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Abstract The paper argues that the transformation of start-ups into leaders or trend enablers in the high technology sector can be best accomplished by the combination of strategy, innovation with vision and leadership. In this paper we review the position of Intel corporation which transformed itself twice. In addition to this Intel seemed a particularly interesting research site because it is one of the most important firms of the digital age and its evolution highlights the fundamental technological and economic forces that characterize digital industries. The study has been divided in two periods, i.e., producer of memory/DRAM under Moore & Noyce and producer of microproccesor under Grove, due to its appropriatness within the context of the problem. It has been analyzed by using the induced and autonomous strategy along with the theory of competitive strategic position. The paper concludes that while internal ecology model is more suitable in unexploited industries to exploit unknown oppurtunities of new ICV's, there needs to be a structural context to avoid failures. Keywords Intel Corporation, Microprocessors, DRAM, Induced, Autonomous, Rational Actor Model, Internal Ecology
Table of Contents
Abstract Keywords 1 1 2
SECTION 1 – Introduction SECTION 2 - Theoretical Framework
2.1 Rational Actor Model. 2.2 Internal Ecology Model 2.3 Induced Process Strategy. 2.4 Autonomous Process Strategy
3 3 3 3 6 7 7 7 8 9 9 9 10 10 11 12 12 13 13 13 14 14 14 15 15 16 16 16 17 17 18 18 21
SECTION 3 - Intel Corporation
3.1 Epoch II: DRAM Business Genesis Rise of DRAM and Ancillary with Distinctive Competencies. Transmormation Market and Product Strategy Organization Structure Context/Strategy Actions Corporate Strategy and Leadership/Strategy Structural Context Autonomous Variation Strategic Context/Selection Strategy Reorientation/Retention Analysis: Internal Ecology Model a Strategic Inertia b Strategic Re - orientation. c Strategic Renewal 3.2 Epoch II: Intel Microprocessor Led PC Revolution Technical Competencies/Barriers. Supplier Side Benefit.
Buyer's Side Advantages
Reduced Substitutability Vectorized Induced Process Strategy Corporate Strategy Structural Context Induced Action External Environment Intel Capital and Autonomous Strategy Process.
SECTION 4: Final Word SECTION 5: Bibliography
This paper is a critical study of two periods1: a) Epoch 1 . In this paper. A.Section 1 . followed by outlining the two eras in accordance to Intel Corporation. Intel has weathered major changes in the semiconductor and computer markets.. (1971-1985) b) Epoch 2 .defined by Intel as a memory/DRAM producer under the leadership of MooreNoyce. 1 Burgelman R. Main literature has focused on the work of Prof.defined by Intel’s transformation into microprocessor monolith under Andy Grove post DRAM exit (1985-1998) These were analyzed using the framework of induced or “top-down” and autonomous or “bottom up” strategy making along with theory of competitive strategy.Introduction I argue that “whether transformation of start-ups/organizations into leaders or trend enablers in the high technology sector can be best accomplished by the strategy from “bottom up” or “top down” hierachy or a combination of adaptive strategy – making and innovation over a period of time altering with the level of success of the organization”. Robert Burgelman whose research has focused on the role of strategy in firm evolution. transforming itself twice.up to the leader of PC revolution. with emphasis on Intel Corporation. (2002) “Strategy is destiny”. 3 . we start by building the theoretical framework of strategy making. New York: The Free Press. The company's CEOs have chosen very different methods of formulating and implementing business strategy in the company. when Robert Noyce and Gordon Moore left Fairchild Semiconductors to design and manufacture integrated circuits (IC). which transformed itself from a memory start . Since it's start in 1968. A clear insight in this long standing dilemma of organizational and strategic management researchers has been attempted by investigating Intel Corporation. Intel’s two periods are considered for analysis because of their appropriateness within the context of the problem.
