Business Intelligence Analytics Sample Report by Devign Elements

BUSINESS INTELLIGENCE ANALYTICS

BUSINESS DILEMMA, SOLUTION & PROJECTED GROWTH SAMPLE REPORTS

A compilation of theoretical and fact-based case studies and business intelligence analytics reports on CEO-level decision making related to company growth and development at Intel Corporation.

BY DAWN L. YILMAZ

VR CONTENT CREATOR, RESEARCHER & ANALYST WWW.DEVIGNELEMENTS.COM

Disclaimer The attached reports and information contained, herein, are not intended to represent any specific product, period or analytical scenario. It is a compilation of different analytical reports and any discrepancies in the comments and associated values used in this report are not typical. The values used in this report are not intended to be actual or representative of factual calculations and are used in the report to represent â&#x20AC;&#x153;placeholdersâ&#x20AC;? only. While all attempts have been made to provide accurate, current, and reliable information, the author recognizes the possibility of human or mechanical error. Therefore, the author makes no representations as to the accuracy, completeness, currency or suitability of the information provided by the enclosed reports and disclaim any express or implied warranty as to the same. The author assumes no liability for damages resulting from the use of any information disclosed on these reports and urges independent site-specific verification of the information contained herein. This report remains the property of the Dawn L. Yilmaz and any effort to use this report as an actual and factual analytical report is strictly prohibited.

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Table of Contents Disclaimer ............................................................................................................................................................................... 1 Figures & Tables ..................................................................................................................................................................... 6 List of Figures ..................................................................................................................................................................... 6 List of Tables....................................................................................................................................................................... 6 Expanding to New Horizons ................................................................................................................................................... 8 Products and Services........................................................................................................................................................ 8 Competitors ........................................................................................................................................................................ 8 Market Share ...................................................................................................................................................................... 9 Marketing Analysis ........................................................................................................................................................... 10 State of the Semiconductor Industry .......................................................................................................................... 10 Product and Service Recommendations..................................................................................................................... 11 Stem and Leaf Plot: Diverted Fulfillment Requests .................................................................................................... 11 Tableau Scatter Plot: Production Workers in Correlation to Value Added by MFG ................................................... 12 Additional Historical Data ............................................................................................................................................ 13 Data Flow Diagram ........................................................................................................................................................... 14 Target Area ....................................................................................................................................................................... 14 Facilities and Feasibility................................................................................................................................................... 15 Logistics ............................................................................................................................................................................ 15 Trade Zones .................................................................................................................................................................. 15 Political Risk and Governmental Regulation .............................................................................................................. 15 Community ................................................................................................................................................................... 15 Labor and Human Resources....................................................................................................................................... 15 Visualizing Vietnam .......................................................................................................................................................... 17 Conclusion ........................................................................................................................................................................ 17 Existing Business Intelligence Analytics Problems ............................................................................................................. 18 The I3 Leadership Symposium Super Vacation Giveaway .............................................................................................. 18 Prize Details .................................................................................................................................................................. 18 Cost Breakdown ........................................................................................................................................................... 20 Giving Back ................................................................................................................................................................... 21 Sampling Data .............................................................................................................................................................. 21 Target Customer Pool and Outreach........................................................................................................................... 21 Legal Concerns ............................................................................................................................................................. 22 Kona, Hawaii: Feel the Buzz of Adventure....................................................................................................................... 22 Are the Odds in your Favor? ......................................................................................................................................... 22 11/18/2016

Bayesian Paradigm Recommendations ...................................................................................................................... 23 Expanding into New Markets ............................................................................................................................................... 25 Capacity ............................................................................................................................................................................ 25 Risk................................................................................................................................................................................ 26 Lost Opportunity .......................................................................................................................................................... 26 Personnel.......................................................................................................................................................................... 26 Systems, Business, & Finance .......................................................................................................................................... 27 Marketing .......................................................................................................................................................................... 27 Pricing ........................................................................................................................................................................... 27 Distribution................................................................................................................................................................... 27 Purchasing .................................................................................................................................................................... 28 Suppliers ....................................................................................................................................................................... 28 New Market Segments ................................................................................................................................................. 28 Vertical Integration ...................................................................................................................................................... 28 Optimal Decision Pathways ............................................................................................................................................. 28 Meeting Demand for the Axiom X3 .............................................................................................................................. 29 Decision Tables ............................................................................................................................................................ 30 Maximax and Maximin Criterion .................................................................................................................................. 30 Decision Tree .................................................................................................................................................................... 31 EMV (Expected Monetary Value) ...................................................................................................................................... 31 Standard Deviation & Variation ................................................................................................................................... 32 Opportunity Loss Table & Expected Opportunity Loss (EOL) ..................................................................................... 33 Expected Value of Perfect Information (EVPI) ............................................................................................................. 34 Coefficient of Variation ................................................................................................................................................ 34 Return-to-Risk Ratio (RTRR) ........................................................................................................................................ 34 Outcome of Calculations ................................................................................................................................................. 35 Forecast & Future ................................................................................................................................................................. 36 Forecast Analysis .............................................................................................................................................................. 37 Demingâ&#x20AC;&#x2122;s 14 Points ........................................................................................................................................................... 38 I. Constancy of Purpose ............................................................................................................................................... 38 II. A New Philosophy ..................................................................................................................................................... 38 III. The End of Dependence on Mass Inspection.......................................................................................................... 38 IV. Awarding Business on Price Aloneâ&#x20AC;Ś Not a Chance ............................................................................................... 38 V. Improve Constantly .................................................................................................................................................. 38 VI. Training .................................................................................................................................................................... 38 11/18/2016

