Strategy Assignment

•IMITATION

•SUBSTITUTION

ADDED

VALUE

APPROPRIATED

VALUE

•SLACK

•HOLDUP

Paramvir Singh Jaswal PGDM A 37
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Apply the tetra threat framework in analyzing Intel’s strategy to sustain competitive advantage in microprocessors.
Intel, the world leader in silicon innovation, develops technologies, products, and initiatives to continually advance how people work and live. Founded in 1968 to build semiconductor memory products, Intel introduced the world's first microprocessor in 1971. We are now using tetra threat framework to show how Intel sustain competitive advantage in microprocessors The various threats are1. Threat of Imitation 2. Threat of Substitution 3. Threat of Hold up 4. Threat of Slack.

Response to Threat of Hold up Added Value

Response to Threat of Imitation

Appropriated value

Response to Threat of Slack

Response to Threat of Substitution

Tetra-Threat Framework

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Response to threat of Imitation:

 Maintained strong relationship with its complementors like Microsoft which helped them to provide the customers best service which prevented customers from switching to another company.  From time to time it kept on upgrading its product with next generation microprocessors which made it difficult to copy.  It started project CRUSH and introduced more than 2000 designs for the customers which show its scope economies strategy for reducing threat to imitation  High switching cost. It allowed dual sources of critical pieces of production equipment.  Its major competitor was AMD and Intel does not patent its processors. The reason was it helped them to improve the performance from time to time as the processors become obsolete after some time.

Response to Hold-Up:
It is a threat to the appropriation or capture of sustainable added value that is often rooted in resource of co specialization

 Intel entered in market by having contracts with the suppliers for mass production of parts. Thus it hold-up its suppliers.  It has made a strong trust relationship with its complementors and suppliers.  The processors which it made were used so commonly that the complementary products were valued very high along with this.  Intel started its Intel Inside decreased the threats of Hold up as the demand of this product increases in the market and complementors were forced to use this product.  Complementors and suppliers are highly dependent on Intel’s product.

Response to threat of Substitution:
It is an indirect to sustainability. These are even harder to address than threats of imitation  The life of the microprocessor became very short so they charged a heavy price for the new products initially and then reduced the price.
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 After the evolution of internet, competitor’s complementors also became the complementors of Intel due to their production of unique products.  It always tried hard to fight strongly with its competitors.  It reduced the number of chips to be produced by licensing companies which reduced the threat f substitution and also increased their revenue from 30% to 75%.  It perform short term straddling by strongly competed with Motorola in RISC keeping its CISC microprocessors

Paramvir Singh Jaswal

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