This is a highly dynamic model in which coherence depends on the characteristics of the internal selection processes operating on the strategic initiatives. management science. This broad classification gives rise to four broad strategy making processes. all the units of an organization can act simultaneously or in the other extreme act sequentially. This process can be further divided into two dimensions2: a) Degree of concentration of strategic decision making with specific groups. “patterns in strategy making”. and b) Degree of coherence between conceptualization and implementation. 2. 2. This would suggest it to be ideal for an evolving sector with huge opportunities and uncertainties.. Organizational Science. and Philip Z.(1999) “Essence of Decision”.. 239-62 4 . New York: Longman 3 4 Burgelman R. (1978). “Intraorganizational Ecology of Strategy making and organizational adaptation: Theory and field research” . 24. suggesting a strong coherence between strategy and action. G. 2 Mintzberg H.1 Rational actor model3: This represents the most idealistic where a rational leader is responsible for strategic decision making and organizing all units to simultaneously implement his decision. (1991).2 Internal ecology model4: This model is defined by a distributed strategy making at organization/middle manager level combined with simultaneous actions from all units .Section 2 . In the case of latter. A. Such an idealistic model is expected to succeed only in a market that can be reasonably anticipated.Theoretical framework Strategy making in a firm is a complex process involving conceptualizing and implementation of key actors throughout the firm. Allison. of which the two key models based on concentration of decision making role are: 2. 934-48. The two extremes of former could be complete concentration with top management or wide distribution within an organization.
and the concept of strategy”. “A model of strategic behavior. 2. these two process models provide basis for conceptually understand the emergence of firms using evolutionary organization theory7.L. (1983). As a result. Volume 13. A critical step in their sustainability is to come up with strategic context of these initiatives for evaluating and linking them to corporate strategy. induced strategic process is directed towards gaining and maintaining leadership of a firm in a core business and a familiar external environment. based on four generalized processes: variation.M. 8. 75-76(2) 7 Burgelman R. (1996) "Disruptive Technologies: Catching the Wave". The so called disruptive technologies6 often spring up as autonomous initiatives of established companies in unfamiliar emerging environments. 2. The Journal of Product Innovation Management.4 Autonomous process strategy: Consists of entrepreneurial spirited initiatives from individuals outside the scope of corporate strategy. and Christensen.. retention and competition. A. which may become important later. These initiatives typically involve new combinations of competencies which are not recognized centrally important by the firm. C. Variation result’s from desires of distinct groups to 5 Burgelman R. Internal selection in a firm is managed to obtain coherence between strategic actions and intent by putting in place a structural context. A. comprised of administrative and cultural mechanism like resource allocations. a firm’s strategy is indeterminate regarding these initiatives. pp. This provides the framework to align the varied initiative of operational and middle level managers towards a common goal. J. Together. Number 1. as defined by induced and autonomous process strategy5.3 Induced process strategy: Resembles the traditional “top down” approach. selection. As a result. 5 . wherein the top management formulates their strategic intent based on organizational learning of a firm's distinctive competencies and productmarket domain. corportae context.(2003)” Strategy Making and Evolutionary Organization Theory: Insights from Longitudinal Process Research”. 65 6 Bower. Academy of management review..The differentiation among these process models is caused by the shift in the relative balance of “strategic intent” formation methodology and resource allocation in a firm.
structural and strategic context corresponding to internal selection process. and corporate strategy corresponding to internal retention respectively. There are four common situations that can result from that interplay as depicted in the figure below Figure 1: Prospects of the Mainstream Business 8 Burgelman R..demonstrate their specialized skills and initiatives. (2005 summer). the focus would always be on company spending. Retention concerns the initiatives which survive and grow. 26-34 6 . Induced and autonomous strategic actions correspond to variational. Selection works through administrative mechanisms controlling the resources allocation. Early research efforts suggested that the interplay between the prospects of a company’s mainstream businesses and the availability of uncommitted financial resources create a strong force which drive the Internal Corporate Venturing (ICV) cycle8. A. “Managing Internal Corporate venturing Cycles”. where innovation is key to growth. Internal competition arises from different strategic initiatives struggling for limited resources. and Valikangas L. MIT sloan management review. Innovation cycles and approaches are intricately linked to corporate strategy. In hightech sector.
