What Is Intel’s Strategy?

Business Analysis using Financial Statements (ACCT 503) Fall 2016 Assignment #1 HAOYU ZHAO, Dale

1. What are the four steps necessary to assess the performance of a firm and derive a valuation?

The four necessary steps are as follows:

1. Strategic analysis: Develop a qualitative understanding the firm’s method for earning profit.  
2. Financial analysis: Provide numerical measures of performance such as ratio analysis and cash-flow analysis.
3. Accounting analysis: Determine whether the accounting procedures and estimates used to produce the financial statements appropriately reflect the underlying economic position of the firm.  
4. Valuation: determine the current cash value of a company’s assets or its shareholders’ equity.  Valuations can be computed using multiples of earnings or other variables.  Valuation can also be done by projecting cash flows and discounting them.

1. What is Intel’s strategy? Do you believe this strategy will create value for Intel’s shareholders?

Intel’s company strategy is to offer complete and connected platform computing solutions, consisting of both hardware and software, and to continue to drive "Moore’s Law." Through enhanced energy-efficient performance, connectivity, and security, we enable platform solutions that span the compute continuum, from high-performance computing systems running trillions of operations per second to embedded applications consuming milliwatts of power.

Yes.  Intel uses its strategy to achieve its key objectives effectively and efficiently.  By achieving the key objectives, it can maintain its market leader position in the changing computing environment.  As a market leader, Intel captures large market share and keep relatively high revenue and profits in the market.  Those achievements can enable Intel not only to maintain its stock price but also to distribute high dividend to shareholders.  Therefore, Intel’s strategy create value to shareholders.

1. What is the Intel’s competitive advantage and how does the company plan to sustain its competitive advantage? Do you think the company will create value of shareholders in the future?

   Intel’s competitive advantages are showed in the following:

1. Transitions to next-generation technologies
2. Combination of our network of manufacturing and assembly and test facilities with our global architecture design teams
3. Products optimized to operate on multiple operating systems.

To main this competitive advantage, the company continue work on the development of next-generation products.  In addition, they enter and expand into adjacent market segments.  Moreover, Intel has made significant capital and R&D investments into its integrated manufacturing network, which enable Intel to have more direct control over its design and whole manufacturing process, which will improve the overall manufacturing efficiency of Intel.