(BUS 13) News Update May 15, 1998

Comments on Our Discussion of the Intel Case

Hopefully you observed that there is no one correct answer to the Intel case -- indeed this is true of most business situations. One of our classmates told me after class that he recently had a discussion with two Intel managers involved in the decision to drop DRAMs, and they were still arguing whether Intel had made the right decision, 12 years after the fact! These particular managers thought there were reasons (not developed in our case) that supported the very "niche" strategy which I labeled "least practical." I would still argue that Intel made a good decision at the time, given the facts in the case and their subsequent success. No one will ever know whether they made the perfect decision.

It is because of this uncertainty and complexity that the case method was developed. If everyone prepares the case in advance and participates in the discussion, then we all learn more because of the different view points brought to the table.

Reflecting on our discussion, I would also like to clarify Intel's DRAM position on the Price/Feature matrix. When someone in the class asked, "Who decides where Intel is on the matrix?" I replied that the class decides -- missing the point of the question. (Thanks to Figen for pointing this out.) Intel thought they were differentiating, but the customer simply did not care about the things Intel was offering. In fact, the customer wanted a commodity so that they were not locked into one supplier with the resulting high prices. The market makes these decisions, not the company involved. Consequently, Intel's DRAMs ended up as a high-priced commodity (something that no one wants to buy).

Finally, a comment on entry barriers. Entry barriers get their name because they determine whether it is easy or difficult for a company to enter the market, but even existing market participants feel their impact. For Intel, the changes we identified as occurring between the 1970s and the 1980s made it difficult for Intel to compete effectively in the DRAM market, even though they already participated.

The Written Assignment

Auditors do not need to turn in the written assignment, but ALL students selecting the grade OR the credit/no credit options must do so.