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Intel Corp Leadership Study Essay Research Paper

Intel Corp Leadership Study Essay, Research Paper

1. Andy Grove and his role in Intel?s Success

When I think of Intel, I think of Andrew Grove. That may be due to my age, and the fact that I was too young in 1968 to know that Gordon Moore and Robert Noyce, pioneers in the semiconductor industry, had left Fairchild Semiconductor to form Intel Corporation. But I believe that my association of Grove with Intel is due more to the tremendous influence that he has had on the company as the official and unofficial overseer of Intel?s internal operations from the beginning.

Even though he did not join Intel?s executive committee until 1976, and did not become CEO until 1987, it is clear that he has been the leader at Intel since the beginning. He has constantly pushed the collective company envelope with ?big, hairy, audacious? goals to produce better and faster chips that ultimately have been some of the primary drivers of the computer industry.

Intel?s first goal was to replace magnetic-core computer memories with semiconductor memories. Their objective and early vision, initially shaped by Gordon Moore, was to dominate any market in which they participated. They would set out to accomplish this internally by ?buying options?, which allowed them to systematically explore various alternatives. This approach gave them flexibility but also created internal competition, which played a strong role in shaping the culture of Intel. I believe that Moore, who felt that the semiconductor business ?lived on the brink of disaster?, also was a very strong influence on Grove. Grove seemed to carry on ?Moore?s Law? ? that approximately every three years a new generation of chips must be developed with four times the capacity of their predecessors.

The company?s first SRAM chip, the 1101, came out in 1969, but Intel was constantly driven to change the industry. Moore, Noyce and Grove were never satisfied long. They initiated a drive within the company to produce a DRAM chip with four times the capacity of the SRAM. The resulting 1K chip, introduced in 1971, was the 1103, which was universally preferred to magnetic core technology and became the industry standard. After two other big developments in 1971, ?Operation Crush ? an all-out combat plan? was initiated to make the next generation 8086 chip the industry standard. This was followed by development of the 432 project. The 8086 and 432 are examples of ?buying options? ? Intel?s strategy whereby one product is developed with an evolutionary strategy while another is developed with a revolutionary strategy. Noyce remarked that through these R&D projects, often times Intel ?may not have found what they were looking for, but found something else equally important?.

Andy Grove could be described as a ?detail-oriented pragmatist?, as oppossed to Gordon Moore, who was a ?technology driven futurist?. Grove was a demanding, hard worker who worried about how to accomplish what Moore dreamed up. This has been a critical element in Intel?s success. Grove noted that it led to the development of the ?Two-in-a-Box? management philosophy. This consisted of two individuals with complimentary skillsets, much like Grove and Moore, sharing the same management position in order to stabilize a transition, start-up or reorganization. It was also used to groom successors or to get more value out of a position. Some people in the organization viewed this as inefficient, but Intel continued to succeed.

According to another executive, Grove possesses ?aggressive brilliance?. He?s very articulate, yet with a powerful, confrontational style. I believe Grove?s penchant for ?constructive confrontation? led Intel employees to think of themselves as the ?Marine Corps? of the industry. He helped develop an organization with ?bright, opinionated, macho, rude, even arrogant and impatient, and very informal? employees. This negative type of personality meant that Intel people often didn?t care how they got results, but it probably gave them the toughness to weather the 1980?s recession and the semiconductor price wars of 1986-87 that caused U.S. manufactures to lose billions.

Intel survived, not unscathed, probably in large part due to Grove. Despite his tough style, he focused on individuals and took a lot of pride in putting people where they were needed. This would be extremely important as he tore the company down and put it back together a number of times, as was done in 1986, when Intel exited both the DRAM and SRAM businesses. The open culture he helped create enabled him to move people up, down and sideways during reorganizations and allowed him to implement his ?125%? and ?90%? solutions to get more out of his people in tough times. Grove believed that in their business ?there are the quick and there are the dead?. He helped the company accept as the norm constant relearning, as the company changed its focus. This would be the case as he moved the company into microprocessors, as they were faced with protecting Intel?s intellectual property, and as they had to make the CISC vs. RISC choice in the late 1980?s. He would push for more rapid product introduction and force computer makers to keep up with the pace set by Intel. He pushed for dvelopement of The Intel Inside slogan. The process at Intel seems to closely follow the exhibit The Process of Renewing and Transforming Organizations (Kotter) that we studied as part of the Charlotte Beers case.

Even though Grove believed that work time and leisure time should be separate, he did begin to soften that stance to combat burnout. He moved for a more friendly work environment and even offered sabbaticals for employees with enough service. As the 1990?s began and Andy Grove oversaw a company that was significantly molded in his personality, his vision had changed only slightly:

?We are currently a leader in semiconductors, and my hope and vision is that our technology is going to be the heart and spine of the entire computer industry.?

2. The Culture of Intel and its Creation

Intel started as a purely functional organization centered on R&D and getting done what needed to be done to crank out new and better chips. Andy Grove and Gordon Moore wanted an unconventional approach initially. They wanted to reduce barriers and promote a free flow of ideas and information throughout Intel.

