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De Beers

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INTRODUCTION

Advanced Micro Devices (AMD) was founded on May 1, 1969 by Jerry Sanders and seven of his friends in the living room of one of the co-founders. Based on the company's corporate website, www.amd.com, AMD describes itself as "a customer-centric innovation company, focused on best meeting the needs of leading computing, wireless, and consumer electronics companies to help them deliver high-performance, energy-efficient and visually realistic solutions."

After 30 years of innovating and leading the company, Sanders made room for Hector Ruiz to assume the position of CEO in 2002. During Ruiz's reign in power, AMD saw many successes, specifically through its 2003-released 64-bit microprocessor, Opteron. The Opteron received much praise and business primarily due to the fact that its updated technology did not require software upgrades unlike its primary competitor, the Intel Itanium 2. With the help of the Opteron, AMD was quickly emerging out of Intel's shadow.

Despite this achievement, AMD also had a variety of challenges to which it needed to overcome. These challenges included constant threats from its competitors in the processor industry including Intel, Korea's Samsung Electronics, and Texas Instruments, and a falling stock price in 2005.

However, Ruiz had several innovations that were expected to boost the company ahead of its primary competitor, Intel. In 2004, AMD introduced new manufacturing techniques, released a series of microprocessors for corporate users, and pushed a new technology which put several microprocessors on a single chip. The company also launched its Turion 64 chip targeted at mobile computing, created new business divisions that would focus on incorporating chips in cell phones and consumer electronics, and it also planned to be one of the first companies to introduce dual-core processors for servers and desktops. Even with all of these plans anticipated to further the company's future success, the question still remains can AMD emerge out of Intel's shadow?

ANALYSIS

The following analysis will give insight into AMD's general environment, industry environment, competitor environment, internal environment, and the SWOT summary.

General Environment

The general environment part of the analysis will focus on how technology, demographic trends, economic trends, and political/legal, socio cultural, and global factors affect AMD. First of all, technology plays a major role with regard to AMD's survival and success in the microchip industry. To begin with, the constant evolution of computer information systems, devices, and software always require new technology to improve upon and make operations easier for customers. Thus, AMD has to be abreast of the latest technological advancements, trends, and innovations so that it can remain competitive in its industry. One example of this is with AMD's Opteron, a 64-bit microprocessor so advanced that it did not require an upgrade for its operating system, and the company's move toward mobile computing.

In terms of demographic trends, the fact that there are so many young professionals in today's society, the sophistication and variety of technology in computer operating systems has become a popular trend. Therefore, these individuals need to have the most current and convenient technology with which to complete their daily tasks.

Moreover, economic trends that affect AMD include the fact that as the economy grows, more consumers and businesses will desire and acquire more up-to-date computers, software, and technological devices. AMD must be both proactive and responsive to these trends so that it can maintain and improve its current share of the market. By anticipating this economic growth, AMD will have technology readily available that its customers desire. Similarly, if the economy declines, consumers and businesses may be unable to afford new, and ideally more expensive, technology.

The political and legal environment does not have much effect on AMD in this case. The only issues that could be commented on are the issues of copyright infringement and the theft of mental property. AMD needs to protect its ideas as much as it can, without becoming a monopoly, at which point it will deal with laws that prevent monopolistic practices.

With regard to the socio cultural environment, the increase in the capabilities and tasks to be performed by technological devices and computers in today's business and society make it important for people to have the resources that will enable them to do the things they need to do. AMD needs to stay abreast of such trends in society and culture in order to stay current with its technology and give consumers the resources they need.

As for the global environment, AMD should be aware of what technological trends are affecting foreign businesses, culture, and computer operating system and software manufacturers. For instance, if foreign business trends are getting more into mobile computing through cellular phones, this could be a market that AMD could infiltrate, despite the fact that this trend has potentially not taken off domestically. Also, certain foreign computer companies may be doing different things with technology that domestic companies like Microsoft and Hewlett-Packard may not be doing. If this were the case, then AMD should be aware of such trends so that it can innovative its current product mix.

Industry Environment

Industry Definition

According to TechEncycopedia, they define microprocessors as a central processing unit (CPU) contained within a single chip. In today's world, all computer CPUs are microprocessors. The term, microprocessors, originated in the 1970's when the CPUs up until that time were all comprised of several chips. When the entire CPU (the processor) was miniaturized onto a single chip, the term "micro" processor was coined. "Since the turn of the century, the semiconductor manufacturing process has become so sophisticated that not only one, but two or more CPUs, are built on a single chip" (http://www.techweb.com/encyclopedia/defineterm.jhtml?term=microprocessor).

Dominant Economic Characteristics

To understand the dominant economic characteristics, we will discuss ten key elements that include market size, stage of life cycle, growth rate, scope of rivalry, rival concentration, vertical integration, pace of change, product/service differentiation, economy of scale and barriers to entry for Advanced Micro Devices (AMD) in this technology world that we are faced with.

The market

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