Case study assignment technology strategy -

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ASSIGNMENT – 1

Case Study Analysis

9/15/2009

Your Name

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September 15, 2009

ASSIGNMENT – 1

Advanced Micro Devices 2

Introduction

Technological companies have been evolving since last few decades. Advancements in

the technology and radical innovation have forced these sorts of companies to upgrade

themselves rapidly with the changing environment. Advance Micro Devices (AMD) is

one of these companies who are in the business of silicon and software since four

decades. AMD is founded in 1969. It is a worldwide recognized company which is

passionate about innovation. It is a global provider of innovative graphics, processors and

media solutions. The main objective of the AMD is to become best energy-efficient that

will provide visually realistic solutions. Its revenues have grown up to $5.7 billion

(approx) in year 2006 (AMD Official Website). Some of its major competitors are ARM

Holdings, Intel Corporation, and NVIDIA.

Components of the Strategy:

There are five major components of a strategy which are; scope, goals and objectives,

resource development, identification of sustainable competitive objective and synergy.

[Walker, Mullins, & Larrehe, 2008]. There are many strategic challenges that a company

has to face. Especially, technological oriented companies have to be flexible and quick in

their strategy making and implementing in order to keep them updated with the

environments. In this kind of industry, each company struggles hard to attract the

customers with their new technological product and features.

AMD always tries to focus on planning exact and well thought out strategies by making

the maximum use of five components of strategy. The scope for AMD is clearly

identified and circumstances and environment suggests that it is right to assume the scope

of emerging technologies and hence of AMD. First, AMD started with only a short

product line and at the time passed, it jumped into diversification and more innovative

products that caused reasons for AMD’s higher scope.



September 15, 2009

ASSIGNMENT – 1


The success of every organization is largely dependent on how clearly it defines its Goals

& Objectives. AMD has clear cut goals and objectives to serve its valued customers.

AMD has an objective i.e. AMD does not follow the principle “technology just for the

sake of technology”. It has always an objective of fulfilling people needs ahead of

technology. Throughout its journey, AMD always focused on developing its resources in

order to tackle any disturbances and hurdles that fall into its way to success. Also the low

cost resources for manufacturing were of great interest to AMD.

The strategies made are consistent with environment and have the flexibility to change

along with a change in environment. AMD has the belief that the strategy planned should

be sustainable and should create a competitive advantage for the organization. So when

planning the strategy, these points grab attention of planners.

While talking about synergy, AMD does not seem to be comfortable about sharing its

resources or technologies across the industry. However, AMD and NVIDIA have some

sort of synergies as they both are working on the project in which graphic cards by the

NVIDIA could get compatible for AMD new silicon boards.

Corporate Strategies:

There is a hierarchy of strategies i.e. corporate level strategies, business level strategies,

and functional level strategies [Walker, Mullins, & Larrehe, 2008]. While formulating

corporate strategies, managers should coordinate the activities of business units or

separate legal entities. The primary focus of these strategies is organization’s scope and

resource development [Raymond & charies show, 2003]. The main purpose of these

strategies is to address the questions like what business we are in. what business we

should be in? How much resources should be allocated to each business to achieve

organizational goals? Corporate level strategies includes; corporate mission, corporate

goals and objectives, corporate development strategies, and development of resources

[Walker, Mullins, & Larrehe, 2008].



September 15, 2009

ASSIGNMENT – 1


Each organization wishes to maintain an edge or distinctiveness over its competitors.

These competitive edges may be like human resources strength, financial and

technological resources etc. AMD has taken initiatives in its corporate strategies by

Digital Inclusion, Fair and Open Competition, and has adopted modern and latest

manufacturing technologies. The strategies for growth of business are made at corporate

level. To measure the growth of a company the critical factors are sales of the company,

unit sales and most importantly percentage change in sales [Raymond & charies show,

2003].

In the nutshell corporate strategy is all about making a distinctive position of your

company in the clusters of competitors. This leads the company to the comparative

advantage. Same situation is with AMD, they are providing high quality distinctive

products to their employees.

"Only two companies in the world develop and deliver x86 microprocessors in volume.

Only two companies in the world deliver leading-edge 3D graphics. Only AMD does

both."

- Dirk Meyer, AMD president and CEO

This was the message by the CEO and the president of the AMD that shows their basic

corporate struggle to get a comparative and distinctive advantage over the other

companies. They also consider that world is world is focusing on the major changing

environment. And they try to position them to have maximum benefits because, they

have developed a motto like, 'when you think value, you think AMD.' [Official website

AMD]

Business level Strategies:

The focus of business level strategy is on the competitiveness of business units to its

industry. These strategies strive to find out sustainable competitive advantages for their



September 15, 2009

ASSIGNMENT – 1


business units. AMD is using low-cost strategy as it has low cost sources of supply and

modern technologies which gives it a competitive advantage over its competitors.