A physical example of this was the cubicles of one big hall that all employees, including executives, sat in. Walls were low and executives were not clustered in one area, but spread out. Meeting rooms and parking spaces were on a first-come, first-served basis. Dress was casual. These were classic examples of role modeling by Intel executives that played a major role in shaping culture. It probably gave all employees the confidence to speak up in meetings where even high level executives were present, which they were encouraged to do.

But as early as 1976 the first divisions were established in order to focus managers? attention on emerging business segments. Functional and business lines began to cross in ?matrix-relations?. Task forces, councils and other ?cross-boundary devices? were set up along with other more informal relationships in order to bring ideas to fruition. These new ideas often originated from ?small, highly motivated, and innovative? teams and then were carried by ?product champions? through the gauntlet of Intel?s? corporate hierarchy towards approval and/or rejection. This helped create a company with a ?very sharp and well-defined sense of history and identity?.

Great examples of secondary embedded mechanisms at Intel are the stories that evolved about how these product champions transformed dreams into amazing products. As the stories were retold over and over, the developers and champions became legendary and through the years became part of company mythology.

Further evidence that the company culture was adding some more formal components ,though, could be seen in the creation of a formal Strategic Long Range Planning (SLRP) process, which Gordon Moore pushed for, and required middle managers to prepare formal strategies for their business segments.

The ?way we do things around here? was embodied in what Gordon Moore believed:

?One of our unspoken rules at Intel is that if you can?t measure something you don?t understand it?. Not surprisingly, Moore was in charge of many of the primary embedded cultural mechanisms at Intel; measurable things like profitability and other targets that helped determine employee bonuses. He was a strong believer in performance based incentives, unlike Grove who focused more on individuals.

Intel did try to remain unbureaucratic, but it was felt by one executive that in the company?s zest to do that, it was undertaking too many reorganizations. This in turn led to unnecessary attrition and erosion of their knowledge base. The human side seemed to get lost in the mechanics of drawing up a new organization chart. Those that did remain thought of themselves as a special breed: ?Intel was not a place for those looking for a stable environment?.

Part of the socialization process seemed to come from this lack of stability. The constant action led to many internal meetings, during which employees were encouraged to debate the pros and cons of issues. This led to a sort of trial by fire, but taught people to stand their ground.

A survey was conducted in 1988 on employees? understanding of Intel?s culture. The senior officers hoped to get a handle on the human relations side of things in order to try to balance the entrepreneurial spirit of the company, which often led to instability, with the people side of things. There was a faction of long-time managers who didn?t seem concerned about that though. They felt that things had worked fine so far so why change.

This survey did lead to a formalized document clarifying Intel?s values. I believe that the espoused values contained in the document very closely match the actual values of the company. Of the six categories ? risk taking, quality, discipline, customer orientation, results orientation, and a great place to work ? only the last one really reflects a major concern for people, and Intel was not first and foremost about people. What Grove was all about is contained in these values.

Intel?s culture has been partly defined by the fact that they have so often in their history been at a strategic crossroads, but have been able to transform themselves through constant strategic renewal and revitalization. This culture will continue to exist, as long as Intel pushes to stay out in front. The October 16, 2000 Chicago Tribune points out that Intel won?t have the Pentium 4 ready for a planned pre-Halloween launch, which will cost them holiday sales in the consumer channel. They better keep pushing.

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Реферат - Intel A Corporation Essay Research Paper

Intel: A Corporation Essay, Research Paper

“A corporation is a business that, although owned by one or more investors, legally has the rights and duties of an individual. Corporations have the right to buy, sell, and own property. Corporations may make legal contracts, hire and fire workers, set prices, and be sued, fined, and taxed. A business must obtain a charter of incorporation from a state legislature or Congress to be legally recognized as a corporation.”(Watson, p211) While corporations didn’t exist until the mid to late 1800s, the idea of the corporation had existed since the early 1600s. It all started with English merchants who started trading companies to help fund the early colonies. If the colonies thrived, the stockholders reaped in the profit. (Watson, p211)

A corporation is started when a sole proprietorship, a one-owner business, that is the most common form of business institution in the US, or a partnership, an association of two or more people in order to run a business, decides that they don’t want to be personally responsible for any loss the company might have. (Watson, p211) Or they might decide that they want the company to “live on” after they die, that is for the business to have “unlimited life”. Since neither of these goals can be reached with a sole proprietorship, or a partnership, the owner (or owners, as the case may be) decide that he (they) want to “convert” their business to a corporation. The owner(s) file a charter of incorporation from the government to be legally recognized as a corporation. (Boyd, March, 99) The owner(s) then sell shares of stock, documents representing ownership in the corporation, to investors. These investors buy and sell the stock to small investors, or stockholders. Since there is no limit to the number of shareholders to a company, the investors vote (for every share you own you get one vote) on a board of directors. The board of directors are in charge of hiring the people responsible for the every-day running of the corporation. These positions include, but are not limited to: the president, vice president, and other chief administrators. (Watson, p211-212)

If a corporation reaps a profit, investors may receive a dividend, or a share of the monetary gain made by the company. The elected board of directors choose whether the money will go towards profit, expansion of the company, modernization of the company, or research and development. (Watson, p212)

