company’s overall position. An evaluation of Intel’s strengths, weaknesses, opportunities, and threats support the fact that above all Intel has established a healthy position in the industry. TESTS OF A WINNING STRATEGYTest 1: Goodness of FitThe goodness of fit test determines if a company’s strategy is suitable for its internal and external situation in order to obtain market success. Intel is a member of the technology sector and in the semiconductor industry. Firms involved with technology must deal with the quick obsolescence that is inherent when dealing with computers. An example of this is Moore’s Law coined after Gordon Moore, Intel’s founder, who truthfully stated that “the power and complexity of silicon chips would double every year with proportionate decreases in cost”. This external environmental situation causes two problems for companies in the industry. One problem is that a company must constantly innovate to stay on top and secondly, the company will need capital in order to create new technology. Does Intel’s strategy adequately deal with the constant change that is prevalent in its business environment? The Intel’s strategy is to cannibalize its own products. In other words Intel strives to make its own products obsolete. A Company’s profits and market position can be severely undermined if another company offers a faster chip with more capabilities. Intel is able to do this because of its internal situation. Intel has vast amounts of capital, “…a ‘war chest’ of about $10 billion”. This is useful when the average plant costs will be about $2.5 billion dollars around the year 2000. Test 2: Competitive Advantage TestThe competitive advantage test ascertains if a company’s strategy leads it to have a sustainable competitive advantage over its rivals. The competitive advantages that Intel has are its brand image...