Further, the business level strategy takes into account “scope”. Which market segments to

be compete in? And what products should launch in which segment to give a hard target

to competitors? [John A. Byrne, 2006] Business level strategies include business unit

objectives, competitive strategy, and development of resources [Walker, Mullins, &

Larrehe, 2008].

AMD has developed many strategies for its business units, due to greater strength in

Human Resources; it has developed the strategy of Superior Customer Services. And, to

cope with its major competitors, AMD uses the Low-Cost Strategy by minimizing its

costs of production and marketing. As the discussion with the Bob Rivet and AMD's

CEO Dirk Meyer about the current strategy plans for the company they said that we have

plans for conversion to 45nm manufacturing technology. “We'll be fully converted in first

half of next year,” AMD's CEO Dirk Meyer. [Traian Teglet, 2008]

Marketing Strategies:

Market strategies are responsible for effectively allocating the marketing resources for

attaining the organization’s objectives within a specific market segment. These strategies

help to identify target markets for particular products [Ronald, Katharine, Valarie, 2004].

The organization also maintains a competitive advantage by offering a proper marketing

mix (4Ps) according to the needs of customers or potential customers in that targeted

market. Some of the marketing strategies includes; marketing strategy for product,

market entry for new product, R&D strategy and plans, human resources strategy and

plans and operations strategy and plans [Philip & Gray, 2008].

The business level strategies are vital for success of Strategic Business Units (SBUs).

SBUs at AMD are delivered with objectives known as business unit objectives. Each unit

considers those objectives and gives its maximum to achieve those objectives. Each SBU

also needs sources for conducting its part of business. These strategies also underlie the



September 15, 2009

ASSIGNMENT – 1


allocation of resources to these business units [Jay B. Barney, 2005]. AMD has a separate

Head for managing these strategies and amending them according to changing needs.

Conclusion:

The factors influencing strategies are; competitive factors of competitors, development in

industry, globalization, and information technology (Walker, Mullins, & Larrehe, 2008).

Sustaining in such a competitive industry is not an easy task. AMD is dealing quite well

with these factors. Its efficient R&D department is one of the reasons of its presence in

such an industry for decades. Its global presence and quality of products are growing its

revenues at a steady pace. Overall, AMD has implemented quite good growth strategies

that are aligned well with the corporate, business and market level strategies. The key to

its success is that they are flexible and quick and that is why it is one of the largest

companies providing high profiled technological services over the globe.



September 15, 2009

ASSIGNMENT – 1


Works Cited

1. Philip Kotler and Gary Armstrong (2008), Principles of Marketing, Prentice hall

2. Raymond miles and charies show (2003), organizational strategy, structure and

process, McGraw Hill

3. John A. Byrne (2006), AMD standouts, business week April 10,2006, pp. 84-143

4. Walker, O. C., Mullins, J. W., & Larreche, J.-C. (2008). Marketing Strategy: A

Decision-Focused Approach. New York: McGraw-Hill.

5. Jay B. Barney (2005), firm resources and sustained competitive advantage,

journal of management 39, pp. 96-123

6. AMD Annual Report 2008, available at http://phx.corporate-

ir.net/phoenix.zhtml?c=74093&p=irol-reportsannual, accessed at 13/09/09

7. Interview with Mr. Utz-Hellmuth transcribed on knowledge@wharton (2005),

available at www.knowledge. Wharton.upenn.edu

8. Ronald T. Rust, Katherine N. Lemon, and Valarie Zeithaml (2004), return on

Marketing: using Cuustomer Equity to Focus Marketing Strategy, journal of

marketing 68, pp.109-127

9. Management Strategy and Analysis, available at:

http://www.amd.com/us/aboutamd/corporate-

responsibility/strategy/Pages/management-strategy.aspx, accessed at 14/09/2009

10. Traian Teglet, (2008), AMD Talks About Current Business Strategy,

http://news.softpedia.com/news/AMD-Talks-About-Current-Business-Strategy-

95889.shtml, Accessed at 13/19/2009



http://www.amd.com/us/aboutamd/corporate-responsibility/strategy/Pages/management-strategy.aspx

http://www.amd.com/us/aboutamd/corporate-responsibility/strategy/Pages/management-strategy.aspx

http://news.softpedia.com/news/AMD-Talks-About-Current-Business-Strategy-95889.shtml

http://news.softpedia.com/news/AMD-Talks-About-Current-Business-Strategy-95889.shtml