Intel transformed its corporate strategy and innovative cycle to encash the opportunities. resourced R&D.org/wiki/Intel> Date excessed: 28/02/2007 7 . is the largest semiconductor manufacturer in the world. quickly adapting to the market. Intel's microprocessors were found in more than 80% of PCs and appliances worldwide. d) Desperately seeking ICV: This is mostly the failure prone area.9 billion in 1987. Intel has survived by continuing innovating products. Intel remained aggressive through a blend of intelligent marketing. Intel's today can boast of its revenues which are $35. Nearly rising from phoenix. 9 Wikipedia <http://en.a) ICV orphans: Initiatives arising from committing excess financial resources by a firm. The above defined theoretical frame work and associated concepts will now be used to analyze the Intel Corporation in its two time periods. legal. b) All out ICV drive: Top management is an ICV drive due to urgency arising from lack of growth potential in core and large excess of financial resources.wikipedia. Autonomous initiatives like microprocessors(CPU) started to take center stage. They have used several strategies to increase the market share and claim a larger share of it.9 Intel started off as leaders in both innovation and market share for memory chips but steadily declined to be an insignificant player in the DRAM business. by end of 1985 Intel decided to transform itself into a CPU company while completely exiting from DRAM. a vital corporate culture. based on revenues. advanced manufacturing expertise. wherein a firm is short of financial resources as well as growth prospects in an incumbent sector.3 billion as compared to $1. Section 3 .Intel Corporation “Integrated electronics” or Intel. By 2000. c) ICV irrelevance: It arises where there is paucity of funds and huge growth opportunity in the core like start-ups. and 'WIntel' the alliance with software giant Microsoft Corporation. but lack of corporate motivation to support them actively due to large opportunities in the core sector. After years of losing shares in DRAM.
A. The exit from DRAM was governed by events imitating a slow ecological process. Competencies in the field of MOS 10 Burgelman R. This was accompanied with development of unplanned products from autonomous initiatives. it was a leader with market share of 84%. dominating the memory devices. 193-214. The rise and fall of DRAM can be viewed under the competitive and resource based strategic theory of firm (CBT and RBT).(1996 summer). It's business grew during the 1970s. Intel was the first to enter the 1K memory market. originating from combination of strategic alteration and organizational structure.In this paper. By 1984.Epoch 1: DRAM business Genesis: In early days. 17. role of leadership and altered innovation in both its product and its ancillaries in the two era’s. “A process Model of strategic Buisness exit: Implications for an Evolutionary Perspective on Strategy”. we shall study the strategic transformation.1 . Intel’s top management decided to exit the DRAM in 1984. as it expanded and improved its manufacturing processes and produced a wider range of products. 8 . Intel and others were not focused on getting patents or achieving "inventions" so much. market segment share had fallen to less then 3% and the revenue contribution to Intel had fallen less then 5%. Section 3. But Intel could not sustain the competitive advantage over long time. due to changes in external environment and cumulative setback in internal selection environment. as they were desperate to get new products to market and begin reaping profits.. By 1974. which started to take prominences within Intel for resource allocations.10 Rise of DRAM with Distinctive Competencies: Semiconductor memories required three technical competencies: a) Design b) Process technology c) Large scale precision manufacturing Process technology was viewed by Intel’s management as the firms ‘distinctive competence’ on which it differentiated its product and got a premium price. As a result of these.
wherein they were the first to make the process with yields higher than required for viability. Design advantages were reduced by the standard customer procedure in semiconductors necessitating a second source. This resulted in increase of process technology's importance in being a differentiating tool. When the external environment changed the basis of the DRAM sector from process technology to large scale precision manufacturing.licenses from existing competitor companies (c) It had to learn quickly to increase product performance while lowering producing costs Transformation: Intel soon lost these competitive advantages in R&D to rising competitions in US and Japan. On the external front. 9 . to obtain sustained supply. this competitive advantage was narrowed further. in the external environment. with rising costs and movement of skilled labourers. Also. The distinctive competencies were fast diminishing. the competitive advantage was nearly negated in line with the competitive strategy. Intel's early strategy was to deliver products based on the next generation process technology before competitors. Intel continued to rely on process technology. the competitors were initially barred from these markets as: (a) A new entrant required large investements on factories with small shell life of 3 years (b) It had to get some patents in order to get cross.technology. the Japanese competitors rose up quickly with strong competitive advantages as they: (a) Were supported from conglomerate banks (b) Used scientific methods to lower costs and increase yield (Over 20% more yield than US companies in 1980s) (c) Had a domestic supply chain to provide better production tools (d) Had a huge local product demand (e) Acquired strong research ability which lead the industry in 1980s. Finally with the shift of role process innovation to equipment suppliers from manufacturers. it hadn't yet entered commodization which required mass manufacturing. Further. Being a niche product.
