By Peter Pham - August 30, 2012 | Tickers: AMD, AAPL, ARMH, INTC, MSFT | 0 Comments

Peter is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.

Highly successful companies are not accidents. One does not just wish billions of dollars in revenue, high profit margins and streamlined operations into being. Intels (NASDAQ: INTC) management prides itself on being at the right place at the right time; from strategic decisions to rewarding and nurturing their employees, all of these details are prioritized. After reporting record annual revenue at the end of 2011 of $54 billion, Intel was quick to realize that the management should not be complacent but rather made decisions for promotions and rotations quickly.

But Intel is at a bit of a crossroads as their focus as chip designers has always been about producing more IPC (instructions per cycle). Their chips reveal a form of myopia that has them slightly behind the curve as the world of computing shifts away from discrete PC units to devices that are more an extension of us. While that transition takes place, however, Intel will rely on its core strengths of design efficiency and manufacturing to carry them while new products designed around power management are developed.

Mastering Management

The technology industry is so competitive and changes within it so rapid that it requires tremendous precision in making deals leading to mergers and acquisitions. This is one area that Intel has down cold. Developing strong partnerships and purchasing companies that they have worked in the past is Intels process. In essence, doing business with someone is the best form of due diligence. In this context, purchasing 15% voting rights in ASML was of great significance as it would help Intel lower the cost of manufacturing 450mm wafers, thereby streamlining production as the competition moves from 300mm to 450mm wafers.

Managements efficiency has allowed them to fend off the odd challenge by rival AMD (NYSE: AMD) over the years by using size to their advantage and executing at a consistent level, making AMDs margin for error very small. Moreover, the top management and executives encourage the middle management to seek ideas and suggestions from those closest to the market in order to develop products thatll help them acquire first mover advantage with each chip generation.

To develop specific solutions within a market a functional team is set up for the development of any particular product or venture in the pipeline. A functional team at Intel is made up of the technical departments needed for the job at hand. Having functional teams at the product development stage is designed to get the maximum out of the expertise team members have. But this structure retains the flexibility to form cross functional teams for more complex tasks. Product development and product ownership is the same thing at Intel in that the person that generated the idea becomes a part of the product development cycle. Allowing people to see their ideas through to the end is an important part of maintaining employee loyalty.

The Current Conundrum

Even though the management at Intel has worked exceedingly well in making the organization the giant in the chip manufacturing industry, management has not taken any backup measures considering the macroeconomic problems surrounding the economies across the world. There are a number of challenges on the horizon: rising costs resulting in margin erosion, shifting computing tastes which de-emphasize their x86 i-series Core CPUs in favor of ARM Holdings-based (NASDAQ: ARMH)SoCs.

Here is the original post:
Managing Intel’s Way