Are the revised strategic objectives (formulation) of diversifying into a number of other business areas a smart move?
Intel’s diversification strategy is a risky, yet extremely smart move for the corporation. Intel has been one of the world’s most profitable companies in history thanks to their narrow product line, beginning with computer memory in the 60s and 70s and transitioning to microprocessors in the 80s, and lack of competition. However, due to the decrease in personal computer sales and the increase in competition from companies such as AMD and IBM in the microprocessor market, while the microprocessor can still be a major part of Intel’s product line, they simply must diversify to remain a highly profitable company. Based on this, the real question is if Intel will implement this strategy in a way that will allow them to stay one of the world’s most profitable companies. Since Sept 11, 2001, the answer had been no, but in 2006, they solidified their strategy and their recent resurgence has shown that they are on the way to again being one of the world’s most successful companies.
Until 1999, Intel strictly manufactured personal computer microchips and the emphasis was on speed. At that point in time, the speed increase in chips began to slow due to physical laws. This led to a decrease in personal computer sales which even led to 2001 being the first year ever in which their was a decrease in sales. This, already cutting into Intel’s business, led then CEO Craig Barrett to lead his company to diversify into other microchip markets. They began incorporating technologies such as wireless data transfer and cellular telephone technologies into their chips and they began making servers, routers, and stand-alone web-surfing devices. Growing pains from this endeavor led to further decline at Intel, especially as Intel was blasted by its buyers for cutting into their businesses. Another factor that cut deeply in Intel’s business was the...