“With about 85% of the microprocessor market, Intel is definitely inside. Its microprocessors — including the Pentium — have been providing brains for IBM-compatible PCs 1981.”(http://thestandard.net?.) Intel started on July 16, 1968 when magnetic core memory was the leading technology at the time. They were trying to make semi-conductor memory practical with silicon memory. Unfortunately for Intel semi-conductor memory cost 100 times more than magnetic core memory, but the silicon had many advantages – smaller size, greater performance, and reduced energy consumption. Then, in late 1968,the Japanese company Busicom asked Intel to produce a series of chips (twelve chips for every unit) for a group of programmable calculators that they were producing. Normally, chips were made specifically for each product. Well, the designers at Intel decided that they would make a general purpose logical chip to replace all of the many different varieties of chips that would go into the different electronics. The logical chip was a major success; the only problem was that Busicom had the rights to the chip. Realizing that this chip could have a major impact on society, the founders Bob Noyce and Gordon Moore praised the new chip, while people in the corporation still wanted to stick with producing memory. Intel bought the rights to the chip from the struggling Japanese company for $60,000, and this “paved the way for Intel’s developing vision of ubiquitous (universal) microprocessor-based computing.”(?/cn71898a.htm).

The 4004 microprocessor set was introduced near the end of 1971. “Smaller than a thumbnail and packing 2300 transistors, the $200 chip delivered as much computing power as the first electronic computer, ENIAC. By comparison, ENIAC relied on 18,000 vacuum tubes packed into 3,000 cubic feet when it was built in 1946. The 4004 executed 60,000 operations in one second, primitive by today’s standards, but a major breakthrough at the time.”.”(?/cn71898a.htm). Directly after the 4004, Intel introduced the 8008 microprocessor, which processed eight bits of information at a time, twice as much as the original chip. This technological break-through put microprocessors everywhere, from fast food restaurants to airport control towers. Yet no one had thought of the personal computer, until; Intel Chairman Emeritus Moore remembers, “In the mid-1970s, someone came to me with an idea for what was basically the PC. The idea was that we could outfit an 8080 processor with a keyboard and a monitor and sell it in the home market. I asked, ‘What’s it good for?’ And the only answer was that a housewife could keep her recipes on it. I personally didn’t see anything useful in it, so we never gave it another thought.”

Intel decided that they would try to become the processor-manufacture for IBM. They received some static at first, but eventually; Intel’s long-term commitment to the microprocessor product line and ability to produce in large masses convinced IBM to choose the 8088 chip processor for the first personal computer. Intel was thrilled at the thought, but had no idea the PC would become so popular. The Intel sales engineer who worked with IBM on the project recalled, “At the time, a great account was one that generated 10,000 units a year. Nobody comprehended the scale of the PC business would grow to tens of millions of units every year.”.”(?/cn71898a.htm)

In 1982, Intel introduced the 286 chip. With 134,000 transistors, it was three times as powerful as the current chips. This 286 chip was first used in IBM’s very memorable machine, the PC-AT.

In 1985, the Intel386 processor came off the showroom floor. With 275,000 transistors, the chip was a huge jump from the competition. The Deskpro by Compaq was the first PC that used the 386 chip. The Intel 486 processor was released in 1989. This new chip had all the fixins’: 1.2 million transistors and was the record-breaking first chip to have the first built-in math coprocessor. In 1993, Intel introduced a processor with five times the speed of the 486, the Pentium processor. The Pentium chip uses 3.1 million transistors. In 1997 Intel started introduced its MMX technology, a breed of chip build for high multimedia performance. After MMX took hold, it is now standard on all Pentium processors. In 1998 the Pentium II chip was released with incredible speed and mind-blowing processing power. .”(?/cn71898a.htm)

The Intel Corporation is an amazing company that will be around for a very long time. As of 1997 the company was worth $26,273,000,000. The CEO of Intel is Craig R. Barrett. Intel, as of 1997, had 63,700 employees on its roster. In my personal opinion, I feel that Intel is a very reliable chip manufacturer, I buy only Intel brand processors because of their reliability, and I would proudly join their workforce if at all possible.

Stock Exchange: “market for the sale and purchase of securities of corporations and municipalities, and, in some cases, of certificates representing commodities of trade.”(Funk and Wagnalls p359) The first stock exchange to be built was in Antwerp, Belgium in 1531. In 1773 the brokers of London formed an exchange in England. In New York City, brokers met to exchange stocks under a button tree until they organized the New York Stock Exchange. (Sobel, p904) The NYSE only let in stocks that it deemed “good enough”. Those that didn’t pass the test where traded outside on the curb of the NYSE building. This “curb exchange” later formed the American Stock Exchange, or the ASEX. (Edustock ?/3088/)

