Using relevant frameworks to conduct internal analysis of Intel

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Resources are the tangible and intangible assets of an organization. It includes facilities, land, brand name and intellectual capital. Where an organization has a resource which is both valuable and unique, this may give rise to a distinctive competency, if it has the required capabilities to capitalize upon it (Hill and Jones, 2004) [1] . There are 4 types of resources, namely the physical, financial, human and intellectual capital.

Human resources refer to the number and mix of people, skills, training, industrial relations and remuneration policies. Intel believed that hiring and retaining qualified executives, scientists, engineers, technical staff, and sales representatives are critical to its business, and competition for experienced employees in the semiconductor industry can be intense (Intel Annual Report, 2009) [2] . Hence, Intel places Human Resources as its important place. Intel uses share-based incentive awards such as employee stock options and non-vested share units to help attract, retain, and motivate qualified employees. Managers in Intel are also important to the corporation. Intel has nine operating segments after the reorganization, each operating segments require high qualified managers to manage well the segment. They are required to distribute jobs well to different employees.

Financial resources refer to the capital, cash, debtors/ creditors, shareholders and bankers. Businesses need finance to expand. As of December 26, 2009, cash and cash equivalents, debt instruments included in trading assets, and short-term investments totaled $13.9 billion. In addition to the $13.9 billion, Intel has $4.5 billion in loans receivable and other long-term investments that Intel includes when assessing its investment portfolio. Intel believes that it has the financial resources needed to meet business requirements for the next 12 months. Business requirements include capital expenditures for worldwide manufacturing and assembly and test, working capital requirements, and potential dividends, common stock repurchases, and acquisitions or strategic investments(Intel Annual Report,2009) [3] . Hence, with the possible availability of finance, Intel will therefore less limit its strategic options open to its business.


Capability is the organisation's ability to effectively utilize its resources. Organisations may distinctive competency through more unique, effective and efficient resource utilization, without the benefit of unique and valuable resources(Hill & Jones 2004) [4] . A company needs the appropriate capabilities too fully capitalize upon unique resources. Intel design and manufacture computing and communications components, such as microprocessors, chipsets, motherboards, as platforms that incorporate these components. Intel strives to optimize the overall performance improvements of the Intel products by balancing increased performance capabilities with improved energy efficiency, which is achieved by lowering power consumption in relation to performance capabilities. The increasing performance can include faster processing performance and other improved capabilities, such as multithreading and multitasking. It is believed that performance can also be improved through enhanced connectivity, storage, security, manageability, utilization, reliability, ease of use, and interoperability among devices.

Core Competencies

Core competencies are the most significant value creating skills within the corporation and key areas of expertise which are distinctive to the company and critical to the company's long term growth. According to the Management's Discussion and Analysis of Financial Condition and Results of Operations, at the end of 2009, Intel reorganized the business to better align their major product groups around the core competencies of Intel architecture and the manufacturing operations in the fourth quarter. Intel has nine operating segments after the reorganization:

PC Client Group

Data Center Group

Embedded and Communications Group

Digital Home Group

Ultra-Mobility Group

NAND Solutions Group

Wind River Software Group

Software and Services Group

Digital Health Group

Although Intel had experienced one of the deepest recessions in history, the fourth quarter results reflected a strengthening demand across all regions and all product categories, driven primarily by the notebook market segment. Fourth quarter revenue of $10.6 billion was up 13% compared to the third quarter, nearly twice the seasonal average, and up 28% compared to the fourth quarter of 2008. Furthermore, for the first quarter of 2010, Intel reported net income of $2.4 billion on revenue of $10.3 billion. That handily beats Wall Street's already-optimistic consensus expectation of 38 cents per share on revenue of $9.8 billion. The company also reported that gross margins had reached 63%. This shows that Intel has a strong finance.

Intel has demonstrated its exceptional competence in the Information Technology since it introduced the world's first microprocessor in 1971. According to the 2009 Annual Report, Intel is the world largest semi-conductor chip maker, based on revenue. In 2008, Intel led the semiconductor industry for the seventeenth consecutive year, with a market share of 13.3% in the semiconductor market while Samsung Electronics, the second largest vendor, has a market share of 6.8%. The company also maintained its share in the global microprocessor revenues. The company accounted for 81.8% of global microprocessor revenue, compared to 80.9% share in the third quarter of 2008.

Undoubtedly, it indicates that both the Information Technology and strong finance pay tributes to the core competencies of Intel.

Conclude the main strengths and weaknesses of Intel derived from the above analysis. (5 marks)

As the world's largest semiconductor chip maker based on revenues, Intel aims to develop the integrated digital technology platforms for the computing and communications industries. Intel's strong market position and brand image enhances its investor confidence. Intel led the semiconductor industry for many consecutive years, with a relatively large market share in the semiconductor market, which is nearly twice the market share of the second largest vendor. Intel also maintained its share in the global microprocessor revenues even facing a recession in revenues, when comparing with the competitors. Furthermore, the company has strong brand recognition. Intel uses share-based incentive awards such as employee stock options and non-vested share units to help attract, retain, and motivate qualified employees. Intel also reorganized the business to better align their major product groups around the core competencies of Intel architecture and the manufacturing operations. This is beyond doubt to show that Intel has good management as well as good decision-making.

On the other hand, Intel also faces its weakness in some areas. For instance, the customer concentration. Intel hinges on few customers for significant proportion of its revenues. Sales to Intel's top two largest customers, Dell and HP. High dependence on a few customers reduces the bargaining power of the company and increases its business risk.