Business Case Study of AMD and Intel

In terms of any business case study of the companies AMD and Intel, there are a some excellent articles available that discuss their existence from a case study standpoint. In a business case study, several key issues presented in the article "AMD in 2005: Coming Out of Intel's Shadow." While the case specifically addresses the examples of AMD and Intel, which are microchip processor developers and manufacturers, this business case study of AMD and Intel can offer important lessons about the planning and implementation phases of organizational strategy in a variety of other industries.

The most important issue presented in this case study of AMD and Intel is the discrepancy between the organizational strategies of two intense competitors in a single market. The author narrates the history of the race between AMD and Intel to develop cutting-edge microchip processors, detailing how first one competitor, and then the other, has edged ahead in market recognition and profit dominance. Initially, Intel was the strongest performer in the microchip market; however, it made the mistake of assuming that its historic market dominance meant that its continued control of the market was assured. Intel further assumed, incorrectly, that its strategic partnerships with other branded names in technology, Dell and Microsoft among them, would sustain and even strengthen their grasp on the lion's share of microchip earnings. Because of this combination of hubris and false assumptions, Intel was vulnerable to AMD's increasingly aggressive tactics to match and outperform Intel.

The author explains how AMD identified and exploited the weaknesses in Intel's strategy. Approaching the same allies Intel had cultivated and promising them a better product, AMD succeeded in stealing away at least a portion of the market, and a valuable one. From a R&D perspective, AMD recognized that Intel's next generation of microchip processors demanded too much of the consumer, whose software had to be rewritten, and they worked on circumventing the problem in their own product. This strategy was successful in bringing AMD closer to Intel's position in the market, yet AMD perhaps did not forecast appropriately, scan its external environment, or think about how to manage exponential growth. As a result, the gains it enjoyed in the late 90s and the first half of thee present decade began to falter by 2005.

The shift in leadership at AMD represented a significant transition from a chairman whose personality was described as charismatic and "outsized" (p. 21) to one who was equally innovative but more balanced in terms of his public personality. The differences in Sanders' and Ruiz's personalities were also reflected in their management styles; while Sanders had a propensity for taking big risks, Ruiz preferred a more studied approach. To that end, he trimmed the budget and the AMD labor pool, and continued to funnel a large percentage of overhead expenses into R&D processes. While this strategy may result in a superior product, it may not be a sustainable approach to fostering and maintaining a cohesive and committed workforce, as the professional environment may be perceived as unstable.

The competitive positioning of the Opteron chip by AMD represents a business-unit level strategy of differentiation. AMD had to prove, especially to companies that were previously aligned with Intel, that its product was superior. During test runs performed by those companies, it was determined that Opteron was different from Intel's product; quite simply, it worked better. Perhaps the most damaging blow to Intel and the greatest boon to AMD was Hewlett Packard's endorsement of the Opteron chip; previously, HP had committed to Intel's chip, but after seeing the performance indicators, realized that Opteron functioned better and, as such, distinguished itself from the Intel product.

This business case study ends in 2005, a year in which he observed slowed growth at AMD after several years of high performance that gave Intel a reason to pause and reconsider its own development, production, and marketing strategies. Since this business case study of AMD and Intel was written, the price war between Intel and AMD has intensified and the battle for market share dominance continues. In terms of strategy, AMD should continue to consider how its microchips and processors can be integrated into related technological products, a strategy which it began to pursue earlier in this decade and one which should be renewed. AMD should consider devoting R&D dollars and time to investigating whether and how its product can be applied in cell phones, digital storage devices, and the like. In this way, AMD can begin to diversify its holdings and not rely exclusively or primarily upon the computer sector to sustain its position and fuel its growth. With the boom in technology product development, it is highly likely that microchip processors can be integrated into other new and emerging products, which will spread AMD's brand recognition into other user sectors, both individual and corporate. AMD may also want to bolster its predictive and scanning processes, as well as its human resources policies and practices vis-à-vis its employees so that brand loyalty can be cultivated from the inside out.

In conclusion, this case study of AMD and Intel represents an interesting study in comparisons and contrasts between two companies engaged in the pursuit of a similar corner of an expanding market. The business case study of AMD and Intel also illustrates the differences in development, production, and marketing strategies, and exhibits the strengths and weaknesses of both AMD and Intel in these areas. Given the rapidly evolving nature of the technologies sector, it would behoove both AMD and Intel to maintain a constant awareness of both internal and external factors that can affects its profit and performance. Both companies, AMD and Intel, should be cautious and avoid resting too comfortably upon its impressive accomplishments, as neither is so secure that it is immune from the developments of the other.

Reference:

Madapati, R.S. (n.d.). AMD in 2005: Coming out of Intel's shadow. http://www.icmr.icfai.org/casestudies/catalogue/Business%20Strategy3/BSTA001.htm