In the 1920’s the American economy was booming, due in an increase in industrialization, and an increase in technology. There was an increase in wages, an increase in spending, and an increase in stock prices. People bought billions of dollars worth of stock -on margin, mind you- and economists said that the uprise would continue. Because of the large number of people buying in margin, left the stock market in a vulnerable position. Many stockholders, ready to reap a fortune, invested all they had, even mortgaged their homes and emptied their bank accounts. As the prices spiraled higher and higher, economists began warring people of the turmoil that could lie ahead, but everyone was interested in making money and paid no heed. Finally, in October of 1929, the purchasing frenzy calmed, but then burst into a selling bonanza. On Thursday, October 24th, 1929 the strong iron bars of the U.S. economy began to give way. Stock prices fell to the floor as investors struggled desperately to sell. When the New York Stock Exchange closed that day, it had lost over four billion dollars. By the next Monday, the 28th, a widespread panic took form. Thousands of investors, some “normal”, working citizens, were ruined financially. By the end of 1929, stock values had dropped by fifteen billion dollars. (www.thehistorychannel.co.uk) “There have been many market crashes since 1929 however this is the one that had the greatest impact. It is still to early to say for sure whether the economic situation that is effecting global stock markets will result in such a scenario. The only fact that is certain is that we are in the middle of a large correction in the value of global stock prices. With crises in Asia, Latin America and now Russia rolling from one to another, the fear of a 1929 style crash is once again with us.”(www.thehistorychannel.co.uk)

Biblography

“Boyd, Donald. Economics Lecture: Corporations, March 1999

Company Profile-The Intel Corporation” The Industry

Standard. 1999.

thestandard.net/companies/company_display/0,159

1,13787,00.html (3/17/99)

Edustock, tqd.advanced.org/3088/ (3/23/99)

Intel Corporation, www.intel.com: The following documents were used under this domain: ?/pressroom/archive/releases/Cn31799a.htm?iid=cnfy+cn19&(3/17/99)

?/pressroom/archive/backgrnd/cn71898a.htm (3/17/99)

?/pressroom/archive/backgrnd/cn71898c.htm (3/17/99)

?/pressroom/archive/backgrnd/cn71898d.htm (3/17/99)

?/pressroom/kits/prfaqs.htm (3/17/99)

Sobel, Robert. “Stock Exchange.” World Book Encyclopedia

“Stock Exchange.” Funk and Wagnalls New Encyclopedia

“Stock Market Crash of 1929 Repeated? – A History profile

of the Wall St Crash of 1929.”

www.thehistorychannel.co.uk/topstory/1929.htm

(3/24/99)

Watson, Jr., George G., Economics. Sacramento, McDougal,

Littell and Company 1986

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Реферат - Intel Essay Research Paper A corporation is

