nbc1 2008, (c) 2008 jay a. smith 1 class 2 industry, strategy, business model (continued) intel case...
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NBC1 2008, (c) 2008 Jay A. Smith
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Class 2
Industry, Strategy, Business Model (continued)
Intel Case Study
NBC1 2008, (c) 2008 Jay A. Smith
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Announcements
Attendance listEmail accountsRegistration confirmations
Today: review, Intel case Next classes:
5/13 Sales & Marketing5/27 Dell Online Case Study6/3 Regional Goods Marketing Project
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4 C’s & 2 S’s Review
___ CompanySuppliers
Competitors
Substitutes
Channel Customers
Collaborators協力者 / 協業者 “5th C”
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Channel
How customer gets your product/service Direct – company’s own network
Sales Force, Mail, Telemarketing, Vending, Some Internet/Catalog, Company Store
Indirect – via one or more other companiesSales Agents, VAR (value added resellers),
Stores (department, convenience, supermarkets, Some Internet/Catalog (e.g. Askul)
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Collaborators
Partners, helpers, advisors, experts Directly or indirectly help the company Examples
Industry experts, user groups, educators, advisors Industry or trade groups Government, NPOs, universities Complementary product/service providers
Software makers for hardware Computer magazines, manuals, websites
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In Class Exercise
___ CompanySuppliers
Competitors
Substitutes
Channel Customers
Collaborators
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5 Forces Affect Industry Profitability
CompanySupplier
Power
New Competitor
Entry
Substitutes
Buyer PowerChannel / Customer
CurrentCompetitor
Rivalry
Profit = Price – Cost
cost
price
price
price
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Today’s Drucker
A business has 2 basic functions:
marketing
and
innovation.Peter Drucker
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Intel Case Study Technology Innovation
Big idea, new technology/business area: (semiconductors, IC chips)
Marketing Innovation Intel Inside
Company is more than its products “Platform” (product series, same technology base)
Strategic Choices
Sustainable Competitive Advantage
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Intel 1968-1977 Case
“Trying to do things nobody else could” – Robert Noyce (co-inventor integrated circuit IC)
Gordon Moore (creator of “Moore’s Law) Andy Grove joined, took personal “risk” First 2 DRAM products not successes 3rd product 1103 became world leader,
90% of Intel revenues (concentrated)
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Intel DRAM Strategy Strategy: push product design, be first to market
Design & process technology leader Investment in plant & equipment Costs drop over production volume (scale) growth Prices drop with competitive capacity DRAM generally not protectable with patents Japanese started introducing products more rapidly
Invested more heavily in production (44% vs. 22%) 1986 Intel decided to exit DRAM business
1/3 of R&D, but only 5% of Revs, was small player in market Japanese beat Intel on process technology (of commodity)
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Intel and Microprocessor 1970 CPU chipset order for Busicom calculator
Technology development “paid by customer” Bought rights for “non-calculator” use
Hard to see future even for Gordon Moore “…never gave it another thought” – Moore “We didn’t take it (PCs) seriously” – Grove
Non-sequential forecasting Sometimes easier for outsider to see
Exit: By 1984 mid-level managers shifting technology Hard to leave business that began company Especially for long time senior managers Mid-level managers closer to daily business realities
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Intel
IntelSuppliers
Competitors
Substitutes
Channel CustomersKyocera, etc
Motorola
AMD, TI, Cyrix
RISC
日本の DRAM
END
USER
Licensees-IBM-Others
DirectIBM
CompaqDell
Packard Bell
CHANNEL
SoftwareProviders• OS• Application
Equipment (sole/dual)
collaborators
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Apple/Motorola vs. IBM/Intel
First to Market Closed architecture Sole-provider
Exclusivity Proprietary
Big, famous name Standardized, open
architecture Components Software Scale economies
Intel gets benefit of IBM marketing and strategy (derived demand)
INTERDEPENDENCE OF COMPANIES (p.30, 22)
“Value Chain”
1994 Apple/IBM-Motorola PowerPC chip2006 Apple/Intel
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Intel Microprocessor ProgressionChip(bits)
Transistors
Year Introduced
Initial
Price
Licensees Intel-Chip Market Share
8086(8-bit)
29,000
1978 $360 12 30%
80286(16-bit)
134,000
1982 $360 4 75%
80386(32-bit)
275,000
1985 $299 1 (IBM) 100%-IBM
80486(64-bit)
1,200,000
1989 $950 ? ?
