Chipping Away at Intel Case Study
In today’s economy, corporations are consistently experiencing pressures to change. With pressures both internally and externally, leaders must constantly reassess who, what, when, where, why and how they do business. In light of these obstacles, they strive for the highest possibility of success by taking risks and pushing limits that others may question as extreme. We are going to review the “Chipping Away at Intel Case Study” to examine the different changes CEO, Craig R. Barret implemented, which pressures Intel experienced and how he responded to these pressures.
Initial Changes
In Barret’s first three years as CEO of Intel, there were multiple changes he decided to execute regardless of the fact that Intel was a leading global technology company. He had pushed the company into new markets and went from making microchips to creating information and communication appliances and internet services. Intel’s extensions into so many markets caused them to withdraw from a number of them. Mahajan, Sharma and Buzzell (1993) stated that it is important for the individuals creating the competitive strategy to assess the competitive entry into the market. Barret’s changes did not stop here.
During his first three years as CEO, Barret also reorganized many different units within Intel. He noticed products from different units within the organization were competing with one another. This led him to organize these units into working together and also organize other units into one. These types of changes can lead to a state of anxiety for employees. So, his next step would be to change Intel’s culture. According to Mallak (2001), “A long-term study found that organizations with strong cultures outperformed their peers two-to-one on several primary
CHIPPING AWAY AT INTEL CASE STUDY 3 measures of financial performance” (p. 18). He wanted Intel to move the focus on improving relationships with the customers so he started investing in research and development to reduce costs of chip making.
Current Pressures
Intel experienced numerous environmental pressures which lead them to implement a variety of changes. One example of an environmental pressure they encountered was market decline. As a result of a plunge in the economy, Intel experienced a drop in their shares. They saw a second drop in shares due to a geopolitical pressure, September 11, 2001. On top of these, was the hypercompetition pressure of staying on top of the aggressive, involving technology being released by their competitors. As Schein (1985) noted, “There are continuous strains on most of the organization's culture, policies, and people because of new technology, new products, and changing public tastes and values” (as cited in Agrawal & Haleem, 2005). Some corporations delay these changes, do not change at all or even deny looking at the pressures as valid threats. If not handled properly, any one of these pressures can lead to death of an organization.
Internal organization pressures also had a profound effect on the changes that greeted Intel. They responded to growth pressures by entering into new markets, and integration and collaboration pressures by reorganizing units, which eliminated internal competition and assisted in units working together. Wilkinson, Hill and Gollan (2001) expressed that leaders must balance the interests and needs of the business with employees, who are their most valuable resource, to be productive and competitive. Barret was smart to work towards changing the culture of Intel. If not changed, these internal pressures could have continued to cause disruption in their success.
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Additional Pressures
In the last half of Barret’s tenure as CEO, Intel faced reputation and credibility pressures. Trying to stay as the leading chip maker, Intel’s vision was that their Itanium processer would be the future. However, the market was smaller than expected. They also had some success with their Centrino mobile technology and flash memory business but their Manitoba processor was yet to be used. “Maintaining and enhancing corporate reputation is therefore an important part of managing firm survival…” (Palmer, Dunford, & Akin, 2009, p. 59). They needed to enhance their strategy in order to continue to stay as a leading innovator.
Barret responded to these pressures by introducing more reorganization of the company and also a change in strategy by cancelling the 4-GHz Pentium 4. This restructure of business units would ensure that work was systematized throughout the organization. Huang, Chen and Han (2011) suggest that even a reorganization based on top of the line principles will not be successful if it is not directed by a strong, perfectly timed business idea. Intel’s new CEO to take control after Barret was Paul Otellini, and he was in for a big challenge to keep these changes moving in a positive direction.
If I was Paul Otellini, I would definitely step back, review all the changes and strategies which were put in place and assess which worked and which did not. Also, communicate internally with management and the employees to hear their concerns, ideas and thoughts. After reassessing everything, I would then decide what, if more, changes are needed, both large and small.
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Conclusion
In conclusion, the pressures Intel faced during Barret’s tenure caused a significant amount of turmoil which resulted in a substantial amount of change. He was able to keep them on top in their market regardless of these threats. Having a solid strategy and strong plan is essential for success in the wake of internal and external pressures. There will always be the threat of pressures and how a corporation confronts them will set its path for the future.
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References
Mahajan, V., Sharma, S., & Buzzell, R. D. (1993). Assessing the impact of competitive entry on market and incumbent sales. Journal of Marketing, 57(3), 39-52.
Mallak, L. (2001). Understanding and changing your organization’s culture. Industrial Management, 43(2), 18-24.
Agrawal, V. K., & Haleem, A. (2005). Environmental pressures, culture and factors contributing in the usage of various categories of application software. Global Journal of Flexible Systems Management, 6(2), 31-46. Wilkinson, A., Hill, M., & Gollan, P. (2001). The sustainability debate. International Journal of Operations & Production Management, 21(12), 1492-1502.
Palmer, I., Dunford R., & Akin, G. (2009). Managing organizational change: a multiple perspectives approach. New York, NY: McGraw-Hill Irwin.
Huang, L., Chen, S. K., Han, S. B. (2011). The effect of business reorganization and technical innovation on firm performance. Journal of Business & Economic Studies, 17(1), 29-36.