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1) Why was Intel initially successful in DRAMS?

While the demand for mainframe computers was growing, few semiconductor companies had experimented with DRAM, a unique industry and Intel was the only company which uses new production technology that leading costs cutting. Initially, Intel was the first mover in memory chip business with newest devices and strong and advance in product design. Moreover, the applied leadership at product development strategy could put Intel always ahead of competition. 2) How did Japanese companies come to be the international leaders in this business? Why couldnt Intel(or other American companies) recover? Japanese firms had a capability to fit to the market demand by introducing new products faster than its American competitors and also Japanese could gain cost advantage through its massive production volume. Key success factor of Japanese strategy was to invest heavily in manufacturing. The total of investment in this area was about 40% of sales revenue in new plant and equipment, as compared to only 22% for US firms. Also most Japanese semiconductors firms own high technology that available only in Japan such as photolithography. This made Japanese DRAM producers to be highly competitive, as such technology made Japan firms were much faster at developing process technologies and increasing production capacity. 3) How did Intel build a competitive advantage in microprocessors? How has the company managed to sustain the advantage over time? Intel made strategic decision to exit from DRAMs business and focus only on microprocessor. Intel through project CRUSH won contract to develop first generation PC from IBM with an intense marketing and sales campaign, this project was very important since it defined new open architecture standard for both software and hardware components including microprocessor. Also, Intel applied outsourcing strategy by licensing to 12 companies to produce chips, this strategy made Intel become sole source for the 386 microprocessor to all PC makers except IBM. Overall, the entrepreneurial culture and independence of middle managers to set strategic direction, both combined with strategic planning that embedded in the organization, resulted in rapid growth and sustain its advantage over time. To sustain the advantage, Intel executive successfully resolved the debate by listening to customers, and made decision to stay developing 486-based computers, Intel found out the unwillingness of users to switch to RISC a new architecture that would replace CISC the key strong factor of Intel. Also, Intel developed particular strategy to achieve an overwhelming advantage in performance over its cloning products. To carry out this strategy Intel invested heavily on human resources and new manufacturing technology. 4) Why did U.S. companies dominate the microprocessor business from the beginning, with Japan unable to gain a major position? The majority of computer industry standards originated from US rather than from other countries like Japan as the electronics technology was born in the US. There was a significant budget allocated for R&D as well as the domestic market for electronic products using microprocessor was huge. According to some research report, the majority of Japan electronic industry tends to emphasize more on producing electronic appliances which do not need powerful microprocessors, this leads to dependency of Japan PC manufacturer to US microprocessor makers. 5) What explains the different outcomes in the DRAM and microprocessor industries? What are the lessons for government economic policy? In DRAM industry, they did not consider technology as a competitive advantage so it is rather diffused instead of using patent or license to protect from clone. In contrast, most microprocessor companies applied intellectual property law to protect their own technology from competitors. In this case, Japanese showed its advantage in DRAM process technology, while US players including Intel own leading position in making microprocessors. The government could apply economic policies such as helping and guiding industry to make products that have comparative advantage to foreign competitors, continuously and consistently facilitate industry to do R&D and facilitate the establishment of industrial clusters that create added value and industry competitiveness.

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