Intel Essay, Research Paper

A corporation is a business that, although owned by one or more investors, legally has the rights and duties of an individual. Corporations have the right to buy, sell, and own property. Corporations may make legal contracts, hire and fire workers, set prices, and be sued, fined, and taxed. A business must obtain a charter of incorporation from a state legislature or Congress to be legally recognized as a corporation.”(Watson, p211) While corporations didn’t exist until the mid to late 1800s, the idea of the corporation had existed since the early 1600s. It all started with English merchants who started trading companies to help fund the early colonies. If the colonies thrived, the stockholders reaped in the profit. (Watson, p211) A corporation is started when a sole proprietorship, a one-owner business, that is the most common form of business institution in the US, or a partnership, an association of two or more people in order to run a business, decides that they don’t want to be personally responsible for any loss the company might have. (Watson, p211) Or they might decide that they want the company to “live on” after they die, that is for the business to have “unlimited life”. Since neither of these goals can be reached with a sole proprietorship, or a partnership, the owner (or owners, as the case may be) decide that he (they) want to “convert” their business to a corporation. The owner(s) file a charter of incorporation from the government to be legally recognized as a corporation. (Boyd, March, 99) The owner(s) then sell shares of stock, documents representing ownership in the corporation, to investors. These investors buy and sell the stock to small investors, or stockholders. Since there is no limit to the number of shareholders to a company, the investors vote (for every share you own you get one vote) on a board of directors. The board of directors are in charge of hiring the people responsible for the every-day running of the corporation. These positions include, but are not limited to: the president, vice president, and other chief administrators. (Watson, p211-212) If a corporation reaps a profit, investors may receive a dividend, or a share of the monetary gain made by the company. The elected board of directors choose whether the money will go towards profit, expansion of the company, modernization of the company, or research and development. (Watson, p212) “With about 85% of the microprocessor market, Intel is definitely inside. Its microprocessors — including the Pentium — have been providing brains for IBM-compatible PCs 1981.”(http://thestandard.net?.) Intel started on July 16, 1968 when magnetic core memory was the leading technology at the time. They were trying to make semi-conductor memory practical with silicon memory. Unfortunately for Intel semi-conductor memory cost 100 times more than magnetic core memory, but the silicon had many advantages – smaller size, greater performance, and reduced energy consumption. Then, in late 1968,the Japanese company Busicom asked Intel to produce a series of chips (twelve chips for every unit) for a group of programmable calculators that they were producing. Normally, chips were made specifically for each product. Well, the designers at Intel decided that they would make a general purpose logical chip to replace all of the many different varieties of chips that would go into the different electronics. The logical chip was a major success; the only problem was that Busicom had the rights to the chip. Realizing that this chip could have a major impact on society, the founders Bob Noyce and Gordon Moore praised the new chip, while people in the corporation still wanted to stick with producing memory. Intel bought the rights to the chip from the struggling Japanese company for $60,000, and this “paved the way for Intel’s developing vision of ubiquitous (universal) microprocessor-based computing.”(?/cn71898a.htm). The 4004 microprocessor set was introduced near the end of 1971. “Smaller than a thumbnail and packing 2300 transistors, the $200 chip delivered as much computing power as the first electronic computer, ENIAC. By comparison, ENIAC relied on 18,000 vacuum tubes packed into 3,000 cubic feet when it was built in 1946. The 4004 executed 60,000 operations in one second, primitive by today’s standards, but a major breakthrough at the time.”.”(?/cn71898a.htm). Directly after the 4004, Intel introduced the 8008 microprocessor, which processed eight bits of information at a time, twice as much as the original chip. This technological break-through put microprocessors everywhere, from fast food restaurants to airport control towers. Yet no one had thought of the personal computer, until; Intel Chairman Emeritus Moore remembers, “In the mid-1970s, someone came to me with an idea for what was basically the PC. The idea was that we could outfit an 8080 processor with a keyboard and a monitor and sell it in the home market. I asked, ‘What’s it good for?’ And the only answer was that a housewife could keep her recipes on it. I personally didn’t see anything useful in it, so we never gave it another thought.” Intel decided that they would try to become the processor-manufacture for IBM. They received some static at first, but eventually; Intel’s long-term commitment to the microprocessor product line and ability to produce in large masses convinced IBM to choose the 8088 chip processor for the first personal computer. Intel was thrilled at the thought, but had no idea the PC would become so popular. The Intel sales engineer who worked with IBM on the project recalled, “At the time, a great account was one that generated 10,000 units a year. Nobody comprehended the scale of the PC business would grow to tens of millions of units every year.”.”(?/cn71898a.htm) In 1982, Intel introduced the 286 chip. With 134,000 transistors, it was three times as powerful as the current chips. This 286 chip was first used in IBM’s very memorable machine, the PC-AT. In 1985, the Intel386 processor came off the showroom floor. With 275,000 transistors, the chip was a huge jump from the competition. The Deskpro by Compaq was the first PC that used the 386 chip. The Intel 486 processor was released in 1989. This new chip had all the fixins’: 1.2 million transistors and was the record-breaking first chip to have the first built-in math coprocessor. In 1993, Intel introduced a processor with five times the speed of the 486, the Pentium processor. The Pentium chip uses 3.1 million transistors. In 1997 Intel started introduced its MMX technology, a breed of chip build for high multimedia performance. After MMX took hold, it is now standard on all Pentium processors. In 1998 the Pentium II chip was released with incredible speed and mind-blowing processing power. .”(?/cn71898a.htm) The Intel Corporation is an amazing company that will be around for a very long time. As of 1997 the company was worth $26,273,000,000. The CEO of Intel is Craig R. Barrett. Intel, as of 1997, had 63,700 employees on its roster. In my personal opinion, I feel that Intel is a very reliable chip manufacturer, I buy only Intel brand processors because of their reliability, and I would proudly join their workforce if at all possible. Stock Exchange: “market for the sale and purchase of securities of corporations and municipalities, and, in some cases, of certificates representing commodities of trade.”(Funk and Wagnalls p359) The first stock exchange to be built was in Antwerp, Belgium in 1531. In 1773 the brokers of London formed an exchange in England. In New York City, brokers met to exchange stocks under a button tree until they organized the New York Stock Exchange. (Sobel, p904) The NYSE only let in stocks that it deemed “good enough”. Those that didn’t pass the test where traded outside on the curb of the NYSE building. This “curb exchange” later formed the American Stock Exchange, or the ASEX. (Edustock ?/3088/) In the 1920’s the American economy was booming, due in an increase in industrialization, and an increase in technology. There was an increase in wages, an increase in spending, and an increase in stock prices. People bought billions of dollars worth of stock -on margin, mind you- and economists said that the uprise would continue. Because of the large number of people buying in margin, left the stock market in a vulnerable position. Many stockholders, ready to reap a fortune, invested all they had, even mortgaged their homes and emptied their bank accounts. As the prices spiraled higher and higher, economists began warring people of the turmoil that could lie ahead, but everyone was interested in making money and paid no heed. Finally, in October of 1929, the purchasing frenzy calmed, but then burst into a selling bonanza. On Thursday, October 24th, 1929 the strong iron bars of the U.S. economy began to give way. Stock prices fell to the floor as investors struggled desperately to sell. When the New York Stock Exchange closed that day, it had lost over four billion dollars. By the next Monday, the 28th, a widespread panic took form. Thousands of investors, some “normal”, working citizens, were ruined financially. By the end of 1929, stock values had dropped by fifteen billion dollars. (www.thehistorychannel.co.uk) “There have been many market crashes since 1929 however this is the one that had the greatest impact. It is still to early to say for sure whether the economic situation that is effecting global stock markets will result in such a scenario. The only fact that is certain is that we are in the middle of a large correction in the value of global stock prices. With crises in Asia, Latin America and now Russia rolling from one to another, the fear of a 1929 style crash is once again with us.”(www.thehistorychannel.co.uk)