In 1979. Market and Product strategy: In initial years.istheory.In the mean time.. customer valuation of innovation reduced in terms of substitutability.htm> Date Accessed: 04/03/2007 12 Purohit D. Intel enjoyed patents. Niche product demand failed to cover the lost business in the old product market. Due to this competition. Marketing Science. This is well reflected in the 16K DRAM market. This resulted from unlinked product offering with the mainstream DRAM customers. wherein Intel's new product approach mirrored product replacement strategy to maximize the product in a near monopolistic market. (1994). Intel's old strategy of product replacement with supplier of niche products left a vacuum in the standard market for low cost competitors to grab.ca/rbv. worldwide shipments of three-pin chips was 70 million units as compared to 150K for single pin chip offered at Intel.12 With the market trend moving towards commodization. But in transition to that. Intel had difficulty in sustaining its position. leading to a drastic fall in Intel's share. corporate strategy was significantly influenced by the organizational structure and core values set by the founders. US competitors such as Texas Instruments and Mostek also had strong R&D which aimed to produce better and bigger DRAM's with lower costs. “What Should You Do When Your Competitors Send in the Clones”. it lost the share in the mainstream market for three-pin 16K DRAM. Intel was the sole supplier of the single pin 16K DRAM and also managed to charge a premium. leading to short term competitive advantage in terms of rare and valuable resources ( RBT ). Corporate strategy and leadership/strategy: In the initial years. Organization structure context/strategy actions: Intel created an induced strategy process to pursue the opportunities in the semiconductor memory markets. As headed by two researchers in the field of design and 11 IS Theories <http://www.11 This was also reflected in the product introduction and pricing policy. These were achieved through a combination of formation of strategy and installation of a structural context. 392-411 10 .yorku. 13(4). money and technology advantages.
11 . A key structural rule regarding the manufacturing resource allocation within various groups was to be decided by maximum margin per wafer rule. originated by middle managers rather than an insight of corporate management. the initial management had also created an organizational structure that breaded and supported the autonomous process. Further Intel had installed a very rigorous measurement and reward system in accordance to its core principles of result orientation. The key indicator was the emergence of the microprocessor and the EPROM as disruptive technologies that provided unplanned alternatives to DRAM. This allowed the company to make rapid incremental process changes and stay way ahead of competition. where they insisted Intel performed all research directly on its process line. these aligned the actions of middle and operational management with top management. Autonomous variation: Even though induced strategy process had a variation reducing effect. Further. these were made adaptive in terms of market demands. Structural context: A structural context was created to couple the strategic initiatives at the operational level with the corporate strategy. rooted in the distinctive competencies of core business which brought Busicom to Intel.manufacturability. The rise of microprocessor highlights the strong individual initiative oppurtunities at intel. The top management abided with the rule in the resource allocation made by middle managers who decided it in accordance to the rule and market realities. where even though each product division had its own development and marketing group. This started with the organizational structure. there were a set of common functional groups gorming matrix which controlled the flow. This was enhanced by their altered R&D model. discipline and profit orientation. Noyce and Moore's organization had been ingrained with values of fostering technical innovations and flawless executions. Strategic planning systems in form of strategic long range planning (SLRP) were put in place with aligned actions of operational managers. Their deep insight into the potential for silicon directed the firm’s distinctive competencies to be based on process technology. Together.
