Sustainability Analysis: Intel - Case Study Example

Sustainability analysis: Intel BY YOU YOUR SCHOOL INFO HERE HERE Sustainability analysis: Intel The Intel Corporation is a best practice model in marketing, use of consumer psychology, as through proactive strategy development that would soon outperform the computing marketing in microprocessor technology. With the development of the Celeron microprocessor, it allowed for consumer self-expansion that brought rapid brand loyalty to the Intel and Celeron brand names. New capabilities in home computing were offered by the Celeron processor, thus serving as creative destruction and disruptive innovation in a very mature and largely declining market. The Celeron processor managed to build natural, social and legitimate capital and also destroyed some of the market share once held by traditional mainframe and minicomputer manufacturers. This report spotlights the dimensions of the Celeron processor that achieved market destabilization and what provided Intel with sustainability for its superior business prowess and understanding of market conditions during and after launch of the Celeron brand. Introduction A first-class example of an enterprise serving as a catalyst for creative destruction and disruptive innovation is Intel Corporation. Intel currently holds 79.3 percent market share in the microprocessor market (McGrath 2011; Shah 2011). This current market position was accomplished through the development of the Celeron chip, a revolutionary microprocessor launched in the late 1990s. The Celeron chip was a market disruptor for the minicomputer and the traditional computer mainframe that improved computer performance and ultimately opened new market potential for Intel Corporation. Furthermore, Intel utilised a strategic alliance with Apple, Inc. to ensure more concentrated market saturation of the new Celeron processor that would be used in conjunction with a variety of Apple pc and Mac products. This alliance opened the doors for market visibility in the lower-priced pc market that served to effectively differentiate both Apple products and the Celeron brand from other pc and processor manufacturers. The Celeron processor provided Intel with the sustainable value required to maintain market dominance and ensure longevity in a market environment that sustains many market barriers for entry by new technology competitors. The alliance with Apple placed Celeron processors in many different top-grossing products which led to restructuring of the technology supply chain, giving Intel more bargaining power with the vendors providing raw products for assembly. Having more control within the supply chain further provides sustainable value by allowing Intel to dictate costs as Celeron significantly raised the switching costs in an oligopolistic market structure with limited choice for buyer substitution. As a disruptive innovation, the Celeron processor can be showcased as a best practice for achieving a sustainable global enterprise. The considerable market control offered to Intel due to this revolutionary product development produced a high volume of consumer interest in the Celeron and Intel brand (piggybacked on the success of the Intel Pentium Processor brand recognition). Through alignment with another enterprise, Apple, which maintained significant brand loyalty, Celeron maximised corporate success through effective strategic development. Analysis of Intel The Celeron processor was a disruptive innovation as it changed the long-standing technology plane that existed in the personal computer market since the 1980s: the traditional mainframe system and the minicomputer product (Christensen 2003; Christensen and Raynor 2003). The Celeron processor displaced what had been a stable market, forcing some product manufacturers used in computing to lose market share or radically change their operational models and product innovation strategies. The Celeron processor greatly increased the speed of computation, the tangible construct allocations required for personal computing software and memory storage, and dramatically reduced the costs of personal computers in a market that was still, largely, in an early growth stage in the late 1990s and early 2000s. In order to understand the conceptions of Intel’s strategic success, it is necessary to explore the conceptions of brand achievement in the personal computer market. Consumers become more highly attached to a brand when it offers opportunities, either tangible or perceived, for self-expansion (Muniz and O’Guinn 2001; Aron, Aron and Smollan 1992). In this context, self-expansion should be considered and defined as the ability to provide newfound social mobility or increase for personal utility attainment. At nearly the same time, the dual launch of the Pentium microprocessor was heralded with considerable promotion in order to build brand recognition and establish a differentiated, positioned brand personality in the computing market. The marketing was constructed to highlight performance and creative revolution in processing capacity and expedition, thus giving consumers a perception of Intel as a market leader and important innovator for self-expansion as the Celeron processor allowed for faster Internet connections and gaming capacity (among countless other improvements in computing). By selecting Apple as an alliance partner, Intel was able to build consumer perceptions of expertise, credibility and reliability to further begin the foundations of brand loyalty that would be achieved some years later after Celeron’s success. This dual-promotion strategy was the foundation of strategic intent for Intel and the Celeron brand, thus ending the long life cycle of the minicomputer and traditional mainframe systems that were still largely in use in the corporate environment. Sustainable value, when defined as longevity in a marketplace, was accomplished through effective advertising conceptions and also promotion of corporate social responsibility by highlighting Intel expert staff in promotional content. Some years later, new market entrants able to cut through the barriers to entry attempted creative destruction against this growing technology manufacturer. One such example was the highly promoted, but largely unsuccessful launch of the personal digital assistant (PDA). The PDA provided a new portability not achieved by the Celeron microprocessor, expected to provide a new variety of