VII. Leadership .............................................................................................................................................................. 39 VIII. Drive Off Fear ......................................................................................................................................................... 39 IX. Breaking Down Barriers .......................................................................................................................................... 39 X. Eliminating Slogans.................................................................................................................................................. 39 XI. Eliminating Numerical Quotas ................................................................................................................................ 39 XII. Removing Barriers to Pride of Workmanship ........................................................................................................ 39 XIII. Education & Retraining ......................................................................................................................................... 39 XIV. Taking Action ......................................................................................................................................................... 39 Six Sigma & Lean Manufacturing ..................................................................................................................................... 40 The DMAIC Process (Define, Measure, Analyze, Improve, and Control). .................................................................... 40 Getting Lean by Reducing Waste ................................................................................................................................. 40 A Lean Six Sigma Approach.......................................................................................................................................... 40 Six Sigma Challenges ................................................................................................................................................... 40 Six Sigma Final Thoughts ............................................................................................................................................. 40 Process Flow Diagram ...................................................................................................................................................... 41 Conclusion ............................................................................................................................................................................ 42 Article 1: Intel® RealSense™ Technology ............................................................................................................................. 43 Understanding the Competitive Landscape ................................................................................................................... 43 Immersion, Making Virtual Reality Feel Real................................................................................................................... 43 Inferential Process ........................................................................................................................................................... 43 What The Team Found ..................................................................................................................................................... 43 Lingering Questions ..................................................................................................................................................... 44 Better Together ............................................................................................................................................................ 44 Descriptive Statistics .................................................................................................................................................... 44 Measuring Up................................................................................................................................................................ 45 Qualitative, Nominal-Level Measurements ................................................................................................................. 45 Qualitative, Ordinal-Level Measurements................................................................................................................... 45 Quantitative “Interval-Level” Measurements ............................................................................................................. 45 Seeing the Future ......................................................................................................................................................... 45 The Bottom Line Just Got a Whole Lot Greener .......................................................................................................... 45 Visualizing Intel’s Manufacturing Data with Tableau and Maya MASH Networks ......................................................... 45 BIA Tools Comparison ...................................................................................................................................................... 45 Upcoming Analytics Reports............................................................................................................................................ 46 Article 2: Background & General Observations ................................................................................................................... 47 A Challenger Emerges ...................................................................................................................................................... 47 11/18/2016

Forecast: Cloudy with a Chance of …Fireworks?!........................................................................................................... 47 Final Thoughts .................................................................................................................................................................. 47 Market Share .................................................................................................................................................................... 48 Supplemental Maths ........................................................................................................................................................ 48 Article 3: Past Decision Review & I/O Card Import Report .................................................................................................. 49 Product Concerns & Considerations ............................................................................................................................... 49 Getting Hypothetical to see the Light at the End of the Tunnel ................................................................................. 49 Staff & Location Strategy ................................................................................................................................................. 49 Intel & I/O Card Imports ................................................................................................................................................... 50 Background Scenario ................................................................................................................................................... 50 Decision Table .................................................................................................................................................................. 50 Decision Tree .................................................................................................................................................................... 51 EMV (Expected Monetary Value) ...................................................................................................................................... 51 Risk Aversion & Risk Taking ............................................................................................................................................. 52 Standard Deviation & Variance .................................................................................................................................... 52 Relative Risk of Each Choice – Pending Comments from the Director ...................................................................... 53 Return-to-Risk Ratio – Pending Comments from the Director ................................................................................... 53 Final Recommendations .................................................................................................................................................. 54 Article 4: Expanding The Next-Generation Memory Market ............................................................................................... 55 Non-Volatile Memory (NVM) Solutions ............................................................................................................................ 55 Increasing Capacity in China ........................................................................................................................................... 56 Challenges ........................................................................................................................................................................ 57 Central Tendency ............................................................................................................................................................. 57 Variability.......................................................................................................................................................................... 58 Skewness .......................................................................................................................................................................... 58 Competition...................................................................................................................................................................... 58 References ............................................................................................................................................................................ 59