14 Even though top management was still focused on DRAM. were the first to recognize the strategic importance and opportunity of microprocessor when external customer Busicom came forward with a request to develop a set of specific functionality chips. with an informal and flat organization structure based on knowledge power intead of positional power.13 Middle and senior management went beyond the technical competence to support the marketing and sales efforts by coming up with new radical product placement strategies like operation CRUSH. Realizing Intel’s internal resource constraints to develop a complete set and top management's desire to satisfy customer. they developed 8080. which became the foundation of the revolutionising 8086 processor. When middle management realized that 8800 would not be ready in time for market to ever increasing competition from Motorola 68000. but autonomously a group also worked on a simpler 8080 design. Hence the impetus to make microprocessor a central part of Intel was originated by middle managers. This gave microprocessor business a skeptic alignment to the corporate strategy. new engineers at intel. established as core values by Moore and Noyce. The rigorous internal selection process also imposed checks on ICV models to demonstrate strategic viability/context and to obtain resources.org/wiki/Intel> Date excessed: 28/02/2007.wikipedia. a strategic intent was decided by open debate on ideas between middle and top level management for resource allocation and strategies. 12 . This resulted in the strong support from top management like Andy Grove and Gordon Moore in form of Crush and Busicom deal. Wikipedia <http://en. They championed it autonomously to the top management to obtaining resources and buy rights from Busicom. Emphasis was on openness at an individual level and constructive criticism based debating. This was the key to a continuous shift of manufacturing resources from core business to new ventures like microprocessors. 13 14 Wikipedia <http://en. top management had mandated a radical new design of 8800.org/wiki/Intel> Date excessed: 28/02/2007.wikipedia. Again at the design stage of 8-bit processor.Ted Hoff and Federico Faggins. giving microprocessors a chance to reshape Intel with renowned 4004 processor. they came up with the concept of microprocessor. Strategic context/selection: The story of microprocessor reflects the key importance of internal selection process and open debate structure. who obtained the resources and market along with developing technical competencies for their initiative.
A. Besides.. largely owing to the unexplored and unexploited nature of IC business. It propelled refocusing of distinctive competency from process technology to circuit design and technical marketing as the determining factor for corporate strategy. The retention of microprocessor in corporate strategy originated from an organizational learning in the form of resource allocation and market trend. the core principle of maximizing return on wafer and value creation.15 Inability to achieve these. and Burgelman. allowing top management to recognize and rationalize strategic exit from core business of DRAM. These were critical to reduce the strategic dissonance between the current core and future possibilities. Analysis: Internal ecology model: During epoch 1. Strategy reorientation/retention: The success of microprocessors and shift in Intel's product domain from memory (low design) to microprocessors (high design) had important consequences. primarily by a bottoms-up approach. "Strategic Dissonance". 149-64 13 . 49. Vol 38 (2). Adaptive organizational capability during this period could be attributed to the simultaneous application of induced and autonomous strategy through four forms: a) Strategic inertia16: 15 Grove. California Management Report. and Freeman J. Intel's corporate strategy was characterized by flexibility. Top management further recognized the opportunities in the form of protected intellectual property in new ventures and accompanying benefits. (1996). R. T. 16 Hannan M. (1984). “Structural Inertia and Organizational Change”. it was amended to maximize on opportunities generated. pp.A. 8 – 28. American Sociological review. lead to cannibalization of ICV like direct ventures into PC as an original equipment manufacture (OEM).Determination of strategic context and creation of linkages to existing core businesses was very important in survival of new initiatives. The product base was widened and distinctive competencies were altered.
