Intel Corporation (Intel) is a digital technology organization headquartered in Santa Clara, California, in the U.S. The firm manufactures digital technology products for the computer and telecommunication sectors, for instance, chipsets, motherboards, processors, solid state drives, wired and wireless products, software, and electronics. Intel sells its products to "original equipment manufacturers (OEMs), industrial and communication equipment manufacturers and original design manufacturers (ODMs).” Intel Celeron, Intel Pentium, Intel Atom, and Intel Xeon are some of the company’s brand names, which are used in computers, smartphones, and tablets. Intel operates in the Americas, Europe, Asia-Pacific, and the Middle East. The firm reported US$62,761 million in revenues for the FY2017; a 5.7% increase from the previous financial year (Intel Corporation, 2018). This essay seeks to analyze Intel’s strategic management processes.
Part 1: Elements of the Strategic Management Process with Respect to Intel Inc.
According to Persaud and Woodhouse (2016), the purpose of strategic management is to formulate, implement, and evaluate cross-functional decisions designed to assist firms in attaining long-term organizational goals and objectives. Strategic management process is the successful integration of an organization’s management process with other business processes in the firm’s value chain (such as marketing, production, and finance), to boost financial growth and competitiveness by consistently improving the existing strategy, creating new opportunities and exploiting the existing ones. This implies that organizations utilize the available knowledge and competencies to create value for the customer.
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The four principle elements of the strategic management process are situation analysis, strategy formulation, strategy implementation, and strategy evaluation and control. When Intel undertakes a situation analysis, it intends to perform an internal and external audit of the environment to tap into opportunities and develop pathways to countering threats. Failure to conduct such an assessment would place the firm at a serious disadvantage. For instance, Intel can consider the effect of staff satisfaction and HR competence to its performance or conduct a SWOT analysis to analyze the internal and external factors for more effective strategic planning (Persaud & Woodhouse, 2016).
Strategy formulation comes second after Intel has done a solid environmental analysis. Effective strategies are formulated after the company has gathered adequate information at the previous stage. The focus is to develop and improve the critical competencies outlined in the situation analysis. For instance, Intel may want to increase its foothold at a given technological area. It is important to note that strategy given the company a sense of direction (also envisioning what the future looks like for the firm) (Persaud & Woodhouse, 2016).
Strategy implementation puts the formulated strategy into action. It acts as a guideline that Intel’s top management can follow to ensure the strategic goals are met. For instance, if the firm wants to invest in cloud computing, managers would want to put in place clear steps to ensure that the resources (material and human) are available for proper implementation of the new strategic direction (Persaud & Woodhouse, 2016).
According to Persaud and Woodhouse (2016), the strategy’s effectiveness and permanency are assessed at the control and evaluation phase. Intel puts in place ongoing processes that allow the top management to ascertain the effect of the new strategy on the daily operations of the organization as well as on its overall strategic direction. Based on the results, the company may rethink its strategy or start all over again until the desired results are accomplished.
Part 2: How Intel Engages in Each of the Element of the Strategic Management Process
Technology in the contemporary world is fast-paced, so companies need to proactive in their strategic frameworks to survive. Intel Inc. has had to redesign its strategies several times as shall be assessed in the analysis below. Intel uses SWOT to do a situation analysis. This implies that internal strengths and weaknesses, as well as the external opportunities and threats, are analyzed extensively, to make the most effective strategic decision. The company’s primary objectives are to minimize operational costs and improve financial performance by venturing into unique and profitable sectors. Intel is leveraging its strengths (financial performance, solid R&D model, and integrated manufacturing network) to invest in opportunities and wade-off potential threats. The firm also established that a concentrated customer base precisely the PC market is risky; hence the need to diversify to other lucrative sectors (Intel Corporation, 2018).
Strategy Formulation at Intel is focused on delivering fully on its goals and objectives. To achieve its financial and diversification strategies, the year 2016 witnessed drastic adjustments that were centered on reducing overall expenses and increasing product offerings. According to Krzanich (2016), Intel chose to take a new and additional direction due to the continued decline in the PC market segment. The firm is transforming from a PC company to an organization that provides cloud computing and IoT products and services. Intel established that cloud computing would shape the future of a smart, connected world thereby shaping its financial base; memory and other programmable solutions would deliver new types of products for data centers and IoT, and Moore’s Law will progress so Intel will continuously deliver the ideal economic impact. Therefore, the company is focused solely on situating every segment of its business around the products and services mentioned above and services.
Since strategy formulation at Intel is focused on meetings its diversification and profitability strategies, implementation seeks to ensure that the established plans are attained. For this reason, in 2016, Intel underwent massive restructuring to tap into the data center, cloud computing, memory, and programmable gate arrays, artificial intelligence, and the Internet of Things markets (IoT) market. These particular segments were responsible for $2.2 billion in revenues generated in 2015, which was approximately 40% of the overall sales. Also, it laid-off 12,000 of its employees; about 11% through global consolidations, involuntary departures, and program reevaluations, which took place for a full year (2016-2017). The move saved the company approximately $740 million in 2016 and is expected to affect more saving of up to $1.4 billion annually (Intel Newsroom, 2016).
