Assignment #1 Exhibit A Five Forces Analysis:

Intel Microprocessors
Extent of Rivalry (Med)
Threat of Entry (Low)

HP, Dell
High economies of scale ( need to
produce on large scale to recover costs)
High capital requirements ( Factories
and R&D cost millions)
Strong brand recognition ( guarantees
quality)
Overall: Potential or actual entry does
not limit in this industry. Huge barriers
so Intel are not facing the threat of new
entrants

Suppliers

Power of Suppliers (Low)

Potential Entry

Industry
Rivalry
Substitutes

Silicon suppliers
Large volume buys ( Suppliers
depend on firms purchases)
Suppliers of a commodity(
Threat of Substitutes (Med)

Limited substitutes ( If you need a

Silicone is abundant and can be
microprocessor, there is no way around it)
purchased from anywhere)

Scattered suppliers( Intel not

Knock offs exist ( cheaper alternative,
yet does not provide same value)
dependent on 1 specific supplier)
Apple consumers may switch from PC but
High switching costs ( hard to adapt)
Overall: Supplier Power Low.
Overall: Threat of Substitutes Med.
Suppliers cannot drive up
Substitutes do not impact profits majorly.
costs to make Intels
suffer.
There are not many substitutes, with the
only substitutes being cheap knock offs, or
having to switch to Apple.

AMD, Texas Instruments, Nvidia

Moderate industry growth (Makes it more
appealing for rivals to expand overall pie )
High exit barriers ( In firms interest to
remain in industry and continue competing)
Few rivals( Less saturated market)
Different sized rivals (Intel are huge
compared to their rival AMD)
Brand identity ( works in Intels favor due
to higher perceived value provided by the
firm)
Overall: Rivalry is Medium. If you are an
existing well established firm, rivalry does
not affect P

Buyers

Power of Buyers (Med)

HP, Dell, scattered smaller PC

producers
Large volume buys (Intel depends
on these buyers)
High product differences ( Buyers
cannot attain same value from other
suppliers)
High brand identity ( Extremely
important part of PC, Intel provides
great performance)
Difficult to integrate backwards (
Intel not threatened by buyers
producing their own microprocessors)
Overall: Buyer power is Medium if you
are another large corporation (HP), and
low if you are not. Buyers cannot drive
prices down sufficiently for industry

ssignment #1 Exhibit B Industry Average Profitability Report

Name of your Firm & its Industry:

Intel microprocessors
Analysis of Industry Profitability

(e.g., Return on Sales)

Intel & competitor comparison

+19%
ROS Looks at income
23%
generated from sales. This is an
4%
important ratio when comparing
Intel to its rivals and just how
Economic Industry Industry
efficient they are at generating
Average Influence Profitabilit
income given their level of
y
sales.
ROS
2014
2013
2012
Intel

27%

23%

27%

AMD

-3%

2%

-19%

Texas
Instruments

23%

15%

22%

MCHP

23%

11%

28%

Source: All of the information above was

gathered from the companies 10K for the
year 2014