(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.
Stn_0515.doc