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Figures & Tables List of Figures Figure 1 Top Five Semiconductor Companies ...................................................................................................................... 9 Figure 2 Market Share Gap Closing Between Intel & Samsung ............................................................................................ 9 Figure 3 Semiconductor Vendors by Revenue .................................................................................................................... 10 Figure 4 Exchange Rate Vietnam (vs USD)........................................................................................................................... 11 Figure 5 Tableau Scatter Plot .............................................................................................................................................. 12 Figure 6 The PC Market Landscape, Source: Intel ............................................................................................................... 13 Figure 7 Chromebooks on IA, Source: Intel ......................................................................................................................... 13 Figure 8 Processor Improvements, Source: Intel ................................................................................................................ 14 Figure 9 Data Flow Chart ...................................................................................................................................................... 14 Figure 10 Average Manufacturing Wages Annual (USD) ..................................................................................................... 16 Figure 11 Vietnam's Four Industrial Zones, Source: Hong Kong Trade Development Council ......................................... 17 Figure 12 Population Density (Low Coastal Elevation Zone), Source: CIESIN, Columbia University................................ 17 Figure 13 Population Density Heat Map, Source: Trung Tâm Xúc Tiến Thương Mại Nông Nghiệp (Vietnam Center for Agricultural Trade Promotion), 2004 ................................................................................................................................... 17 Figure 14 Diversity at Intel, Source: Intel............................................................................................................................. 18 Figure 15 Carnival Cruise Legend, Source: Carnival Cruise Legend ................................................................................... 19 Figure 16 Hotel Valencia, Source: Hotel Valencia ............................................................................................................... 19 Figure 17 Axiom X3 Processors Decision Tree ..................................................................................................................... 31 Figure 18 China's Sunway TaihuLight Supercomputer, Source: Xinhua............................................................................ 36 Figure 19 Regression Trend Analysis (Quadratic Models)................................................................................................... 37 Figure 20 Data Flow Chart: Sales Office............................................................................................................................... 41 Figure 22 BI Vendor Comparison ......................................................................................................................................... 46 Figure 23 I/O Card Import Decision Tree ............................................................................................................................. 51 Figure 24 3D XPoint Technology, Source: Intel ................................................................................................................... 55 Figure 25 Storage Performance, Source: Intel .................................................................................................................... 56 Figure 26 New Class of Non-volatile Memory, Source: Intel ............................................................................................... 56 Figure 27 SSD & Mobile Driving NAND Bit Growth, Source: Micron .................................................................................... 57

List of Tables Table 1 Stem & Leaf.............................................................................................................................................................. 12 Table 2 Grand Prize Costs .................................................................................................................................................... 19 Table 3 Second Prize Costs .................................................................................................................................................. 19 Table 4 Third Prize Costs...................................................................................................................................................... 20 Table 5 Cost Breakdown of Giveaway Totals ...................................................................................................................... 20 Table 6 HR EEOC Data by Sex............................................................................................................................................... 21 Table 7 Vacation Giveaway Marginal Probability Index ..................................................................................................... 23 Table 8 Demand and Probability ......................................................................................................................................... 29 Table 9 Axiom X3 Payoff Table ............................................................................................................................................. 30 Table 10 Axiom X3 Maximax & Maximin Criterion ............................................................................................................... 30 Table 11 Axiom X3 EMV Table .............................................................................................................................................. 31 Table 12 Axiom X3 Opportunity & Loss Table ..................................................................................................................... 33 Table 13 Axiom X3 EOL Table ............................................................................................................................................... 33 Table 15 Regression Statistics ............................................................................................................................................. 37 11/18/2016

Table 14 Regression Raw Data............................................................................................................................................. 37 Table 16 I/O Card Payoff Table ............................................................................................................................................ 50 Table 17 I/O Card EMV Table ................................................................................................................................................ 52 Table 18 Central Tendencies, Skewness, & Variability ....................................................................................................... 58

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Growth at Intel

Business Dilemma and Solutions Report

Expanding to New Horizons Intel Corporation (INTC) develops advanced integrated digital technology products (largely integrated circuits), for the information technology and communications industries, as well as, several other sectors [1]. Intel is headquartered in Santa Clara, CA, right in the heart of Silicon Valley [1]. According to Intel’s company website, Intel was founded by Robert Norton Noyce and Gordon Earle Moore on July 18, 1968. The website also details, how in 1971, the company made history with the Intel® 4004 made history, the first general-purpose programmable processor (http://www.intel.com/). Until recent years, Intel has generally dominated semiconductor processing industry due in part to first mover advantage – after all, the 4004 even predated the PC it would later go on to be widely used in. Now with Samsung closing the market share gap, Intel looks towards maximizing their expansion strategy to maintain their lead.

Products and Services At its core, Intel designs and manufactures computer components, however, the company has a vast array of offerings. Intel designs components, such as microprocessors, chipsets, motherboards, and wireless and wired connectivity products. As stated on Intel’s corporate website, Intel operates its business through following segments: • The Client Computing Group • Platforms for the notebook, tablets, mobile communication components. • The Data Center Group • Platforms for the enterprise, cloud, communications infrastructure, and technical IT. • The Internet of Things Group • Platforms for Internet of Things (IoT). • Additional services that promote Intel architecture. • All Other Projects (http://www.intel.com/). • Competitors The Software & Services Operating • Software products that secure computers, mobile devices, and networks.