self-expansion to consumer markets (Christensen 2003). However, the concept was not deemed paramount to consumer audiences as it could not match the performance of the new Celeron-based personal computer (Christensen 2003). Therefore, this device, heavily promoted to multiple target markets, simply got lost in a growing shuffle of similar mobile products and smartphones not to be developed until many years later. The Celeron processor, however, managed to achieve creative destruction simply by legitimately revolutionizing computing efficiency and reliability in a way that no other company had managed in the years of competitive personal computing. In addition, the alliance with Apple provided Intel with new opportunities for building natural and social capital. Social capital is rather self-explanatory, as the company dedicated many of its capital resources to expanding the Celeron brand into the social networking environment which was in its infancy when the Celeron was gaining foundational brand loyalty. Apple products using the Celeron processor allowed Intel to become more active in viral marketing and customer relationship management, building a culture of service, support and the development of human social capital to achieve market share goals and competitive advantage. Natural capital can be observed at Intel through the energy efficiency achievements gained by changing production systems and operational strategies. The change in processor design improved energy usage when wafer sizes were reduced as higher volumes of processors could now be produced at the same time (Intel 2010). The alliance with Apple sustained higher volume ordering that also improved reliance on various water systems used in manufacturing and other operational processes. Komninos (2002) offers that it is very difficult for business to conceptualise when their products are reaching the final decline of the product life cycle related to their brands. It is usually not until sales decline that business leaders notice that market strength is waning (Komninos). Intel recognised that the Celeron processor maintained considerable disruptive ability and would ensure growth in revenues if promoted effectively. The business was proactive in identifying that the microcomputer and mainframe had reached their declines, catching the computing market by surprise for Celeron’s sustainability opportunities. In terms of strategic planning, Intel sustained best practice as they were able to react and respond quickly to a dying market (Policastro 2012). Conclusion Intel not only completely disrupted the computing market with the Celeron innovation, it created a type of sustainability that would not allow new innovators (even years later) to attempt to diffuse. This was clearly built on the back of successful marketing strategy and an understanding of the competitive environment to recognise opportunities for new product launch in a declining sales market. Intel also utilised a change to organisational culture that spotlighted its corporate social responsibility, thus giving consumers an insight into what drives environmental and social activity with a now-trusted company backed by solid performance and effective persuasive marketing strategies. There is little doubt that the best practice can be illustrated by strategic intention and the use of marketing in operations as a tool for gaining market presence and longevity. Celeron did not have to utilise dynamic pricing strategies, either, to achieve the market dominance which again illustrates a benchmark for new market entry. Intel seemed to understand the conceptions of the law of supply and demand and chose an appropriate time to launch the Celeron processor so that pricing could be in-line with consumer fairness expectations and also achieve profit targets. Since Intel was the dynamic innovator in this changing market structure, there was little opportunity for competitive action to launch substitute products as no other technology companies maintained the technological know-how or process capital to replicate the microprocessor for the consumer market. Coupled with the Apple alliance, Intel created best practice in consumer psychology associated with launch strategy that rapidly built brand recognition that is usually only accomplishable over an elongated period of time while relationships between consumer and brand are established. Now that Intel maintained more control over supply chain bargaining and costs, this too changed dependencies within the international supply chain. The innovation was disruptive to struggling mainframe producers that were not deemed viable partners for up-and-coming materials suppliers, thus giving Intel even more clout as a market destabilizer in a way no other company had accomplished before. References Aron, A., Aron, E.N. and Smollan, D. (1992). Inclusion of other in the self-scale and the structure of interpersonal closeness, Journal of Personality and Social Psychology, 63(4), pp.596-612. Christensen, C.M. (2003). Beyond the innovator’s dilemma: Is innovation a gamble, or can the right strategic framework lead to predictable results?”, Strategy and Innovation, 1(1), pp.1-4. Christensen, C.M. and Raynor, M.E. (2003). The Innovator’s Solution: Creating and Sustaining Successful Growth. Harvard Business School Press. Shah, A. (2011). IDC reduces yearly processor shipment growth forecast, PC World. [online] Available at: http://www.pcworld.com/article/237068/article.html (accessed 10 November 2012). Intel. (2011). Corporate responsibility report, Intel Corporation. [online] Available at: http://csrreportbuilder.intel.com/PDFFiles/CSR_2011_Full-Report.pdf (accessed 11 November 2012). Komninos, I. (2002). Product life cycle management, Urban and Regional Innovation Unit. [online] Available at: http://www.urenio.org/tools/en/Product_Life_Cycle_Management.pdf (accessed 10 November 2012). McGrath, Dylan. (2011). IDC cuts pc microprocessor forecast, EE Times. [online] Available at: http://www.eetimes.com/electronics-news/4218438/IDC-cuts-PC-microprocessor-forecast (accessed 11 November 2012). Muniz, A. and O’Guinn, T. (2001). Brand Community, Journal of Consumer Research, 27(4), pp.412-432. Policastro, M.L. (2011). The traveller’s company management and planning series – Introduction to strategic planning, p.3. [online] Available at: http://archive.sba.gov/idc/groups/public/documents/sba_homepage/pub_mp21.pdf (accessed 9 November 2012). Read More