Introduction
This is a case of Advanced Micro Devices (AMD) and how they were able to face an extremely problematic situation during the tenure of the company’s Chief Executive Officer, Jerry Sanders. What makes AMD’s case worth discussing is the fact that the management problem that it faced was one of the most damaging ones. It was able to put up a good fight in the semiconductors and CPU industry against the toughest player in the room, Intel Corporation. However, it merely lacked the consistency and technological edge needed to bring it down .
Major Characters
The major characters in this case would be the company’s CEO, Jerry Sanders, the customers, the competitors, and the members of the management team. The selection process was mainly based on what population group played the biggest role in the case and the various developments that led to its outcome.
Organizational Background
Advanced Micro Devices operates in the semiconductor and CPU manufacturing industry. Its biggest and possibly most profitable division would be its desktop PC CPU manufacturing division. The company was able to hold the top spot in the industry in terms of sales sometime during the opening of the 21st century, although only for a brief moment . This basically shows the company’s clout in the industry.
Industry Context
The semiconductor industry is one of the most competitive ones. Profit margins are becoming increasingly thin thanks to the development of new CPU-manufacturing technologies and the declining demand for desktop computers—mainly as a result of the more favorable trend of smaller consumer electronics such as smart phones and tablet computers. The combination of these external factors plus the internal decision making errors that Jerry Sanders and his management team made at AMD were the major causes of the company’s decline.
Dilemma of the Case
The dilemma of the case revolves around the fact that AMD could have won its battle against Intel Corporation had its leaders been more focused with its goals. Sometime during the first half of the first decade of the 21st century, AMD had its competitors on the ropes. The main threat was its competitors, particularly Intel and its years of experience in making the best products for the industry’s consumers.
Management Outcomes
They were leading in sales, brand popularity, and perhaps at some point, revenue—although they were still behind total market share, relative to their competitors especially Intel. However, instead of being persistent, Jerry Sanders became too complacent. Instead of increasing the level of funding for the Research and Development of new and better products, he funded big parties and gatherings for investors—the opposite of what its major competitors did . The result, of course, was catastrophic. When people over at AMD were celebrating, its competitors were continuously working on developing and later on releasing products that would later put their products down in terms of performance, power consumption efficiency, and price competitiveness. AMD tried to rise again by releasing a new set of roadmap to investors and to the public—for a new wave of products. However, its competitors became too much ahead of them already; it was too late.
AMD was able to put up a good fight but it lacked the consistency needed to eventually win against its competitors. This problem proved to be the fault of the management as they became too complacent with their short term gains; they lost focus early on in the game and it costed the company a lot.
Conclusions
In summary, what happened to AMD offers a lesson for CEOs and members of an organization’s management team. It should teach everyone the importance of being focused, not being complacent, and being relentless especially when one sees that the competitors are being hurt by how the company is positively performing—things which unfortunately people at AMD failed to value.
References
Cunningham, A., & Farivar, C. (2013). The rise and fall of AMD: How an Underdog stuck it to Intel. Ars Technica, http://arstechnica.com/business/2013/04/the-rise-and-fall-of-amd-how-an-underdog-stuck-it-to-intel/.
Hollister, S. (2012). What Happened to AMD. The Verge, http://www.theverge.com/2012/11/15/3646698/what-happened-to-amd.
Jennings, M. (2012). AMD: What went wrong? Alphr, http://www.alphr.com/features/372859/amd-what-went-wrong.