Competitors Intel is the leading semiconductor company in the world, followed by Samsung Electronics, SK Hynix, Qualcomm Inc., and Micron Technology [2]. Intel has a philosophy of striving to be the most significant player in all of the many segments they operate in. Although, Intel has historically held a high rank in the industry, by focusing aggressively on strategic growth; in recent years, Samsung has drastically reduced the market share gap between them [3]. In 2015, Intel’s revenue was $51.7 billion, while Samsung was at $37.9 billion [2]. Samsung is furiously charging forward with strong sales on their mobile products, a larger market capitalization and greater amount of assets [2] to aid the company in realizing its ambitions.

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Figure 1 Top Five Semiconductor Companies

Market Share Although Intel, continues to hold the largest portion of market share, Samsung has managed to persist in second place for number of years and is now gaining traction to close the gap. At the close of 2015, Samsung had improved its market share by 0.9 percent, taking the companyâ&#x20AC;&#x2122;s total global market share to 11.6 percent [3]. Intel is currently sitting at 14.8 percent [3]. This is relevant because in 2012 the gap was 5.3 percent, shrinking down in 2013 to 4.2 percent, and in 2015 the difference was down to just 3.2 percent [3]. If the difference keeps going at the same rate analysts predict Samsung will catch up to Intel and conceivably overtake them in the next few years.

Figure 2 Market Share Gap Closing Between Intel & Samsung

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Figure 3 Semiconductor Vendors by Revenue

Marketing Analysis Over 80 percent of U. S. semiconductor sales takes place outside of the U.S. [4]. With locations in 46 countries around the world, Intel is no stranger to expanding internationally to meet the needs of the global economy (http://www.intel.com/). Now with competitors closing in and PC sales deteriorating, Intel is boldly restructuring their location strategy to capitalize on opportunity while shrewdly minimizing costs and risks [5]. This is a tumultuous time for Intel, because the company recently shuttered their doors at locations in half a dozen countries [5]. Intel also laid off tens of thousands of employees following the location closings [5]. For these reasons, Intel needs to consider expanding with vigorous due diligence and care. According to a recent report from the International Trade Administration, the South East Asian market and, particularly Vietnam, is a prime location for semiconductor production [4]. According to the CEO of Intel Products Vietnam, “80 percent of the semiconductor chips used in computers around the world at this time next year will be made by the Intel plant in Vietnam” [6]. As Intel looks towards the future, it asks, is now the right time to expand operations in Vietnam?

State of the Semiconductor Industry Global semiconductor sales increased 9.9 percent in 2014 to a record $335.8 billion, then fell in 2015 to $335.2 billion [4]. It’s important to note that this decline stemmed primarily from a decrease in the value of sales, due to exchange rates, as opposed to a reduction in the sales of semiconductors [4]. In order to form a more complete picture of the industry, also take into account the compound annual growth rate (CAGR) for the integrated circuits sector. The CAGR for integrated circuits has been 3.5 percent since the 2000s and is anticipated to remain static far into the 2020s [4]. This means Intel can reasonably expect continued slow growth in their sector over the next few decades. Additionally, Intel can capitalize on the knowledge that dips in value of sales can be minimized with some upfront strategic planning. In order for Intel to be competitive, the company requires a focused strategy for expansion that takes into account foreign exchange rates. Particularly, since these rates have the potential to create a substantial impact on Intel’s bottom-line.

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Figure 4 Exchange Rate Vietnam (vs USD)

Product and Service Recommendations As Intel looks towards adding a second plant in Vietnam to offset the operations at the Ho Chi Minh City Plant, the question of which product lines to increase looms large. The Ho Chi Minh City Plant produces two of Intel’s top products, at an unparalleled speed and quality; • the SOC (system on a chip), used for tablets and smartphones, and the • Haswell CPU [6]. By getting production up and running smoothly on both two products inside of just 4 years, the Ho Chi Minh Plant has accomplished a task that took China’s Chengdu Plant, 15 years, and one of the plants in Malaysia, 40 years [6]. Intel would like to duplicate this success in Hanoi. Moreover, Intel is currently releasing the next generation of Broadwell CPUs and, soon the Iris Graphics models. In addition to supporting SOC and Haswell CPUs, the Hanoi location could also potentially take on the fabrication on these 2 newer offerings.

Stem and Leaf Plot: Diverted Fulfillment Requests For the past 30 days, the Managers at the Ho Chi Minh Plant have been gathering data. Since the Iris product is too new to have any historic data, the Production Management Team has been capturing raw data for this report, while running production tests for the new Iris product. During this time, Production Managers captured the number of orders that plant would be unable to fulfill once the Iris product went live, due to a shortage of staffing support and infrastructure. Table 1 shows all of the fulfilment requests that would have to be diverted to other, less efficient facilities, throughout Southeast Asia, causing longer production times, as well as; increased taxes, tariffs and labor costs.

