INTEL'S THEORY

OF BUSINESS
CASE STUDY

By:
Shivangi Kumari
Saayana .S. Prakash
Ananya Vaishnavi
Malvika Batra
Himani Yadav
 •Andrew S. Grove was born on 2nd September 1936 in
Budapest, Hungary.
•He graduated from the City College of New York in 1960.
•Graduation, he joined the Research and Development
Laboratory of Fairchild Semiconductor 
Andy Grove: •became Assistant Director of Research and Development in

Intel's First 1967.

•In July 1968, Grove participated in the founding of Intel
Employee Corporation.
• Andy Grove became Intel’s President by 1979 and CEO by
1987
•Grove played a critical role in the decision to move Intel’s
focus from memory chips to microprocessors and led the
firm’s transformation into a widely recognized consumer
brand.
 • In 1993, Andy Grove – president of Intel. 
• CEO – Gordon Moore developed the Moore's Law, which stated that the number of transistors you could
place into a memory chip tended to double every 18 months and Intel expected that this law was
designed only for them.
• In 1980 Intel was booming and was defined by memory chips. But there was a problem as Intel forgot
to inform the Japanese competitors about the memory chip. So, Intel began to get undercut by
the Japanese competitors as the market share held by Japanese companies doubled from 30% to 60%
between 1978 to 1988.
• Initially, Intel did not worry about their competitors rather they continued as before as they had belief in
the success of their memory chips and thought that they could get out of this situation by developing a

The Memory •
better chip due to which they could get back their dominance and charge a premium price. 
In 'Icarus Paradox' Danny Miller stated that the capabilities that create a company's success can also be
its downfall. It meant that unless Intel is not able to correctly diagnose the situation and take action

Chip Market its success will be short-lived. There was various research going on other products such as the
microprocessor, but still the company's resources were mainly focused on memory chips and also most
people at Intel had so much emotional capital invested in memory chips that it was difficult to accept
that the Japanese firms had turned it into a commodity product.
• The main problem with Intel was that their first reaction to this news was of denial, before they came
to realize that they were behind. There was great deal of debate and discussion at Intel but there was no
real discussion about their core product, memory chips. 
• Intel thought of twice the price of what the Japanese companies are earning, but they did not realize
that the twice the price they were thinking of earning could also get to losses.
• Even being in losses, Intel did not change its product. It continued developing its core product memory
chips as the business had been really good. But still the profits fell from $198 million in 1984 to $2
million in 1985.
 • In 1985, Andy Grove discussed the problem with
Intel chairmen and CEO, Gordon Moore.
• Grove took advice from Moore for exiting from
their memory chips to microprocessor.
• This requires firing 1/3rd of the workforce and
closing of 7 factories.
• Intel faced a 'strategic inflection points'.

Time For • In order to achieve the objective, managers were

allocating resources from less profitable to more

Change
profitable lines of productions.
• The Intel's biggest customer and shareholders
was IBM. It was 60 times the size of Intel.
• It wanted Intel to license its 386 microprocessors
to different manufacturers.
• During the launch of 386, Grove told that
technology would not be licensed to
other producers.
 • The development of the PC market was to drive intel's monstrous achievement.
• In the event that an individual had put $1000 in INTEL in 1985, by 2012 the
speculation would be worth $47000.
• During Grove's eleven years as CEO, Intel developed at a pace of almost 30%.
•  In 1998 Grove relinquished his role as CEO and became Intel's chairman
•  A new marketing campaign was launched by the marketing director having the
slogan 'INTEL INSIDE' in the year of 1990.

Back to • The effective promoting effort transformed INTEL into an internationally perceived
brand.

Growth • In 1994, a mathematician discovered irregularities in the way that Intel's Pentium
chip performed complex, scientific calculations.
• When the mathematician's discoveries were posted on the web, public came out
asking for an explanation for which the IBM stated that it is suspending the sales
of its Pentium chip-based computers.
• Instead of recognizing on the strategic inflection point, Grove only focused on the
issue from an engineer's perspective rather than that of the consumers. 
• Due to this at the end Grove recalled the product which costed Intel $475
million and expressed his regret to the consumers. 
• He had neglected to understand that a brand is created with a client and as a
particularly client's emotional reality turns into the organization's goal reality.
 Till 2005,Grove was Intel's chairman. He believes in
'constructive confrontation' which leads a decision as a debate
in a positive way ; anyone can challenge or encounter other
ideas till they are prepared and have fact and valid point to say.
Hence, he started a culture of knowledge power above position

Other
power. He was depended on the people known as Cassandras,
the one who can quickly recognize the changes and can predict
the early warning. According to Grove, his primary
responsibility was to protect the organization from
competitor's attack as he had learnt that the more successful

Changes
one is, the more people want to break them into pieces until
there is nothing left.
Intel's CEO Brain Krzanich entered into a technology alliance
with ARM holdings by 2016 as a move towards core computing
platform from personal computer. His view point is to offer
Intel's core strength i.e.;chip to other chip making companies
working with ARM design. This will decrease the level of
competition via collaboration with other companies and also
work as a hedge against internet of things which was barely
making any impression.