Intel Corporation’s successful semiconductor business strategically addresses the strengths, weaknesses, opportunities and threats (SWOT) in the organization and the external environment. The SWOT analysis model is a tool used to determine the most significant internal strategic factors (strengths and weaknesses) and external strategic factors (opportunities and threats) that affect the performance of the firm. Intel’s performance is subject to the impacts of these factors. As a leader in the global desktop microprocessor market, the company must overcome its weaknesses and the threats to its business. Intel must also develop its strengths and exploit its opportunities to stay ahead of competitors like AMD in the desktop market, and ARM and Apple in the mobile device market (Read: SWOT Analysis of Apple Inc.).
This SWOT analysis of Intel shows that the company is in a comfortable position where it is easy to maintain market dominance. Nonetheless, the company must address the critical issues shown in the SWOT analysis, to ensure long-term success, considering rising competition from other technology firms.
Intel’s Strengths (Internal Strategic Factors)
Intel Corporation is the strongest competitor in the global market for semiconductors. This part of the SWOT analysis identifies the company’s main strengths or internal strategic factors that have an enabling effect for business success. The following are Intel’s strengths:
- Strong partnership with Microsoft
- High-efficiency fabrication processes
- Economies of scale
Intel has an enduring partnership with Microsoft Corporation, which dominates the market for desktop operating systems (Read: SWOT Analysis of Microsoft). This partnership is partly responsible for the success of the two companies. For example, Intel continues to benefit from the wide profit margins of its processors developed for market-dominant Windows systems. On the other hand, Microsoft benefits from the partnership through the satisfactory performance of Windows systems based on the processing power of Intel’s products. Both companies use this strength as a barrier to counteract the effects of new entry (Read: Five Forces Analysis of Intel). The high efficiency of fabrication processes is a major strength that Intel uses to build competitive advantage. Such efficiency allows the company to supply processors to equipment manufacturers on time and at adequate amounts. Also, the company’s long history of focus on semiconductor fabrication has led to economies of scale that competitors find difficult to match. In this part of the SWOT analysis of Intel, organizational capabilities and strategic alliance strengthen the business.
Intel’s Weaknesses (Internal Strategic Factors)
Intel remains the industry leader, but continuing this leadership requires addressing the company’s weaknesses. This part of the SWOT analysis specifies the organization’s weaknesses or internal strategic factors that impose challenges or limits on performance. Intel has the following weaknesses:
- Insignificant presence in the mobile market
- Dependence on Windows machines
- Limited business diversification
Intel has a mutually beneficial partnership with Microsoft. However, this partnership leads to a weakness because it compels Intel to focus on the design and fabrication of microprocessors for Windows systems. As a result, the company lacks comparably extensive business processes for other products. For example, Intel remains unsuccessful in developing competitive and profitable processors for mobile devices. Also, the partnership makes the company susceptible to declines in desktop/PC sales. Another weakness is Intel’s minimal business diversification. Diversification shields the organization from market-based risks. Intel needs to implement major strategic changes to address the weaknesses specified in this part of the SWOT analysis.
Opportunities for Intel Corporation (External Strategic Factors)
Major opportunities are available to improve Intel’s performance. This part of the SWOT analysis identifies business opportunities or external strategic factors that facilitate growth. The following opportunities are available in Intel’s external environment:
- Business diversification
- Product development for the mobile market
- Flexibility of processors
Business diversification is an opportunity for Intel to improve its performance. For example, the company can develop semiconductor products to target new segments in the household appliance market. Acquisition of other firms can also diversify the business. Diversification remains a significant opportunity that has not been fully exploited, considering Intel’s generic strategy and intensive growth strategies. In addition, the company has the opportunity to develop products for the mobile market, considering the lack of successful Intel processors for mobile devices. Also, the company can increase the flexibility of its processors to widen their potential use. In this part of the SWOT analysis of Intel Corporation, the opportunities point to increased effort outside of developing microprocessors for Windows systems.
Threats Facing Intel (External Strategic Factors)
Intel’s business could potentially decline as a result of unaddressed threats in the external environment. This part of the SWOT analysis specifies the threats or external strategic factors that reduce or end businesses. In this case, Intel faces the following threats in its business environment:
- Rapid market shift to mobile computing
- Competition with ARM in the mobile processor
- Competition with AMD and ARM in the PC market
Intel leads in the PC processor market, especially because of the dominance of Windows systems. However, the rapid market shift to mobile computing is a growing threat against the company. For example, as PC sales decline, mobile device sales increase. This condition threatens Intel, which has failed to capture the mobile device processor market. In relation, competition with ARM devices is a major threat against the company. ARM Holdings develops processor architectures used by the majority of companies in the mobile device market. Moreover, in the PC market, minor competitor AMD has potential to capture a bigger market share, and ARM Holdings has potential to succeed with its enhanced processors for desktop systems. Intel must ensure competitive advantage in the PC market and develop a competitive product for the mobile device market to address the threats specified in this part of the SWOT analysis.
Intel’s SWOT Analysis – Recommendations
This SWOT analysis of Intel indicates current stability based on business strengths. A dominant industry position shows that the company has what it takes to withstand the effects of competition and new entry. However, weaknesses make the company vulnerable to threats in its business environment. For example, because of its insignificant presence in the mobile market, Intel is vulnerable to the threat of the rapid market shift to mobile computing. Also, the company is dependent on Windows machines, making it vulnerable to the threat of competition with AMD and ARM. Nonetheless, Intel has opportunities to address these issues.
Based on the results of this SWOT analysis, a recommendation is to improve Intel’s position in the semiconductor industry through increased efforts to develop competitive and profitable processors for mobile devices. It is also recommended that the company should establish new partnerships to reduce its dependence on Microsoft. Another recommendation is to diversify Intel’s business, such as through new acquisitions in other industries, for the purpose of reducing market risks and the potential impact of declining PC sales.
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