), globalization issues would be (2), and opportunity would be (1).
Intel doesn’t have to worry about new entrants into the CPU market. New entrants is
extremely low because if a new company were to come into the market at the level that the two
main CPU manufacturers are at now, Intel and AMD, they would not only have to make a new
CPU but also new motherboards and possibly new brackets for CPU coolers. The other issue
with trying to enter the CPU market would be the rapidly improving market. Intel is constantly in
product development “creation of new or improved products to replace existing ones.” (Charles
W. L. Hill, Gareth R. Jones, Melissa A. Schilling 11th edition). The company releases a new CPU
into the market almost every quarter. Intel was also the original creator of the x86 platform. “For
all my 30+ years covering PCs, Intel’s x86 processors have been the heart of almost all PCs
made.” (Tim Bajarin July 16, 2012) “Having Intel x86 processors in all Windows computers
allowed for standardization across the industry.”( Tim Bajarin July 16, 2012) This allowed for
major improvement with OS and a reliable platform for many electronics today.
Intel’s main competition is AMD and this is where they need to focus if they want to gain
a larger market share. “Intel clearly has market dominance with 83% of the market. Yet AMD
with its mere 15% market share continues to compete with them successfully.” (Brad Bourque
April 5, 2014) Now both of these companies have made a product that can potentially do the
same thing. Where it differs is the performances that you get and the price that you pay. The
value is where AMD is strong as they have created a CPU that can work on many older

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motherboards. Instead of upgrading the CPU and motherboard when a new generation of CPU
comes out like Intel does, you can get the new CPU and put it in the existing motherboard that
you have. This is one of AMD’s largest selling points and where it has created a very strong
following.
If Intel were to create a strategy focused on beating out AMD, then this is where they
should start. Intel already has a value line of CPUs coming from the Pentiums line and their i3,
but when they have a new generation of CPU launching out onto the market they need a new
motherboard because the amount of pins on the CPU changes. They went from 1155 pins with
their Ivy bridge line to 1150 pins on their Haswell line. If Intel could find a way to gain
performance with the same pin number so they wouldn’t change out there motherboard, this
would give them a significant advantage over AMD. AMD has always been considered the value
CPU due largely to the fact that you don’t need a new motherboard every time you want a new
CPU. I am not saying that the costs of the CPU’s and the motherboards need to change. The
prices could potentially stay the same. What needs to change is the backwards compatibility with
the motherboards. If Intel can create newer generation CPU’s that work on older generation
motherboards, then Intel would have successfully taken away one of AMD’s largest advantages.
The second area that would need to be changed in their value line of CPU’S (the Celerons
and Pentiums) is the number of cores and performance. Both of these are good CPU’S but they
all seem to be duel cores and for a large niche of DIY builders which are gamers. A duel core is
too weak of a processor to play games, especially when AMD has a quad core for the same price.
The other issue is Intel’s 8 cores CPU. AMD prices start at around $169 for their 8 core, but an
Intel 8 core is closer to the $350 which makes an Intel system more geared to the enthusiast
market not the low entry market. There is nothing wrong with being geared towards an

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enthusiast market because there is a niche for this market, but due to the fact that their largest
competitor is geared completely to the budget market it makes having a better value line of CPUs
almost a necessity.
If Intel had backwards compatibility with the motherboard, this would help cut the cost to
the consumer and draw in more customers from the AMD market due to a better price to
performance ratio. Though the CPU price hasn’t changed, the upgrade cost would have
dramatically shifted because there would no longer be a need to buy a new motherboard with the
CPU. This would also help greatly in international emerging markets due to the fact that their
costs would be more competitive.
We are in a time where international expansion has become the norm rather than a
luxury. It’s become another way of doing business whether it’s to help cut cost or expand the
market, the international market has become an invaluable resource for many businesses. With
expansion into a foreign area there are some things to keep in mind even with a company as large
as Intel. The first thing that would need to be done is a background check with any international
business partner. Even local business partners a background check is a solid way to understand
there business practices and to protect a company. (Smith Brandon 2003) The second thing to do
when going to a foreign country is, “Do engage a reputable local law firm that knows local laws
but is also able to understand your American business and legal requirements. The laws of the
host country - especially in very distinct cultures, such as China - might be fundamentally
different.”(Smith Brandon 2003) These are the steps that any company should take when looking
at international expansion to help better protect themselves from being taken advantage of.