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Stem Leaf

Table 1 Stem & Leaf

Diverted Orders (30 days) 22 45 65 77 82 85 23 49

67 77 82

23 51

71 79 83

25 58

72 79 84

34 63

74 80 85

Table 1 Raw Data, Stem and Leaf

2, 3, 3, 5

5, 9

1, 8

3, 5, 7

1, 2, 2, 4, 7, 7, 9, 9

0, 2, 2, 3, 4, 5, 5, 6, 9

0, 9

Tableau Scatter Plot: Production Workers in Correlation to Value Added by MFG The Ho Chi Minh Management Team also sent over this scatter plot depicting the correlation between the Number of Production Workers in relation to the Value Added by Manufacturing.

Figure 5 Tableau Scatter Plot

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Additional Historical Data Although the overall PC market has been somewhat lackluster, as the Figure 6 shows Intel is still strong in the sector.

Figure 6 The PC Market Landscape, Source: Intel

Below in Figure 7 from Intel, the market for SOCâ&#x20AC;&#x2122;s in Chromebooks shows promise.

Figure 7 Chromebooks on IA, Source: Intel

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Below in Figure 8 is a look at Intelâ&#x20AC;&#x2122;s newest processors and their vast improvements.

Figure 8 Processor Improvements, Source: Intel

Data Flow Diagram Figure 9 shows how when an order comes onto the new facility how the data will flow through each step of the production cycle. Chips made by the prospective Hanoi Plant will be channeled in the new market in 3 ways, direct to consumers, to the Ho Chi Minh City plant and to partners and affiliates.

Figure 9 Data Flow Chart

Target Area Hanoi is the capital of Vietnam and its second largest city [7]. Hanoi has a population of 7.6 million people and home to the Hanoi University of Industry, which has around 60 thousand students [7]. Having locations in a highly populated city is important for Intel, due to the tremendous size of their facilities. Having a large, highly-skilled workforce to pull from for accommodate staffing needs is a benefit that is crucial to long-term success.

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Facilities and Feasibility In 2015, Intel decided to relocate one of its larger manufacturing facilities from Kulim in Malaysia, to Ho Chi Minh City in Vietnam [8]. This was generally regarded a good move for the company. This is one of the primary reasons Intel is now seeking to expand to additional regions in Vietnam. Vietnam has a large number of semiconductor and electronics companies already established in the country. Aside from Intel, the majority of the investments in the country have been made by Samsung, Microsoft, and LG [8]. Hanoi shares similar sentiment to Ho Chi Minh City in regards to streamlining the regulatory system and creating stronger incentives for business investment [7]. Renting land in Hanoi, like Ho Chi Minh City, can be cumbersome, however, since Intel has experience with renting land, this is a lesser issue [7].

Logistics Hanoi is 1,760 km north of Ho Chi Minh City where Intel Products Vietnam is based (Google Maps). The city is committed to creating a better transportation infrastructure over the long-term [7]. There are several major logistics firms in the city, the Port of Hanoi and other area service to support intermodal transport [7].

Trade Zones Vietnam has some very appealing benefits from a trade standpoint. The country is a participant in the original World Trade Organization (WTO) ITA, so most semiconductors are duty free [4]. Additionally, Vietnam is also preparing to sign the TPP treaty, a landmark 12-nation free-trade deal, which allows Vietnam export its products free of tariffs to other countries. Moreover, the TPP eliminates 18,000 different taxes on export and import of products and not one of the other Southeast Asian countries have joined it giving Vietnam a huge advantage [8].

Political Risk and Governmental Regulation Vietnam is a welcoming place for the semiconductor industry and the Vietnamese government is known to be supportive of companies wanting to set up a base in their country. The Vietnamese government frequently provides subsidies to companies in the semiconductor industry aimed at helping them to transition with success [8]. The Prime Minister of Vietnam works regularly with industry leaders and is amenable to providing special licenses to make Vietnam an attractive location for foreign companies [8].

Community According to Intel’s company website, Intel has been in Vietnam since the 1990s and has solid community support in the area, due to the popularity of Intel’s outreach programs. Additionally, Intel also offers study abroad opportunities, engineering scholarships and business partner programs that are more robust than, what can be found in many of their other facilities. Further, Ho Chi Minh City employees are treated exceptionally well, on account of their strong productivity, even being given rewards, such as luxury pampering amenities, such as; massage chairs, shoe shining, and relaxation areas (http://www.intel.com/).

Labor and Human Resources The labor cost in Vietnam is extremely economical, considering it is lower than in almost every other Asian country [8]. Intel Products Vietnam has more than 1,000 local employees who are; • • • •

highly motivated, quick learners, and who possess exceptional skills and are recognized consistently for the quality of their work [6].

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To date, the facility has never had a defective shipment, and generally the error rate of the â&#x20AC;&#x153;made-in-Vietnamâ&#x20AC;? chips is low [6].

Figure 10 Average Manufacturing Wages Annual (USD)

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Visualizing Vietnam The geographic map in Figure 11 shows, the key industrial areas in Vietnam, are divided into 4 distinct zones; North, Central, Da Nang City and Ho Chi Minh City. If Intel opens a second plant in Hanoi, it will have locations in 2 zones; the North zone and the South zone.

