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1)What actions did Intel take to create an industry standard in microprocessors?

Intel successfully changed their business from manufacturing memory to processors and led the market with their innovative products that allowed them to hold a competitive advantage. Intel successfully signed a contract with IBM, providing them with the microprocessors for its PC, which became the standard. Since Intel had patents to be the only company to produce standard microprocessors, they had right to sue companies that try to copy its microcode, they manufactured enough microprocessors and eliminated many licenses, which increased profits by a great percentage. Intel’s customers such as Samsung, Nokia Dell, and HP have medium buying power since they can’t bargain much on the price from lack of knowledge about the costs of production for processors. Moreover, there is a large pool of customers and limited processor producing companies, which limits the buyers to only a few companies. Nevertheless, companies such as Samsung are making their own processors and can increase the competition in the market. Intel has high bargaining power with their suppliers since the material used to manufacture the system are abundant such as silicon, metal and plastic, allowing Intel to work with several suppliers at the price and quality that is seen best. Since many computers, mobile phones, and other high-tech devices rely on processors in order to function, the threat of substitutes is low. But due to the advancements in technology, the processors that Intel is producing for the existing products may be obsolete and other companies in the market can replace these processors in future products. On that note, the threat of new entrants is high due to the technologically advanced products that would compete with Intel’s processors, but medium/low if these entering companies are trying to enter the existing processor market since they would need a high capital investment, advanced technology, and eventually would barriers of patents that cover Intel’s developments. Lastly, the competition of rivalry is low since Intel has the largest share of the market in PC and mobile processors and their customers such as Samsung, Dell, HP, and Nokia are loyal to their supplier. The number of competitors in the processor industry is low and the quality difference is high, baring in mind the high costs to switch.

2) Why was Intel so successful in microprocessors? How did it achieve a sustainable competitive advantage?

Intel has proven itself to be the most successful microprocessor manufacturing company capturing a vast percentage of the market share with their top-notch products and quality. Using the VRIO Framework, Intel is has value in its technological innovations allowing them to stay one step ahead at all times, and as well as the support and positive attitude of their management who were encouraged to express their creativity, and make mistakes in order to invent breakthrough technologies. Intel is financially capable of investing in their valuable research and development team and flexible for any alterations. The product that they were developing was not rare since there were few companies that had the technological advancements and manufactured similar products as Intel. The management’s behavior was based on how they were treated, and many companies were financially capable to invest in research and development and created similar processor products such as Intel. With regards to Inimitability, the company’s only sustained strength is their valuable and exclusive research and development that has been accumulating since before Intel’s creation of processors. The technological advancements, management skills, and financial abilities are easy to copy. As the large company they are, Intel finds a way to stay organized in their company and planned ahead for the future. They have strong investments in technology, management, and further research and development in order to continue to prove their passion for innovation with the support of their management. Intel has proven signs of differentiation focus providing their customers with technologically innovated products that are manufactured with speed in a unique way. Intel charges a premium for their products, since they provide their customers with extra features the competition does not offer, that enable them to increase revenue, and gain a larger share of the market. Intel remained unique in the microprocessor market with their act of secrecy and patented innovations that prevented direct competition. Although Intel and AMD are competition in the same market with similar products, Intel gains experience, research and development, and knowledge in their products, which allows them to innovate on a quicker pace and differentiate themselves with newer products, at a cheaper price. I believe the feedback loop that Intel receives from its customers is the satisfaction of the end users once they see the Intel logo on the start up of their computer, knowing that the PC, mobile, or technology devices have the best quality, fast speed and durable processors. Intel’s inimitable research and development and advanced manufacturing allow it to sustain a competitive advantage by regularly innovating their processors and always staying ahead of the competition.