Intel What Were the Different

Intel

What were the different changes at Intel over the first three years of Barrett's tenure?

There were the broader economic, national and political trends that the attacks of September 11, 2001 (9/11) just made more severe, combined with the onslaught of competitive pressure from AMD and the pressure from long-stand customers to not enter competitive businesses. Starting with the economic trends, a recession had already begun in the U.S. And was beginning to spread globally when Craig Barrett took over as CEO. When 9/11 happened all capital spending (CAPEX) came to a grinding halt and the economy quit growing. For Intel, this was serious as it meant that much of their customers' spending on capital equipment in the form of new enterprise computer systems, the primary customer demand factor that drove their businesses, stopped. What made the economic downturn and recession even more difficult for Intel to contend with was the development of a microprocessor faster than the Pentium III by AMD. Second, Intel had entered the information and communication appliances market including networking connectivity products, which Cisco and Dell, two of their bigger customers in that industry, objectives. Third, it was evident a major re-organization as needed as the company had lost its customer focus and was experiencing duplication of effort and internal conflict between divisions. The case study mentions how the Network Operations Group and Communications Unit were competing for the same customers with comparable products. It was evident that a reorganization was needed to create more decentralization and delegation of decision making, all supported by a scalable product strategy.

Of the environmental pressures for change discussed in this chapter -- fashion, mandates geopolitical, declining markets, hypercompetition, and corporate reputation -- which ones were experienced by Intel?

Intel faced declining markets for its core products and as a result was involved in hypercompetition with low-cost memory and processor suppliers more and more. AMD's ability to product a microprocessor at a lower cost that yielded better performance results than the Pentium III exemplifies this trend. In addition the geopolitical pressures of an anticipated war with Iraq and the threat of terrorism created uncertainty in the world's businesses which in turn tended to stop CAPEX spending. All of these factors led Intel to seek alternative product strategies including the production of information and communication appliances in addition to streamlining their company with a multiphase reorganization.

Of the internal organizational pressures for change discussed in this chapter that are associated with organizational change -- growth, integration and collaboration, reestablishment of organizational identities, new broom, and power and political pressures -- which ones were experienced within Intel?

Intel faced the internal pressure to define product strategies that would ensure continued revenue growth, better coordination and integration of internal departments and divisions, more effective collaboration between products divisions, and more effective strategies for gaining customers' trust. Craig Barrett took a product-centric approach to attempting to turn the company around, investing in information and communication appliances. Mr. Barrett specifically focused on how to create greater meaning for the company by concentrating on taking its core engineering strengths and applying it to wireless communications and networking products (Varney, 2009).

What overall conclusions do you draw about why Barrett made the changes he did? Which issues were dominant? Why?

Craig Barrett realized that Moore's Law would support the company only so long, and that given the economic and competitive trends impacting Intel, there would be significant change needed in order to stay competitive. Barrett knew he would need to be an aggressive change agent to get the company on a profitable path to growth in new businesses (Greenemeier, 2004). The greatest issue was that of product strategy and the fact that microprocessors were becoming commoditized. AMD's ascension as a serious competitor for design wins with key OEM accounts, as can be inferred from the case study, was cause of major concern for Intel executives. The design cycles for PCS with the Intel microprocessor provided a long-term, forecast-driven stream of revenue. AMD getting a design win with the Athlon would be difficult to recover from. Mr. Barrett also realized that moving into higher growth markets including networking and telecommunications would give the company an opportunity to complete for higher margins. This was thwarted by long-standing Intel customers Cisco and Dell who eventually pressured Intel to leave these markets. Finally the issue of reorganizing the company to make it more decentralized and accountable for performance, and more fundamentally, to change its culture to being more customer-focused was critical.