Biblography “Boyd, Donald. Economics Lecture: Corporations, March 1999 Company Profile-The Intel Corporation” The Industry Standard. 1999. thestandard.net/companies/company_display/0,159 1,13787,00.html (3/17/99) Edustock, tqd.advanced.org/3088/ (3/23/99) Intel Corporation, www.intel.com: The following documents were used under this domain: ?/pressroom/archive/releases/Cn31799a.htm?iid=cnfy+cn19&(3/17/99) ?/pressroom/archive/backgrnd/cn71898a.htm (3/17/99) ?/pressroom/archive/backgrnd/cn71898c.htm (3/17/99) ?/pressroom/archive/backgrnd/cn71898d.htm (3/17/99) ?/pressroom/kits/prfaqs.htm (3/17/99) Sobel, Robert. “Stock Exchange.” World Book Encyclopedia “Stock Exchange.” Funk and Wagnalls New Encyclopedia “Stock Market Crash of 1929 Repeated? – A History profile of the Wall St Crash of 1929.” www.thehistorychannel.co.uk/topstory/1929.htm (3/24/99) Watson, Jr., George G., Economics. Sacramento, McDougal, Littell and Company 1986

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Реферат - INTEL Knows Best A Major Marketing Mistake

INTEL Knows Best? A Major Marketing Mistake Essay, Research Paper

INTEL Knows Best? A Major Marketing Mistake

Problem Statement

When Thomas Nicely, a mathematician at Lynchburg College in Virginia, first

went public with the fact that Intel’s new Pentium chip was defective Intel

admitted to the fact that it had sold millions of defective chips, and had known

about the defective chips for over four months. Intel said its reasoning for

not going public was that most people would never encounter any problems with

the chip. Intel said that a spreadsheet user doing random calculations would

only have a problem every 27,000 years, therefore they saw no reason to replace

all of the defective chips. However if a user possessed a defective chip and

could convince Intel that his or her calculations were particularly vulnerable

to the flaw in the defective chip then Intel it would supply those people with a

new chip. This attitude of ‘father knows best’ fostered by Intel created an

uproar among users and owners of the defective chips. Six weeks after Mr.

Nicely went public, IBM, a major purchaser of Pentium chips, stopped all

shipments of computers containing the defective Pentium chips. Intel’s stock

dropped 5% following this bold move by IBM. IBM’s main contention was that it

puts its customers first, and Intel was failing to do this.

Intel’s handling of this defective chip situation gives rise to many

questions. During the course of this paper I will address several of them. The

first of which is how did a company with such a stellar reputation for consumer

satisfaction fall into the trap that the customer does not know best? Secondly,

what made this chip defect more of a public issue than other defective products

manufactured and sold to the public in the past? Finally, how did Intel recover

from such a mistake? How much did it cost them and what lessons can other

companies learn from Intel’s marketing blunder so that they do not make the same

mistake?

Major Findings

Intel is spearheaded by a chief executive named Andrew Grove. Grove is a

“tightly wound engineering Ph.D. who has molded the company in his image. Both

the secret of his success and the source of his current dilemma is an anxious

management philosophy built around the motto ‘Only the paranoid survive’.”

However, even with this type of philosophy the resulting dominance he has

achieved in the computer arena cannot be overlooked. Intel practically

dominates the computer market with $11.5 billion in sales. Intel has over 70%

of the $11 billion microprocessor market, while it’s Pentium and 486 chips

basically control the IBM-compatible PC market. All of these factors have

resulted in an envious 56% profit margin that only Intel can seem to achieve.

So what did Intel do to achieve this sort of profit margin?

In mid-1994 Intel launched a $150m marketing campaign aimed at getting

consumers to recognize the Pentium name and the “Intel Inside” logo. In order

to achieve this goal of brand recognition Intel advertised its own name in

conjunction with the “Intel Inside” logo and stated ‘with Intel Inside, you know

you have got... unparalleled quality’. This provided immediate name

recognition for the company and led the consumers to associate Intel with high

quality computers. Then Intel went the extra mile in the marketing world and

spent another $80m to promote its new Pentium chips. The basis for this extra

$80m was to “speed the market’s acceptance of the new chip”. The marketing

campaign was a success. Intel had managed to achieve brand recognition. “Once

the products were branded, companies found that they could generate even higher

sales by advertising the benefits of their products. This advertising led

consumers to regard brands as having very human personality traits, with one

proving fundamental to brand longevity — trustworthiness.” Consumers

readily identified a quality, up to date computer as one with a Pentium chip and

the ‘Intel Inside’ logo stamped on the front. This “push” marketing strategy of

Intel totally dominated the market, thus forcing the Pentium chip to the

forefront of the computer market, all at the expense of the cheaper 486. This

“push strategy” of Intel made it plainly clear to its purchasers that Intel was

looking out for number one first and its purchasers such as Compaq and IBM

second. Making the Pentium chip the mainstay of the computer industry was the

goal of Intel, but a goal that would later come back to haunt them for a brief

period of time.