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When focusing on Intel in the international market, one of the ideas that I came up with is
to partner with companies that have a focus on heavily processor intensive applications. These
applications include video editing and 3D design where Intel’s cores can be used to their fullest.
For example, video editing is a processor intensive task that in some cases the processor needs to
render terabits of data. This can be a time consuming process and due to Intel’s higher end CPU
that have up to 12 cores or even 16 cores, rendering time can be cut down significantly which in
the end will save on cost. In the international market, many foreign films could take great benefit
from Intel CPU when it comes to editing their movies and rendering the final product that would
compete in the U.S. dominated media. In the 3D design field many emerging countries like
China are heavily focused on construction and architecture firms need to develop detailed 3D
models to minimize costs and improve quality.
Another strategy that would be important is Intel’s mobile. When coming to a new
market, introducing something that can be easily accessible by a large group is important like
cell phones, tablets, and laptops. This focus also benefits Intel through their strengths on power
efficiency. Markets that could take advantage of this would be locations that still don’t have a
full set of infrastructure like internet and telephone. Satellite and hot spot connections can be
extremely beneficial. When distributing to the masses, coming up with a good price point is
extremely important. This would allow Intel to work on one of their weaknesses which is high
cost by using mass production and finding ways to implement backwards compatibility.
Again, backwards compatibility is one of AMD’s biggest selling points. When
expanding into international markets in emerging 3rd world countries where price is a very large
factor, having the ability to reuse parts can be a strong advantage for many sellers. If Intel

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focused on backwards compatibility with their CPUs, it would give them a very large edge over
their competitors and help to minimize costs benefitting the consumer greatly.
Tows Strategy External Opportunities (O)
 Emerging markets
 Partnerships with other
company’s
External Threats (T)
 AMD
 Rapidly changing
market
Internal Strengths (S)
 Well Known
 Market with high
entrants
 Many Business
partners
 Partnerships with
emerging business
partners
 Acquire new
technology from
emerging markets
Internal Weaknesses (W)
 Price to Performance is
high
(Mind Tools Tows)
 Intel could help lower
their cost by going with
cheaper labor in
emerging markets.
 Intel could help lower
their cost by going with
cheaper labor in
emerging markets.
Corporate- level strategy in its simplest form is how to best use a company’s assets.
“Corporate-Level strategy is concerned primarily with answering the question of what set of
businesses should we be in. Consequently, scope and resource deployments among businesses
are the primary components of corporate strategy.” (Donald W. Beard and Gregory G. Dess,
1981) One of the main issues that a manufacture like Intel faces is a rapidly changing market
and high labor cost, so a focus on moving company assets to help meet these objectives would be
beneficial. This market demands rapidly changing ideas and new technology to be able to keep
up. This is where partnerships with business partners in emerging markets can be very beneficial.
Intel has already done this with one country in particular with great success. Intel opened a

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factory in Vietnam in Ho Chi Minh City in October 2010. (Dan Nystedt Oct 29, 2010) Within 4
years the factory in Vietnam will have a total of 80% on Intel’s CPU production. It took Intel’s
factory in China 15 years to get to a similar point. (TUOI TRE NEWS July 30, 2014) The main
benefit for Vietnam is the increase in jobs, “Intel Products Vietnam has more than 1,000 local
employees.” (TUOI TRE NEWS July 30, 2014) Where the main benefit for Intel is the low cost
of overhead compared to the US due to the fact that Vietnam has a minimum wage of $1 per
hour. (Wage Rates 2014) Their high performance levels give Intel a large amount of CPUs that
can saturate the market in a very short period of time. This is a very beneficial to Intel due to
their rapidly changing technology having their product everywhere quickly gives them enough
time to sell that product before the newer technology arrives.
Intel’s CPU architecture has changed dramatically over the years. Intel started with a
processor in 1971 with a core clock of 108KHz, “1971 Intel 4004 processor Initial clock speed:
108KHz.” (Intel Corporation web site) Then in just a little over a decade Intel came out with a
CPU clocked at 6MHz, “1982 Intel 286 processor initial clock speed: 6MHz.” (Intel Corporation
web site) At the time this was a significant improvement in performance and Intel’s architecture
has consistently improved to the point that consumers can now get CPUs that have speeds up to
5GHz. The reason for these constant improvements is due to the fact that consumers want more
and more out of their computers. This is why rapidly changing technology needs a large infusion
of ideas. The consumer demands it and without this infusion the technology would not improve
fast enough.
Intel already holds an 83% share on the CPU market, so in many cases AMD is not a
very large threat to Intel. If Intel wanted to gain more of a market share however the best place to
start is in the backwards compatibility issue. This would allow Intel greater leverage over AMD

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and possibly open more markets in developing countries where cost is a very big deciding factor.
They would need to work on the number of pins in a CPU to allow them to be backwards
compatible and that is where they should start. The second area that would need to be improved
would be the budget level CPU where the core count would need to be increased. Increasing
these to a quad core at least would allow them to remain competitive with AMD lower end CPU
at a significant performance increase. Resolving these two issues would increase Intel’s market
share and further industry dominance.

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