Figure 11 Vietnam's Four Industrial Zones, Source: Hong Kong Trade Development Council

Figure 12 is a geographical heat map of Vietnam with a focus on the high density of populations within and outside the low elevation coastal zone. With global warming and the rise of the oceans imminent, this is an area Intel will have to monitor and be mindful of over time. Figure 13 is a population density geographic heat map of Vietnam. Hanoi is clearly marked as one of the densest populated areas in all of Vietnam. Figure 12 Population Density (Low Coastal Elevation Zone), Source: CIESIN, Columbia University

Figure 13 Population Density Heat Map, Source: Trung Tâm Xúc Tiến Thương Mại Nông Nghiệp (Vietnam Center for Agricultural Trade Promotion), 2004

Conclusion Since Intel, needs to streamline their locations to stay competitive, it makes sense to continue expand into areas, like Vietnam, where they have an established working relationship. In addition, the future forward thinking of the Vietnamese government, the low cost of doing business in Vietnam are all excellent benefits that make expansion in this region very appealing. Finally, Hanoi’s strategic location near the Port of Hanoi and its large population, make expanding to this area a worthwhile endeavor. 11/18/2016

Existing BIA Problems Business Dilemma and Solutions Report

Existing Business Intelligence Analytics Problems Intel Corporation (INTC) is in the midst of a company-wide, global restructuring. Evidence of change is everywhere, from Intel’s product offerings, which are shifting from PC to cloud-based services, to its location strategy, which is actively being redirected to streamline the locations of their worldwide facilities [11]. Intel is poised and ready to seize the excellent opportunities that restructuring presents, such as that ability to address shortcomings and pitfalls in diversity and inclusion amongst their employee pool, as their staff fluctuates with each change. As Intel looks towards the future, their leadership has set forth a goal to achieve the “full representation of women and under-represented minorities into their US workforce by 2020” [11]. Thanks to new hiring practices and HR recruitment initiatives, this is a goal that is well on its way to being realized, however, achieving inclusion still is a complex and often illusive task. One way that Intel is tackling this issue is through events that support inclusion, such as the I3 Leadership Symposium. In June of 2016, Intel held its first I3 Leadership Symposium. The 3-day event featured opportunities for networking with industry thought leaders and, on the last day, a formal black-tie dinner followed by Intel’s first diversity and inclusion awards ceremony [11]. The event reached full capacity, very quickly, and although the event team is going to use an even larger event space for the 2017 symposium, it is believed that it will fill to capacity quickly, as well.

The I3 Leadership Symposium Super Vacation Giveaway Since the I3 Leadership Symposium is an extremely successful event for Intel, but space is so limited, it is the recommendation of the BIA Team to create a lottery contest centered around the symposium and its subsequent activities. The idea is to promote diversity and inclusion in the workplace, which can be considered a hard-sell. One thing all people have in common is that they like to win prizes. Sponsoring a lottery-style giveaway is an effective way bring attention to Intel’s cause and new alignment initiatives without being too overt. Figure 14 Diversity at Intel, Source: Intel

Prize Details Grand Prize 1 lucky Intel employee will win seven nights at the luxurious Hotel Valencia in the heart of Santana Row, all-access VIP tickets to the 2017 I3 Leadership Symposium, as well as, a variety of tours and activities together with $1,500 spending money. The grand prize winner will also receive an all-expense paid Carnival Cruise vacation package for 4 to Hawaii, 11/18/2016

aboard the Carnival Legend. This prize is courtesy of Intelâ&#x20AC;&#x2122;s strategic partner, Carnival Cruise Lines, to promote excitement about a product announcement that will be made at the symposium. Estimated value: $8000.00 ea. Table 2 Grand Prize Costs

Item

Price

Hotel Valencia ($419 per day)

$29,33.00

Spending Money

$1,500.00

Carnival Cruise Kona, HI ($1394 per person)

$2,788.00

Subtotal

$7,221.00

Taxes (est. 10%)

$722.10

Misc (Tours / Services)

$56.90

Airfare

$2,000.00

Total

$10,000.00

Figure 15 Carnival Cruise Legend, Source: Carnival Cruise Legend

Second Prizes 2 lucky Intel employees will win seven nights at the luxurious Hotel Valencia in the heart of Santana Row, VIP, allaccess tickets to the 2017 I3 Leadership Symposium with $500 spending money. Estimated value: $5000.00 ea. Table 3 Second Prize Costs

Item

Price

Hotel Valencia ($419 per day) Spending Money Subtotal Taxes (est. 10%) Misc (Tours / Services)

$2,933.00 $500.00 $3,433.00 $343.30 $23.70

Airfare

$1,200.00

Total

$5,000.00 Figure 16 Hotel Valencia, Source: Hotel Valencia

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Third Prizes 8 lucky Intel employees will win gift baskets with a $100 VISA gift card, an iPad’s preloaded with the eBook Managing Diversity and Inclusion: An International Perspective by Jawad Syed and Mustafa Ozbilgin, a “Rainbow of Diversity” Jelly Belly jelly bean jar, an “Embrace Diversity” coffee mug, a set of “Togetherness” greeting cards, and “Celebrate Diversity” pens and pencils. Estimated value: $840.00 ea. Table 4 Third Prize Costs