Throughout the history of the computer industry many manufacturers have

sold defective products. According to Forbes journalist Andrew Kessler, “Every

piece of hardware and software ever shipped had a bug in it. You better get

used to it.” Whether or not ‘every’ piece ever shipped has had a bug is

debatable, but there have been numerous examples of valid software bugs. For

example Quicken 3.0 had a bug that resulted in the capitalizing of the second

letter of a name incorrectly. Intuit, however, handled the situation by selling

an upgraded version (Quicken 4.0) which fixed the problem, and left the consumer

feeling as though he or she had gotten an upgraded version of the existing

program. In essence Intuit had not labeled the upgrade as a debugging program,

therefore it had fixed the problem and satisfied the customer all at the same

time. While Intuit’s customers were feeling as though they had a better

product by buying the upgrade, Intuit was padding its pocket books through all

of the upgrade sales. Other examples of companies standing behind their

products are in the news week after week. Just a few years ago Saturn, the GM

subsidiary, sent thousands of cars to the junkyards for scrap metal due to

corroded engines, a result of contaminated engine coolant. Johnson &

Johnson, the maker of Tylenol, recalled every bottle of medicine carrying the

Tylenol name and offered a 100% money back guarantee to anyone who had

purchased a bottle that might be contaminated. The precedence was already set,

so why would a company with the reputation of Intel fail to immediately replace

all of the defective chips it had sold? Furthermore, why did Intel not come

forth immediately when it first discovered that its chips had a problem?

Intel’s engineers said that the defective chips would affect only one-

tenth of 1% of all users, and those users would be doing floating-point

operations. (Floating point operations utilize a matrix of precomputed values,

similar to those found in the back of your 1040 tax booklet. If the values in

the table are correct then you will come up with a correct answer. This was not

the case with the Pentium. A table containing 1066 entries had five incorrect

entries, resulting in certain calculations made by the Pentium chips to be

inaccurate as high as the fourth significant digit.) Considering the low

number of people that the chip would supposedly affect and the high cost ($475m)

associated with replacing the chips, Intel decided a case by case replacement

policy “for those limited users doing critical calculations”. Intel’s VP-

corporate marketing director, Dennis Carter, stated, “We’re satisfied that it’s

addressing the real problem. From a customer relations standpoint, this is

clearly new territory for us. A recall would be disruptive for PC users and not

the right thing to for the consumer”. This policy infuriated the millions of

Pentium purchasers who had bought a PC with a Pentium chip. Word spread like

wildfire throughout the consumer world that Intel had sold a defective product

and was now refusing to replace it. This selective replacement policy is a

“classic example of a product driven company that feels its technical expertise

is more important than buyers’ feelings”. Intel was faced with a decision.

Should they take the attitude of brand is most important and we will take all

necessary action to preserve it or take the attitude of what would be the

monetary cost of doing the right thing and replacing all of the defective chips,

and would it be worth it? Initially they decided that the monetary cost of

replacing all defective chip would not be cost efficient due to the sheer

numbers involved. Intel had sold an estimated 4.5 million Pentium chips

worldwide, and approximately 1.9 million in the U.S. alone. Intel later

reversed its selective replacement policy (Intel knows best attitude) and came

out with a 100% replacement policy. What was the reasoning behind this change

of attitude at Intel?

As a result of the selective replacement policy, IBM announced it would

stop all shipments of PCs containing the flawed chips. This combined with the

public outcry at having spent thousands of dollars for PCs that did not work as

advertised, and the reluctance of corporate users of PCs to purchase new

computers resulted in Intel changing its public policy concerning the defective

chips. Intel’s new policy was to offer a 100% replacement policy to anyone who

desired a new chip. This policy entailed either sending replacement chips to

those users who wanted to replace the chip themselves, or providing free

professional replacement of the chip for those who did not feel comfortable

doing it themselves. Intel’s new policy was in line with public expectations,

but it had been delayed for several precious weeks. So one might ask, “What did

this delayed change in attitude cost Intel in terms of dollars and repeat

customers?”

The resulting costs to Intel were enormous in some respects, but almost

negligible in others. Intel’s fourth-quarter earnings were charged $475m for

the costs of replacing and writing off the flawed chips. This was 15% more

than analysts had predicted. Fourth-quarter profits dropped 37% to $372m.

This was a sharp drop in profits, but $372m is still a number to be reckoned

with in the fast paced industry of computers. So did this drop in profits mean

that Intel was losing its edge? I tend to think not, since Intel reported that

the sale of Pentiums had doubled between the third and fourth quarters, thus

lifting revenues in 1994 to $11.5 billion, a 31% increase. Apparently

consumers rallied around the new replacement policy and continued to purchase

the Pentium equipped computers at a very fast rate, despite the initial reaction

of Intel towards replacing the defective chips. This renewed faith was not

regained overnight, but nevertheless it happened, therefore Intel is unlikely to

lose its commanding lead in the industry. So what type of assurance was it

that led to this renewed faith in Intel?

