The world of business is currently greatly affected by the processes of globalization, trade liberalization, and integration of the countries’ markets. Drawing from this, business companies implementing the international developmental strategies at much larger scopes than it could be observed yet two decades ago. One of the tools in the international strategy is the capturing of the mast quickly developing Asian markets and spreading their production and sales networks in such countries as India. Intel Inside, one of the world leaders in the IT area and computerized technology development, is also involved in the development of the Indian IT market. The company invests immense funds into the proliferation of its Indian networks seeing the great perspectives of the local market in respect of both the economic development of India and the demographic potential of the country and of Asia on the whole.
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Intel Inside Background
The Intel Inside Corporation was founded in 1968 in Santa Clara, California, USA. Originally titled Integrated Electronic Corporation, the company developed its current name by taking the first two letters from each of the two words and forming an acronym (NASSCOM, 2006). The major operation area of the company is the invention and mass production of microprocessors and cores for computers of various types. Nowadays, the company is acknowledged as the 23rd most powerful band of the global scope (NASSCOM, 2006). Intel Inside currently operates over 200 facilities situated all over the world and employs over 100,000 people globally. The revenue levels observed in 2005, $38.8 billion, report steady growth over the recent years and prove the correct strategy chosen by Intel Inside (Global New Analysis, 2005).
The first steps in the direction of the expansion of Intel to India were taken in 2005 when Intel CEO Crag Barrett visited this country and stated the plan to invest over $1 billion into the development of Intel’s Indian network over the next five years. The company also outlined the four strategic areas that should be primarily developed in the Indian network; they include “business expansion, venture-capital funding efforts, the company’s research and development unit in Bangalore and its education initiatives in the country” (Physorg, 2005).
The results of the plan manifested themselves already in 2006 when Intel announced an additional $400 million of investment for Indian network development, and the scope of transactions carried out by or through the Indian market amounted to over $13 billion (Global New Analysis, 2005). Currently, apart from business operations, “Intel India invests heavily in India’s education and community development through Intel Involved India, an employee community volunteer program” (Intel, 2009) and contributes greatly to the community development. Accordingly, Intel has made obvious progress in developing its Indian network over the past four years.
Market Environment Analysis
Needless to say, to succeed in the Indian market, Intel had and still has, to consider a lot of political, economic, social, technological, legal, and environmental factors of the latter. The so-called PESTLE Analysis will demonstrate the work of Intel in all these directions and will demonstrate how the company faced the challenges of the new market:
|Political factor||To launch the production facilities in India, Intel had to negotiate the process and agree with the Indian government (Physorg, 2005)||The agreement was achieved when Intel proved its ability to develop the IT industry of India and contribute to community development on the whole in education, health care, etc (Physorg, 2005)|
|Economic||Having made over 1,000 investments globally in 2005 Intel looked for the market to bring profit quickly and steadily (Physorg, 2005)||Investing $1 billion initially and over $400 million in the next year, Intel managed to create a competitive Indian network (Global New Analysis, 2005)|
|Social||Community development, investment in education and health care were the major outside activities for Intel in its initial years in India.||Intel created educational programs for its employees and for Indian children, especially the poor, on the whole. Every Intel employee in India has health insurance. Intel contributes to health care development and invests into equipment updating (Intel, 2009)|
|Technological||Indian market operated with outdated equipment before Intel expansion||Intel is interested in the growth of profit so it invests heavily into technological updating of its Indian branches (Intel, 2009)|
|Legal||Intel has not faced any legal disputes in India||Intel respects law and the properly designed strategy allows it to avoid legal controversy (Physorg, 2005)|
|Environmental||India is concerned about environmental protection as ecological conditions in the country are problematic||Intel claims to be an environmentally friendly company whose operation does harm the environment and charitable initiatives help protect it (Intel, 2009)|
The international entry strategy developed by the Intel Corporation is based on the principles of mutual respect and modern technological and management solutions for achieving the highest goals. Thus, entering the Indian market Intel aimed at finding the market for selling its products but found the area to develop its largest non-US based production facility (located in Bangalore) that allows Intel to currently provide the whole Asian market with the demanded production and to develop the wider scope of services that nowadays include telecommunications, hardware, and software products (Intel, 2009).
The global operations structuring is carried out properly by Intel as the company considers all the political, economic, social, etc. factors in its marketing and promotional campaigns so that to satisfy the needs of the wide variety of customers not only in India or the USA but all over the globe. To maintain the competitive advantage against AMD and IBM Microelectronics, Intel resorts to promotional campaigns and greater stress of community development initiatives. These steps combined with the larger funds invested into the Indian economy allow Intel to enjoy domination over its competitors in the Indian market (Intel, 2009; Shenkar and Luo, 2007).
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Thus, Intel Network in India operates in the potentially largest market in the world and benefits Intel Corporation greatly. The following SWOT Analysis allows summing up the major results of Intel work in India and sees what are the areas in need of improvements:
|Loyal customers and Governmental support||Possible lack of understanding of the peculiarities of the Indian market|
|Active participation in community development||Development of Indian network prior to special employee training|
|The new emerging market of India and the neighboring countries might develop into the largest one in the world||Weak competition might affect the quality of products offered by Intel|
|Intel might strengthen its competitive position by operating successfully in both American and Asian markets||Demographic changes in the region might cause the lacking supply of Intel products and make the company look for more new markets|
To conclude, Intel is a globally developing company whose network in India has expanded to the largest production facility network outside the US. Intel India has its strategy of international development and maintaining a competitive advantage in the Indian market.
- Global New Analysis 2005, Intel taps India’s maturing VC market, Financial Times.
- Intel 2009, Intel in India, Intel Jobs.
- Physorg 2005, Intel inside India with $1 B Investment, Physorg.com.
- NASSCOM 2006, From Intel Inside to India Inside, The Economic Times.
- Shenkar O and Luo Y 2007, International business, Sage Publications, 2nd Ed.