Item VISA Gift Card

Price $100.00

eBook Apple iPad Air 2 (16GB)

$40.00 $499.00

Jelly Beans

$20.00

Coffee Mug

$12.00

Greeting Cards

$12.00

Pens / Pencils

$6.00

Basket / Wrapping Svc. Subtotal

$45.00 $734.00

Taxes (est. 10%)

$73.40

Shipping

$32.60

Total

$840.00

Cost Breakdown For all 3 tiers of prizes and oversight for the event, the total cost is $27,000 conservatively. Since there is the potential for additional costs, depending on the distance/country the employee is coming from a reserve of $1000.00 was added under the Misc. category. Table 5 below denotes the total costs for the giveaway. Table 5 Cost Breakdown of Giveaway Totals

Item Grand Prize Second Prizes (x2)

Price $8,000.00 $10,000.00

Third Prizes (x8)

$6,720.00

Administration

$1,280.00

Misc

$1,000.00

Total

$27,000.00

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Giving Back The BIA Team sees the I3 Leadership Symposium Super Vacation Giveaway, as a way to drive excitement for, and say thank you to, employees for supporting Intel’s new diversity and inclusion initiatives. These are high-end, quality prizes designed to illicit maximum excitement for Intel’s diversity and inclusion initiatives, which have cost the company $300 Million [12]. In 2015, Intel worked hard to meet and exceed the Equal Employment Opportunity Commission (EEOC) guidelines and ensure proper use of Title VII in their hiring practices, with much progress and success [11]. When Intel hires employees that are diverse and brings them into a non-inclusive work environment, they run the risk of the newly acquired employee leaving, possibly filing a lawsuit, or becoming unhappy and declining in their day-to-day performance. This can cost hundreds of thousands and even in the millions of dollars over the course of a single year. This makes achieving inclusion a top priority at Intel. If Intel can reach their goals with inclusion, then there is a real chance for the changes taking place to become a permanent fixture in Intel’s workplace culture. Achieving total inclusion would lead to a stronger workforce, better retention, less risk and improved access to talent.

Sampling Data Despite the fact that the issues in this report affect Intel’s worldwide operations, the sample data used to conduct this report only looks at the population of employees from Intel USA. This is the most complete and recent data available at this time. Although, the new employee counts are out for the second quarter in the Intel Diversity and Inclusion MidYear Report 2016 [11], the BIA Team felt it prudent to base their findings on Intel’s Equal Employment Opportunity 2015 Employer Information Report, as it offers one full year of complete data [12]. Table 6 HR EEOC Data by Sex

Target Customer Pool and Outreach Making sure that all employees know about the lottery The BIA Team will reach out to all employees in the network in a series of 3 stages, pre-event, day-to-day, and event launch. During the pre-event stage, employees will be sent a hyperlink to the pre-event webpage, via their corporates email address, here they can find out pertinent information surrounding the ticket lottery. On Intel’s internal social media event and meet-up pages announcements will be made and the link to the pre-event page will be shared. On the Intel employee blog, another announcement will be made also sharing the pre-event webpage hyperlink and details about the lottery.

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During the day-to-day stage, communications will happen in regular intervals, in the form of, blogging and social media updates. These updates will help to build the hype around the event and to get employees talking about diversity and inclusion in the workplace. Carnival Cruise Lines, our strategic partner for the event will also share content for a special section of the bi-weekly lottery newsletter leading up to the I3 Leadership Symposium. During these communications, winners will be announced in stages leading up to the event. During the event stage, press releases will go out with the winnerâ&#x20AC;&#x2122;s names and short bios. Carnival Cruise will announce the winners on their social media and webpages. A series of photos will be collected to share in the postevent follow-up.

Legal Concerns The Legal Team has voiced concerns that a disproportionate number of sampled customers are men. If an employee is randomly selected from the data pool, the probability that the customer is a woman is P(W), is 13,157/53,733, or .245. This essentially means that based on this marginal probability approximately 24.5% of all of Intelâ&#x20AC;&#x2122;s employees are women. This is a percentage that Intel is actively working to change, and again underscore why initiatives, like this giveaway, are so important. If a professional employee was randomly selected for the giveaway, the probability that a female would be selected given that the worker is a professional employee can be calculated by applying the law of conditional probabilities to the cross-tabulation table given, P (F|T) = 8990/35069 = .256. Additionally, by using the concept of complementary events, the probability that a man is selected given that the employee is a technical person is 1 - .256 = .744. This is just slightly less than three times as likely that a randomly selected profession person is a male. Based on the sheer probabilities, if a woman was chosen for the giveaway, a man could theoretically argue discrimination. This means that the Legal Team has a valid reason to be concerned. Intel decision makers should offset this by having complete documentation of the choice criteria readily available and transparent.

