Case Study: Chipping Away at Intel
Ivy Cuttino
Strayer University

Dr. Bobby Barrett
HRM 560- Managing Organizational Change
April 20, 2012

Intel was in the bad shape in the Barrett’s tenure and he had to implement changes to cope with internal and external pressures. The specific pressures that required Intel to change were Intel’s bad products with delays and shortages, overpricing, bugs in its system, shares going down, slowing global chip demand, slowing economy under impact of September 11, 2011 and its rivals becoming stronger. It was a really hard time for Intel and a big challenge for Barrett in order to remain the company’s reputation.
Discuss the different changes at Intel over the first 3 years of
CEO Barrett’s tenure.

When Barrett came in Intel three years ago, he took some bold moves. He expanded into the production of information and communication appliances as well as services related to the internet. He also reorganized internal system to avoid duplications and improve coordination within the organization. The example of duplication was that the network operations group and the communications unit sometimes were in competition with each other, selling similar products to the same customers and Barrett needed to reorganize them. Moreover, new business units were created to enable decentralization and delegation of decision making, which makes the company better coordinated and more nimble. Barrett also wanted to change the culture of the organization toward better customer relations and away from a perspective of being the only real competition in the marketplace.
Barrett sought to diversify Intel by expanding into arenas outside of chip manufacturing, expanding into Internet related services and into production of information and communication appliances. He poured money into new markets looking for ways to expand his brand, he also sought to make Intel more flexible and attempted to reorganize the company and avoid duplicated responsibilities. Unfortunately, many of his efforts were failing and Intel was in worse shape three years into his tenure than they were when he took over.
Identify three significant environmental pressures for change faced by Intel under
CEO Barrett’s leadership. (fashion, mandates, geopolitical, declining markets, hyper-competition and corporate reputation).
External pressures leading to the Intel’s change are Geopolitical, Declining markets and Hyper-competition. The September 11, 2011 affected every technology company and Intel’s shares going down sharply were the results of that catastrophe. The slowing economy together with this catastrophe gave bad impact on Intel’s business, urging them to change. Declining market in global sales of chips were expected by 34 percent fall and people seemed to be more interested in how fast their modem connection was than in the speed of their computer chip. The rapid pace of change in the technology industry also brought hyper- competitive pressures in Intel’s markets. They withdrew from the production of network servers when they had to compete with Cisco, a major client in the chip market. Intel was also faced with hyper competition as many of their rivals; particularly Advanced Micro Devices were producing a faster, cheaper and better quality chip. Intel’s reputation was also floundering due to product delays, recalls and shortages and worse of all, bugs in their software.
Identify three significant internal organizational pressure for change faced by Intel under CEO Barrett’s leadership. (growth, integration and collaboration, reestablishment of organizational identities, new broom, and power and political pressure). It would appear from this case study that Barrett was forced to deal with internal pressures of growth, re-establishment of organizational identity and integration and collaboration efforts. Barrett felt compelled to continuously re-shuffle the deck with this executives, which often resulted in confusion and executives in the wrong position, but Barrett felt it was a necessary step to streamline the company. While streamlining was important, Barrett also felt that he need to pour money and resources into tapping new markets necessary for Intel’s growth and survival as a company.
Evaluate CEO Barrett’s performance under these pressures and discuss what he may have done differently.

Although a lot of Barrett’ strategies were applied for three years in his tenure, most of his efforts were failing and Intel was in worse shape. His changes did not bring many improvements for Intel as he expected. Barrett made the changes at Intel due to the external pressures and reorganized internal forces to cope with these pressures. However, the internal pressures were the result of the changes made to address external concerns. What caused the failure of Barrett in changing Intel was that Intel did not have effective internal processes and systems to implement successful changes initiated by environmental pressures. Even though Barrett tried to reorganize to make the company better coordinated and more nimble, his moves received the concern about Intel future from shareholders and commentators as well as the opposition from the staff. As there was so much reorganization over three years, staff could not follow well. A typical example was that chip managers were now being put in charge of new markets and products about which they knew very little. It seemed that the Intel internal sources were not efficient enough to prepare for the changes as internal sources should have been the core competence of the company so that Intel could get success in changing to adapt to the changes of external pressures. That was the main reason why Intel’s changes did not bring efficiency as Barrett expected.
Intel’s change strategies were not successful as expected and Barrett could not retain Intel’ reputation in the global market. What Barrett lacked might be an overall solution which needs an outstanding analysis about the interaction between internal sources and external sources. From that analysis, he could highlight areas that required more attentions and focused on changes in those areas to cope with pressures.
Barrett will need to stay the course and lean on advisors and consultants to aid in his decision making. If he feels that Intel needs to diversify to stay profitable, then he’ll need to make commitments in his reorganizational efforts and investment strategies. Changing direction every few months will not yield the stable, cultural changes that he desires to make. His investments in research and new production efforts will be paramount to Intel’s success and he will need to position himself and his image as that of a strong, decisive leader.

References Akin, G., Dundord, R., & Palmer, I.( 2009). Managing Organizational Change: Multiple Perspectives Approach. New York, NY: McGraw-Hill Irwin Rough, G. (2011). Intel CEO Barrett. Retreived from http://www.intel.com/pressroom.