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386 Changes Everything (1985)
Intel 386 Investments$200 million for design$800 million for production facilitiesDecides not to license, except IBM
IBM choice allows Compaq entry and Win IBM delays selling, to create more closed
architectureCompaq enters Desktop market with Intel 386
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486 and Wintel Collaboration
Hardware advance precedes software advance Microsoft Operating System (new DOS) not ready for 386 Need large installed base of hardware for software upgra
de Emerging collaboration between MS & Intel
WINdows + INTEL = “WINTEL” platform Software + Brain
Software investments (past and future) Increasing switching costs
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“Intel Inside” – Marketing Innovation
Ingredient (材料) /Component (成分) Marketing Another example?
Intel is “superior to other chips” Market maturity, education higher (2nd, 3rd PC) Buyer Intel preference moved from 60% to 80% AMD: “it shouldn’t matter which chip” but it DOES
IBM, Compaq resisted, but then gave in Couldn’t fight Intel Better to have branded “Intel Inside” “premium” chip 6% rebate for use in partner marketing
Fight competitors with technology, marketing, lawyers and money power (all pointed to same goal) 1997 spent $750 million More valuable than patent
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Ending Question
Is the internet good or bad
for Intel?
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Some Important Strategic Ideas Where is the most “value” in a computer? Success attracts competition, company must protect
against 2005 Intel has 82% of PC processor market
Technology moved so rapidly that patents became obsolete protect by know-how, branding, scale, luck
Small stuff that goes inside other stuff Allows focus, expertise, scale, “piggy-backing”
Thrived on derived demand driven growth and rapid change
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Typical Market Positions & Strategies
Position Goal Strategy
LeaderMost
Sales
-Grow Market
-Grow Share
ChallengerChallenge Leader
-Target Leader
-Target Small
FollowerGrow Carefully
-Maintain Base
-Grow Quietly
NicheFind Safe Space
Specialize
Toyota
Nissan
Mazda
Daihatsu
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Fragmented Industries (fragment= 破片) Market divided over many
companies No dominant leader Largest competitor may only
have a few percent market share Examples:
Restaurants Book stores Repair shops Publishing Pet shops Hair Salons Hotels
第一ラーメン
第二ラーメン
第三ラーメン
第四ラーメン
第五ラーメン
第六ラーメン
第七ラーメン
第八ラーメン
第九ラーメン
第十ラーメン
第十ーラーメン第十にラーメンSlice 13
Slice 14
Slice 15
Slice 16
Slice 17
Slice 18
Slice 19
Slice 20
Slice 3999
ラーメン
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Fragmented Industry Strategies
Construct formula facility Expand geographically Increase vertical integration Become low-cost producer Specialize by product/service Specialize by customer type Build brand
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Company
Who are we? Why are we here? What are our goals? What are our strengths? What are our weaknesses? What are our key competitive advantages? What is our market position? What is our strategy? What is our business model?
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Homework Assignment
Design your own personal “life” meishi
わしのめいし
1. Your Name (as you want it)- Nickname (optional)
2. Title (life position)3. Purpose statement4. Ideal living place(s)5. Identifying email address6. Anything else important
- Logo- Website- Business Name- Cool Phone Number
Print 15枚 copies pleaseSend me a file by 5/12
Email: [email protected] (any languages that fit)
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Homework Assignment
Design your own personal“life meishi”
Jay Andrew SmithInternational Educator
Promoting GrowthAnd UnderstandingAround the World
New York + San Francisco + Kagoshima + [email protected]
SAMPLE
name
“title”
Purpose/goal
Cool place(s)
Meaningful email/HP address
logo
www.vistaprint.jp, ppt, Paint, illustrator, etc. by hand all OK
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4 Cs + 2s – The Players Company (us)
Mission, Goals, People, Structure, Strategy, Model
Customer (goal) Who? How many, How strong, How important, Wants & Needs
Channel (path) Sales Team, Distributors, Service, Support, Partners
Competition (them) Who, Current, Future, Advantages, Position
Substitutes (other choices for customer) What, Advantages, Costs, New Technologies
Suppliers (inputs) Who, How many, How strong, How important to us,
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5 Forces Buyer Power (Customer /Channel)
How many, how big, how valuable, how sensitive Supplier Power
How many, how big, how important to us, to them Current Competitor Rivalry
How many, cost structure, capacity, positioning, exit costs New Competitor Entry
Ease of entry, cost of switching, Substitute Products/Services
Advantages/disadvantages, cost of switching