Intel’s transformation to microprocessor wasn't an abrupt transition/reorientation but a gradual replacement induced from bottom up hierarchy. This was primarily due to inertia of established managers to accept the loss of viability in core. 31. 21. “Modeling Internal Organizational Change”. Internal ecology model also suggests this as a major disruption in the set induced strategy process. which wasn’t the case with Intel. P. Intel continued to invest in DRAM R&D for nearly 5 years after losing leadership at a cost of better options like microprocessor.2 Epoch II: Intel Microprocessor led PC revolution 17 Barnett W. R. (1995). L. This was reflected in Intel’s failure to change its product technology based differenciation strategy when external environment altered DRAM into the commodity sector requiring focus on cost and quality. 14 . and Caroll G.. Annual Review of Sociology. c) Strategic renewal: This results in an adaptive nature of organization and is propelled by autonomous strategy process. Failure of this mechanism would force top management to pursue abrupt reorientation. resulting in a threat rigidity effect wherein firm resorts to strategy adjustments are needed. (1986). Administrative Science Quaterly. This can be equated to Intel’s pursuit of DRAM.orientation: Alteration of strategy of an established firm has always raised contradicting views. before major strategic context development at corporate level. and Anderson P. 3.Induced strategy process implemented to establish reliability in the core sector results in an inertia to strategy to respond to change in the environment. As a result of which. 217-36 18 Tushman M. it continued to attempt short term adjustment in strategy to remain in DRAM business. Organizational ecologists17 find it threatening whereas punctuate equilibrium theory18 believes it to be an integral part of survival. “Technological Discontinuities and Organizational Enviornments”. Similarly. without altering main strategy to support DRAM. b) Strategic re . which allows internal experimentation and selection of niche products like EPROM. 439-65..
This turned to be a significant turning point in establishing the Intel architecture (IA) as standard of PC industry to follow. Buyer’s side advantages: 19 Stanley M. The Journal of Economic Perspectives.htm> Date Accessed: 04/03/2007 15 . Intel created a strong entry barrier for second source manufactures like AMD to copy their products. Vol.20 Supplier side benefit: Intel also gained more power from supplier side where more and more plant equipment suppliers had emerged in the market. No. This allowed it to have a sustained advantage over competition by reducing imitation and substitution. "Choosing How to Compete: Strategies and Tactics in Standardization ". With microcode being made copyrightable in late 80's.istheory. allowing huge success of key processors like 486. that Intel transformed itself from an ailing semiconductor company to a market leader of PC technology by controlling the forces in accordance CBT and creating a sustained competitive advantage based on it's design and manufacturing resources (RBT). But it was only in epoch II. resulting in huge financial advantatge for leading the market with newer technology. in accordance with RBT and CBT. Even though initially Intel lagged the competition in terms of design inferiority.19 Horizontal PC industry was governed by “increasing returns to adaptation”. As against this. enabled by astute corporate strategy making and leadership. in which a high installed base is the key to enhance returns. IBM turned the PC industry into an open structure which begins a new era of horizontal competition. Besen. pp. it won the critical IBM PC account through combined focus of technical (redesigned CPU to 8086/80286) and marketing (CRUSH) efforts. 117-131 20 IS Theory <http://www. 2.yorku. Joseph Farrell (1994). Technical competencies/barriers: In 1980s.ca/competitivestrategy. Advent of new suppliers in Taiwan and South Korea gave Intel more power to negotiate contract and lower their costs by sourcing from different suppliers. with huge success of IBM PC. Intel had fallen prey to the dependence of Japanese OEMs advantageous to japanese chipmakers in DRAM era.In 1971 Intel launched the 4004 which was the world's first microprocessor. 8.
Besides. 325-357. (2006). The Economic Journal. Line extension reduced profitability at cost of maintaining and increasing market share to take advantage of "increasing returns of adoption".21 Reduced substitutability: Unlike the DRAM where Intel pursued the product replacement strategy. European Jounal of marketing. Increasing Returns. Marketing Science. 485-501.. 24 Burgelman R. 47(2). 13(4). A. pp. Vol. enhancing Intel bargaining power to avoid the design sharing of subsequent technological superior products like 486.A. This made them gain more power on customer side. “What Should You Do When Your Competitors Send in the Clones”. 23 Purohit D. P. as compared to only making niche products in DRAM. (2002). Further it enhanced product offering across all price product ranges to cater from low to high end customers. "Competing Technologies. and the cycle of competitive advantage”.6).22 but obtaining the optimal level of innovation23. 116-131. creating demand for Intel CPUs from downstream. (1994). W. Reduced monopoly on PC OEM side allowed Intel to pursue the sole supplier strategy.. To further gain market control. 22 Brian. Intel ventured into end-user oriented brand awareness marketing. No.inside” logo on each final product of OEMs. allowing to maximize the control over external market environment and benefits of high R&D costs. and Darroch J. 99. 392-411. Intel vertically integrated into the computer OEM in design and manufacturing with ancillary ventures like superior chipsets to support IA chips. and Lock-In by Historical Events".. This influenced consumer buying behaviors by making Intel an end-commodity brand synonymous to microprocessor. These strategies helped them to build an image of advanced strategy backward compatibility and reliability. 16 . “Large firms. entrepreneurial marketing processes.(1989). Intel advertised on Medias and put an “Intel. Administrative Science Quarterly”. “Strategy as Vector and the Inertia of Coevolutionary lock-in”. Vectorized induced process strategy under strong leadership of Andy Grove24: 2 21 Miles M. 394. in microprocessor it pursued a line extension strategy where it continued old product line even when it launched new technology to retain market share and avoid low price clone steal market. 40 (5.Rise of new players like Compaq reduced the power of IBM as OEM.
