Strategic Management of Intel Case Study Example | Topics and Well Written Essays - 1500 words

Strategic Management of Intel - Case Study ExampleDr. Nicely concluded, afterwards eliminating other potential sources of the irregularity, that the Pentium chip itself must be soiled. After contacting Intels technical support service to no avail, he posted an electronic message to a Compuserve bulletin board to ask other Pentium owners if they were experiencing identical problems.The message set off a flood of Internet bulletin board postings that confirmed the irregularity. The news show media (print and television) soon released the story to the rest of the public and the concern all over the defacemented chip escalated. In November, Andrew Grove, chief operating officer of Intel, posted a message of his own. He acknowledged the problem, emphasized its minimal significance and made an wisecrack to replace the Pentium chip for users of the Pentium processor who are engaged in work involving heavy duty, concentrated blow point calculations.Meanwhile, Intel worked with Dr. Ni cely and other scientists to develop a workaround that it could build into its programs to avoid the flawed calculations. Intels offer and workaround and accelerated the concern and reaction by the Pentium public. In the face of its self-inflicted PR nightmare and increasingly minute media coverage, Intel decided in December to offer no questions asked chip replacement program to all of its Pentium customers. The caller-out would take a one time charge of $475 million against its earnings for the fourth quarter of 1994 to requital for this program.Perceived Product RiskIntels initial decision to tolerate the flaw was based on a quantitative analysis of its customers risks. After Intel concluded that these risks were extremely low, it decided that nonhing needed to be done. A few months later when its customers were made aware of the flaw, many of them felt they had been intentionally deceived and that they had paid a amplitude price for a damaged product. Intels customers ulti mately concluded that something had to be done.With all the debate exchanged over the months following the public exposure of the Pentium flaw, the involved parties did manage to agree on one thing. The heart of the write concerned risk. The issue in this debate can be broken down into two questions did the Pentium flaw expose Intels customers and Pentium owners (end-users) to undue risks and were those risks significant enough that Intel should replace all flawed chipsIntels at-risk customers, specifically IBM, were concerned that the flaw might diminish its reputation as a best product provider and, consequently, its sales would suffer. at that place was concern the public might view IBM as the source of the problem rather than Intel, to which the problem right belonged. The at-risk Pentium owners had already bought their computers. They were confronted with an involuntary risk. It was clear that the customers and the Pentium owners motivations to react were based on their asse ssments of risk.Intels approach to resolving product defects reflected an implied presumption that the assembler would be responsible for dealing with the end-users (Pentium owners). Intel also assumed that information about the flaw did not need to be passed along to its customers due to the insignificance of the flaw. When millions of computers with flawed Pentium chips passed into the hands of end-users, both assumptions would prove to be poor.Microprocessor defects