Q. 4 The Intel Corporation produces microprocessors that are used in computers. It has a market share of over 75% and has been praised for its highly innovative culture. Do you think that an innovative culture can be relied on to guarantee the future success of a business? Justify your answer with reference to Intel and/or other organisations you know. An innovative culture within a business is where a business is always open to introducing something new in the business such as a product or service with the beliefs of the employees supporting this.
Successful companies actively cultivate new ideas, put those ideas to work quickly and efficiently, and harvest the business value benefits of successful innovations. Discussions of innovation often focus on what a company offers, that is, its products and services. nnovation is not just about what a company offers, innovation is also about how a company conducts business and how IT innovation can transform an organization into a significantly more efficient company for the future.
Senior executives at Intel believe in investing in innovation through the downturn, because they found innovation to be very good for our financial and production positions. Intel provides the needed financial backing and leadership vision, and our company is successful through downturns as a result of our innovation practices. Innovation that gives intel a good financial position could allow the business to fund future projects which could lead to future success for the business. Intel continues to pour more than $4 billion a year into R&D. It does so because it believes that recessions are a great time to gain ground on the competition.
What’s more, Intel’s identity is inseparable from innovation. Intel’s board decided to invest $7 billion in new chip plants in Oregon, Arizona and New Mexico. The first chips from the plants arrived this month, made with techniques that let the company create smaller, faster and lower-power products than its main competitors. An innovative culture may encourage the development of new products and processes, can reduce costs, improve quality and differentiate its offerings to consumers. As a company grows, its economies of scale can become more beneficial for example bulk buying may become cheaper.
Just as it has in past downturns, Intel has used its cash to advance its manufacturing process and technology while rival chip makers have struggled to stay afloat in the recession. An innovation culture at Intel has allowed them to gain ground over their competitors as they have invested in the economy in a recession. This investment may not of happened if Intel hadn’t had innovative culture within the business as they look for new ideas to improve the business even in a recession. Broader technology spending is on the rebound, suggesting that both companies and consumers are more optimistic about their own futures.
Intel, the first major tech company to report earnings this year, said that revenue rose 28 percent to $10. 6 billion in the fourth quarter, and the company earned the largest gross profit margin in its history. Net income was $2. 3 billion, or 40 cents a share, up tenfold from the $234 million, or 4 cents a share, it earned in the last quarter of 2008. This proven success was down to an innovative approach in the market to invest in new chips whilst the market was struggling with competitors content with their market share.
Intel have generated profit through the innovative culture that has forced them to take risks that have paid off for the business. This profitability definitely gives Intel a good chance of future success as they have more money to invest. A technology research firm, reported that worldwide PC shipments rose 22 percent to 90 million units during the fourth quarter, which is a healthy recovery from the dismal fourth quarter of 2008. Because of its investment in the downturn, Intel, which makes the chips at the heart of most PCs, is poised to benefit from that surge more than most tech firms. They continued to innovate while many of their competitors were swimming in debt and reducing their head count,” said Bill Kreher, an analyst with Edward Jones. “The big and strong will emerge even stronger from the downturn, and Intel is no exception. ” “The cumulative impact has left us more nimble, more competitive and more flexible that I can ever recall — certainly since the ’70s,” wrote Paul S. Otellini, Intel’s chief executive, in an e-mail interview before the earnings report. Intel’s chief executive has said that the innovative culture has made them more competitive and flexible as a business.
New ideas for the business that are considered will be ones that can help the business benefit financially and for the general running of the business. Innovative culture may also benefit the workforce and flexibility of businesses such as Intel in the future. An innovative culture will give employees job enrichment meaning they have the chance to range their abilities by giving ideas to help improve the business. This may increase flexibility in the business as workers are given various different tasks to enlarge their job meaning that managers can delegate various tasks to different employees.
Intel executives had feared that the Atom and netbooks could undermine the company’s more profitable business with traditional laptops, but they pushed hard on the products anyway. The new plants produce the chip at a lower cost, and Intel is the leading player in the fast-growing netbook market. “I have to give them a pat on the back for having the guts to go with Atom despite the fact that it could have hurt their business,” said Fred Weber, a former executive with Intel’s rival, Advanced Micro Devices. “They built the right chip for the right time. But there are clouds on the horizon. Although Intel recently paid A. M. D. $1. 25 billion to settle long-running litigation, the Federal Trade Commission and the New York attorney general’s office have filed sweeping antitrust lawsuits against the company. The European Union fined Intel $1. 45 billion last May. The governments charge that the company, the world’s largest chip maker, has abused its market power to squelch competition and charge higher prices to its customers. Innovative culture can also cause businesses future risk as well as success.
Intel’s innovative culture takes risks within the business which can prove to be costly financially. Innovation is not always consistent success for a business and can sometimes be too much of a risk which could result in losses like Intel’s $1. 45 billion fine. This high risk culture will make it hard to maintain the standard of innovative culture throughout the business which can bring future success. Industry experts also wonder how long Intel can continue to leverage its manufacturing muscle.
Contract chip makers like Taiwan Semiconductor Manufacturing continue to improve their production skills and have a wide variety of customers that help keep their plants full. This is another external influence that could effect the future success of Intel as competitors are gradually improving in the market. Intel’s rivals like A. M. D. and Qualcomm are reducing capital costs by using such contract chip makers. Indeed, A. M. D. spun off its factories into a new chip-making venture called Globalfoundries, which is backed by large investments from the government of Abu Dhabi .
China also continues to invest in contract chip makers as well. More significantly, demand for chips that use the ARM architecture, a competitor to Intel’s architecture, has been rising. Most commonly found in cellphones, ARM chips have started to make their way into computers and even computer servers — two markets where Intel commands an approximately 80 percent share. This shows that although an innovative culture is achieving success for Intel, it is not eliminating growing competitors easily which could effect future success for the business. “There is a possibility that Intel’s financial monopoly will be broken,” said Mr.
Weber, who has also received past investments from Intel for a start-up. “Was this Intel’s last chance to crank that old model? I highly doubt it. But it’s actually getting interesting to speculate about now. ” Intel generated in $11 billion in cash from its operations last year, and its financial strength has enabled it to withstand the economic and political winds and still pour money into some of the most expensive manufacturing facilities ever built. The company’s critics have long contended that it has earned such a luxury through anticompetitive practices.
But other large tech firms are in similarly strong positions and have used the recession as an opportunity to get a leg up on competitors. Oracle, the leader in database software, has moved to acquire the fallen angel Sun Microsystems, adding a large hardware business to its portfolio. Cisco Systems, the largest networking equipment seller, spent more than $7 billion last year on acquisitions that bolstered its positions in new markets. And Hewlett-Packard, the largest technology company, added the vast services business of Electronic Data Systems to complement its hardware and software product lines. Mr.
Otellini makes no apologies about Intel’s favorable position and said the company would march on into new areas like cellphones, cars and consumer devices on the back of its manufacturing might. Intel’s currenct success will give them the opportunity to enter these new areas as they have financial backing from previous successful innovations. “Everyone in the company knows that innovation is our lifeblood and did a fabulous job on delivering it,” he said. Intel have a good innovative culture which has clearly brought the business success though a huge market shares and profits through recent innovations in the business.
Intel have made innovation a culture for their business which has provided job enlargement for the employees who have contributed to innovative ideas which brought success to the business. The innovative culture can help the business in the future as it has dominated the market already with such thing as bargaining power being achieved. However, culture may not continue to be the same as employees enter and leave Intel which may effect the future success for the business. Nothing in a business can be considered to guarantee success in the future with internal and external influences which can change any business.