This allowed top management to have better understanding and learning of PC industry and evolving opportunities. corporate strategy was renewed based on DRAM experience to (a) Make IA to be an industry benchmark (b) Become sole supplier of IA based microprocessors as against distributed systems in DRAM to reap benefit of high development cost (c) Have superior manufacturing capacity by having better transfer between process technology R&D and manufacturing25. Structural context: Andy Grove also realized the necessity of clarity of objectives for an organization to propel this induced strategic process. 17 . Corporate strategy: With exit from DRAM in 1985. He realized importance of aligning strategic intent and action or strengthening the induced strategy process to maintain leadership and resolve strategic dilemmas from external and internal selection to avoid DRAM debacle. to avoid DRAM debacle in epoch I Further unlike epoch 1 with multiple products. (1980). “Giant Corportaions from tiny chips Grow”. 480-484.Who was the first CEO to realize the strategic implication of transformation of PC industry from vertical to horizontal and accompanying increasing return to adaptation by keeping Intel’s x86 architecture as standard. there was a huge focus on process technology competencies and manufacturing competences of microprocessor business. Science.. L. 208 (4443). SLRP was revamped with PC industry being set as product-market domain and clear objectives of (a) Leader of microprocessors (b) Lead the PC revolution to foster CPU demand resource allocation rules were centered on objective one Induced Action: 25 Robinson A. The internal reward and rating system was closely linked to executing microprocessor technology which directed middle managers actions to microprocessors.
but interdependencies narrowed the focus to microprocessors only. where Noyce and Moore focused on idea and technology leadership. Thus. the top leadership turned Intel into an executioner delivering new microprocessor generation to entire PC market segments. Microsoft operating systems(OS) ran more than 85% of the worlds PCs.Having made a strategic choice. which ran mostly on Intel chips. which couldn't define their strategic context early. taking risky steps like huge investments in equipment several years before demand of new processors and preannouncing powerful road map. Grove was more focused on swift execution. A key part was also to develop software that would need excess computing power with each new generation of Intel processors. This was a direct reflection of changed leadership. External environment: With narrowed induced focus on making Intel microprocessor based PC to be leader. Intel caved IAL ventures like native signal processing. Intel also worked on influencing the external environment. Hence to Intel's advantage OS was written with Intel chips in mind for optimal efficiency. This endangered development on part of OEMs. Intel entered vertical integration through ventures like IA labs into system level products like motherboards and chipsets which were enabling technologies to cash strapped OEMs26. This allowed open debate and individual initiatives. while organizational level still retained the matrix structure with interdependencies. This was less hospitable to autonomous process.edu/user/yingchic/Shared/Intel%20Corporate%20Strategy. Grove transformed organization structure into one based on clear articulation and data driven strategy focused around strategic intent. As a result of these the bargaining power as well as profitability of OEM shrunk significantly.pdf> 18 . Between 1993-99 Windows NT combined with high performance Intel processors to make steady and significant progress in high end server/workstation market at expense of UNIX. Finally.andrew. which went against Microsoft. Autonomous strategy process: 26 Intel Corporate Strategy <http://www.cmu. Ventures like Intel capital were set to financially assist and setup new entrants in field of OEM like Dell that promoted Intel microprocessors only. the firm's power structure was transformed into a top driven strategy.