Intel evaluates its strategy through the financial statements. For instance, its new cloud computing and data center segments have brought positive earnings to its income statement. According to Intel Corporation (2018), the new Data Center Group (DCG) accounted for 49% of the entire company's revenues, which was approximately US$7.59 billion. The overall percentage increase was 25% if compared with quarter one of the 2017 financial year. Based on the information, it indicates that the new strategy has not only diversified the company's product offerings but has increased its revenues as well.
Part 3: Strategic Management Process Element Executed Best
The strategic management process element executed best by Intel is strategy implementation. While gathering information is vital to an organization, it becomes meaningless if it is not acted upon. Intel is resilient in working on the information it collects. First, the company began by redesigning its R&D model to suit the new business needs in its determination. For this reason, Intel has optimized its products; thus increased incomes. Second, its new diversification strategy saw increased investment in the data center, cloud computing, memory and programmable gate arrays, artificial intelligence, and the Internet of Things markets (IoT) market. Intel’s ability to utilize its financial power to expand its operation was instrumental in attaining its diversification and profitability goals. In the first quarter of FY 2018, that particular segment accounted for 49% up from 40% of the organization’s total revenues while the PC segment contributed 51%. In a bid to reduce costs, Intel laid-off 12,000 of its employees; approximately 11% of the entire workforce and this saved it millions of dollars in expenses (Intel Newsroom, 2016).
How the Strategic Competence Benefits Intel
The strategic competence benefits Intel because it is aligned with its overall strategic goals of becoming a leading company in the Data Center, cloud computing, IoT as well as the PC market. Also, it plays a vital role in boosting Intel’s total profitability and diversification goals and objectives, which implies that if the firm fails to put in place a solid strategy, it may not attain the required outcomes (Krzanich, 2016).
The Strategic Element that Produces the Greatest Challenge and Why
Intel is a large company with highly competent personnel and adequate finances, so it encounters fewer difficulties its strategic management process. However, it has faced few shortcomings in its strategy formulation element. Some of the top management's strategies have negatively affected the company’s income statement (Krzanich, 2016).
Implications to the Enterprise Because of the Challenge
Intel has lost money because of some of its decisions. For instance, the company’s decision to start making the “baseband modem chips” was not based on adequate situation analysis, which could have been established at the time the company was formulating the strategy. The move was risky because it was highly dependent on a few smartphone companies. Intel has lost approximately $17 billion because of the decision because Apple Inc. indicates that it will not be using the company’s chips on its 2020 iPhone versions (Tiernan, 2018). It shows that failure to realize the effectiveness of a strategy during formulation could result in the long-term effect an organization's financial position.
Conclusion
The study sought to discuss the strategic management process concerning Intel Inc. as the context. The company is a technology firm operating is a highly dynamic environment. It employs the four elements of the strategic management process, which are situation analysis, strategy formulation, strategy implementation, and strategy evaluation and control to operate effectively. Under situation analysis, Intel uses SWOT to analyze the external and internal environment to gather information that could be assistive in attaining its overall goals of product diversification and improved profitability. Strategy formulation entails aligning action to the collected information to ensure the goals are met. Intel ensures the implementation of its formulated strategies in a more effective manner so that the objectives are attained. Finally, the company conducts constant evaluation through its financial statements to ascertain if the strategies are producing the desired results. On the contrary, the firm has lost finances due to poor strategy formulation though the effect has been less significant due to the vast array of product offerings.
References
Intel Corporation. (2017). Intel corporation marketline company profile . Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=124641681&site=ehost-live
Intel Corporation. (2018). News Release: Intel reports first-quarter financial results. Retrieved from https://s21.q4cdn.com/600692695/files/doc_financials/2018/Q1/Q1-2018_EarningsRelease-FINAL.pdf
Intel Newsroom. (2016, April 19).Intel announces a restructuring initiative to accelerate transformation. News Release. Retrieved from https://newsroom.intel.com/news-releases/news-release-intel-announces-restructuring/
Krzanich, B. (2016, April 26). Our strategy and the future of Intel. Intel Editorial. Retrieved from https://newsroom.intel.com/editorials/brian-krzanich-our-strategy-and-the-future-of-intel/
Persaud, N., & Woodhouse, M. (2016). Enhancing the strategic management process through the use of professional evaluation methods and the logic of evaluation. Journal of MultiDisciplinary Evaluation , 12(26), 1–11. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&db=eft&AN=119298972&site=ehost-live
Tiernan, R. (2018, July 5). Intel’s mobile failure a $17b mistake says new street research. Barron’s. Retrieved from https://www.barrons.com/articles/intels-mobile-failure-a-17b-mistake-says-new-street-research-1530822083