Following Intel’s announcement of its 100% replacement policy for the

defective chips it recalculated its replacement policy on all future defective

products. Intel realized that its “fatal flaw was adopting a ‘father knows b

www.ronl.ru

Реферат - Intel A Corporation Essay Research Paper

Intel: A Corporation Essay, Research Paper

In 1982, Intel introduced the 286 chip. With 134,000 transistors, it was three times as powerful as the current chips. This 286 chip was first used in IBM’s very memorable machine, the PC-AT.

Biblography

“Boyd, Donald. Economics Lecture: Corporations, March 1999

Company Profile-The Intel Corporation” The Industry

Standard. 1999.

thestandard.net/companies/company_display/0,159

1,13787,00.html (3/17/99)

Edustock, tqd.advanced.org/3088/ (3/23/99)

Intel Corporation, www.intel.com: The following documents were used under this domain: ?/pressroom/archive/releases/Cn31799a.htm?iid=cnfy+cn19&(3/17/99)

?/pressroom/archive/backgrnd/cn71898a.htm (3/17/99)

?/pressroom/archive/backgrnd/cn71898c.htm (3/17/99)

?/pressroom/archive/backgrnd/cn71898d.htm (3/17/99)

?/pressroom/kits/prfaqs.htm (3/17/99)

Sobel, Robert. “Stock Exchange.” World Book Encyclopedia

“Stock Exchange.” Funk and Wagnalls New Encyclopedia

“Stock Market Crash of 1929 Repeated? – A History profile

of the Wall St Crash of 1929.”

www.thehistorychannel.co.uk/topstory/1929.htm

(3/24/99)

Watson, Jr., George G., Economics. Sacramento, McDougal,

Littell and Company 1986

www.ronl.ru

Intel A Corporation Essay Research Paper

Intel: A Corporation Essay, Research Paper

Возможно вы искали - Реферат: Метафора

In 1982, Intel introduced the 286 chip. With 134,000 transistors, it was three times as powerful as the current chips. This 286 chip was first used in IBM’s very memorable machine, the PC-AT.

Похожий материал - Реферат: Бюджетный процесс на местном уровне 2

Biblography

“Boyd, Donald. Economics Lecture: Corporations, March 1999

Company Profile-The Intel Corporation” The Industry

Очень интересно - Реферат: The Truth Essay Research Paper The Truth

Standard. 1999.

http://thestandard.net/companies/company_display/0,159

1,13787,00.html (3/17/99)

Edustock, http://tqd.advanced.org/3088/ (3/23/99)

Intel Corporation, www.intel.com: The following documents were used under this domain: ?/pressroom/archive/releases/Cn31799a.htm?iid=cnfy+cn19&(3/17/99)

Вам будет интересно - Реферат: Комбинированое питание

?/pressroom/archive/backgrnd/cn71898a.htm (3/17/99)

?/pressroom/archive/backgrnd/cn71898c.htm (3/17/99)

?/pressroom/archive/backgrnd/cn71898d.htm (3/17/99)

?/pressroom/kits/prfaqs.htm (3/17/99)

Sobel, Robert. “Stock Exchange.” World Book Encyclopedia

Похожий материал - Контрольная работа: Технология и производственная функция

“Stock Exchange.” Funk and Wagnalls New Encyclopedia

“Stock Market Crash of 1929 Repeated? – A History profile

of the Wall St Crash of 1929.”

http://www.thehistorychannel.co.uk/topstory/1929.htm

cwetochki.ru

Winamp, Skins, Plugins

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Реферат: Intel Essay Research Paper A corporation is. Реферат intel

Intel A Corporation Essay Research Paper

Intel: A Corporation Essay, Research Paper

In 1982, Intel introduced the 286 chip. With 134,000 transistors, it was three times as powerful as the current chips. This 286 chip was first used in IBM’s very memorable machine, the PC-AT.

Biblography

“Boyd, Donald. Economics Lecture: Corporations, March 1999

Company Profile-The Intel Corporation” The Industry

Standard. 1999.

http://thestandard.net/companies/company_display/0,159

1,13787,00.html (3/17/99)

Edustock, http://tqd.advanced.org/3088/ (3/23/99)

Intel Corporation, www.intel.com: The following documents were used under this domain: ?/pressroom/archive/releases/Cn31799a.htm?iid=cnfy+cn19&(3/17/99)

?/pressroom/archive/backgrnd/cn71898a.htm (3/17/99)

?/pressroom/archive/backgrnd/cn71898c.htm (3/17/99)

?/pressroom/archive/backgrnd/cn71898d.htm (3/17/99)

?/pressroom/kits/prfaqs.htm (3/17/99)

Sobel, Robert. “Stock Exchange.” World Book Encyclopedia

“Stock Exchange.” Funk and Wagnalls New Encyclopedia

“Stock Market Crash of 1929 Repeated? – A History profile

of the Wall St Crash of 1929.”

http://www.thehistorychannel.co.uk/topstory/1929.htm

(3/24/99)

Watson, Jr., George G., Economics. Sacramento, McDougal,

Littell and Company 1986

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