If perceived strategic retroactively. autonomous initiatives were somewhat subdued due to the vectorized induced strategic alliance to microprocessor. where the onus of strategic actions and structural context was left on venture entrepreneurs.During epoch II. was perceived clashing with core x86(CICS) based IA. I860(RISC) chip which was championed autonomously from design to market capture. an the induced business strategy for core business was applied on percieved strategic ICV's. Part of this could be associated to reduced importance of technically trained sales forces which was the dominating in Epoch I championing new products. it was made part of corporate strategy and fully supported. Both networking and chipsets faced this. During early 90's most individual initiatives tracked as ICV orphans in the ICV model like chipsets. But occasionally. The pathway was tougher for initiatives not perceived strategic. but middle level managers played 19 .Conclusion EPOCH 1 under the leaderhip of Gordon Moore resemebled internal ecology model characterized by simultaneity of induced and autonomous strategy process. The former was utilized to learn and establish in core product market through establishment of distinctive competencies and product domain. irrespective of the market demand leading to failure e. while still retaining the competencies gained in its development. leading to market confusion and internal splitting of resources. Defining pro-share for videoconferencing while market wanted generic software.g. Initiatives perceived conflicting with corporate strategy and objectives were cannibalized. limiting their full potential. while later was used to generate new radical learning for possible strategic renewal. Further. they needed to be shielded and championed by strong managers. lack of that lead to slow growth in former. SECTION 4 . It was discontinued. till their strategic context was defined. While chipsets were able to align themselves to core with help of strong managers. As a result they had to venture out for manufacturing resources. left them disconnected with OEM. top management's heavy focus on outbound marketing in 1990's. Top management maintained focus on development of structural context along with an efficient and disciplined team to work. They were left on self to generate resources to develop into new business due to induced strategy process which focused on core microprocessor. Further. like acquisition of chipset manufacturing facility.
Induced strategy process resulted in a strategic inertia around the DRAM business resulting in loss of market share. Inefficient bottom -up channel to translate customer views to top management. Strategic actions were not always aligned to official strategy. losing their significant share and competitive advantage to smaller competitors like AMD (Opeteron vs old Pentium chip). Looking from the perspective of ICV ventures. which didn't have articled strategy or alignment with corporate strategy. in particular to the CEO. The simultaneity of strategic action present in epoch 1 was still preserved. He was able to understand the factors which could influence Intel's roles in the PC market and vectorized induced strategy process (blue process) to influence internal and external selection process. allowing a swifter implementation of the vision. led them miss the shift in market trends from speed to utility feature like own power. Intel's strategy making process resembled rational actor model. During Epoch 2 starting with exit from DRAM. 20 . with former being centralized around PC and latter being subdued. One glaring example. This served well in the product domain of PC to gain and maintain leadership. But this process also enhanced the difference. Andy Grove. to select right ICV. Recent change in Intel’s bureaucratic structure and product portfolio is an example along these lines. while autonomous process on part of middle level managers resulted in a gradual strategic renewal transforming memory company into a microprocessor company. who had gained comprehensive knowledge of the microprocessor and PC business. induced and autonomous process had increased significantly. but retaining the fine tuned structural context of rational actor model. wherein the strategy decision content passed to top management. even though supporting applications weren’t there. Current microprocessor industry is verging commodizations. This would require Intel to reinvigorate the internal ecology model. was the impetus to processor clock speed had carried Intel well into next decade. But strategc inertia developed with disciplined machinery of Intel limited development of new business initiatives from within. it was a phase where lot of ICV orphans were generated. necessiating a reorientation in the corporate strategies to develop new competencies as well as new ventures.very important role on strategic context of resource allocations.
Thus. internal ecology model is found more suitable in unexplored industries to exploit unknown opportunities and success of new ICV’s. As these start ups gain a better understanding of the product-market domain. conditional to a well defined structural context to avoid strategic inertia leading to failures. References 21 . they can enhance their success by vectorizing induced strategy process but need to support the autonomous initative with structural context to develop opportunities for sustained growth in future. At same time. top management needs to retrospectively alter the corporate level strategy to support and incorporate new ICVs.
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