Kona, Hawaii: Feel the Buzz of Adventure There is an ancient Hawaiian proverb, â&#x20AC;&#x153;Kulia i ka nuâ&#x20AC;&#x2122;u,â&#x20AC;? which means strive to reach the highest. As Intel strives to bring its newest offering to market, there is a lot of buzz surrounding project codename, â&#x20AC;&#x153;Coffee Lake,â&#x20AC;? a new 14nm six-core chip. This year attendees of the I3 Leadership Symposium will be treated to a big announcement regarding the product that has been kept tightly under wraps for the past few years. In honor of the historic announcement taking place during at the I3 Leadership Symposium, Intel and strategic partner, Carnival Cruise Lines will be giving away a grand prize featuring an all-expense paid trip to Kona, HI. Coffee is one of those universal joys in life that just about everyone enjoys, especially the employees at Intel. The lucky winner will enjoy cruising the black-lava coast of Kona, Hawaii, known for its deep sea fishing, snorkeling, scuba diving, and kayakingâ&#x20AC;Ś and boldly flavored Kona Coast coffee.

Are the Odds in your Favor? Assuming an Intel employee is randomly chosen to win the grand prize trip to Hawaii and the Symposium, the marginal probability that the winner is a First/MID Official and/or Manager is 13%, which is calculated using the following formula: đ???đ??? (đ??&#x17D;đ??&#x17D;) = đ?&#x;&#x2022;đ?&#x;&#x2022;đ?&#x;&#x2022;đ?&#x;&#x2022;đ?&#x;&#x2022;đ?&#x;&#x2022;đ?&#x;&#x2022;đ?&#x;&#x2022;â &#x201E;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C; = . đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?

The probability that the winner is either a male or an Executive/SR Official and/or Manager, a union probability, is: đ???đ???(đ??&#x152;đ??&#x152; â&#x2C6;Ş đ??&#x201E;đ??&#x201E;) = 11/18/2016

đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019; đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C; đ?&#x;&#x2022;đ?&#x;&#x2022;đ?&#x;&#x2022;đ?&#x;&#x2022; đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019; + â&#x2C6;&#x2019; = = . đ?&#x;&#x2013;đ?&#x;&#x2013;đ?&#x;&#x2013;đ?&#x;&#x2013;đ?&#x;&#x2013;đ?&#x;&#x2013; đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C; đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C; đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C; đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C; 22

Based on the formula: đ?&#x2018;ˇđ?&#x2018;ˇ(đ??&#x152;đ??&#x152; â&#x2C6;Ş đ??&#x201E;đ??&#x201E;) = đ?&#x2018;ˇđ?&#x2018;ˇ(đ??&#x152;đ??&#x152;) + đ?&#x2018;ˇđ?&#x2018;ˇ(đ??&#x201E;đ??&#x201E;) â&#x2C6;&#x2019; đ?&#x2018;ˇđ?&#x2018;ˇ(đ??&#x152;đ??&#x152; â&#x2C6;Š đ??&#x201E;đ??&#x201E;)

The probability of a male or an Executive/SR Official and/or Manager winning the I3 Leadership Symposium Super Vacation Giveaway is .854 or 85.4%. The probability that the winner is a female and a Sales Worker, a joint probability, can be calculated using the following formula: đ?&#x2018;ˇđ?&#x2018;ˇ(đ??&#x2026;đ??&#x2026; â&#x2C6;Š đ??&#x2013;đ??&#x2013;) = đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?â &#x201E;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C;đ?&#x;&#x201C; = . đ?&#x;&#x17D;đ?&#x;&#x17D;đ?&#x;&#x17D;đ?&#x;&#x17D;đ?&#x;&#x17D;đ?&#x;&#x17D;

There is a less than 3% chance that a female Sales Worker will be selected randomly, as the winner of the I3 Leadership Symposium Super Vacation Giveaway. Table 7 Vacation Giveaway Marginal Probability Index

Bayesian Paradigm Recommendations The Marketing Team has requested recommendations regarding the potential implementation of Bayes' rule, into an application using R. The formula below is Bayesâ&#x20AC;&#x2122; rule, which is known for extending â&#x20AC;&#x153;â&#x20AC;Śthe use of the law of conditional probabilities to allow revision of original probabilities with new informationâ&#x20AC;?. đ?&#x2018;ˇđ?&#x2018;ˇ(đ??&#x2014;đ??&#x2014; đ??˘đ??˘ |đ??&#x2DC;đ??&#x2DC;) =

đ?&#x2018;ˇđ?&#x2018;ˇ(đ?&#x2018;żđ?&#x2018;żđ?&#x2019;&#x160;đ?&#x2019;&#x160; ) Ă&#x2014; đ?&#x2018;ˇđ?&#x2018;ˇ(đ?&#x2019;&#x20AC;đ?&#x2019;&#x20AC;|đ?&#x2018;żđ?&#x2018;żđ?&#x2019;&#x160;đ?&#x2019;&#x160; ) đ?&#x2018;ˇđ?&#x2018;ˇ(đ?&#x2018;żđ?&#x2018;żđ?&#x2019;&#x160;đ?&#x2019;&#x160; ) Ă&#x2014; đ?&#x2018;ˇđ?&#x2018;ˇ(đ?&#x2019;&#x20AC;đ?&#x2019;&#x20AC;|đ?&#x2018;żđ?&#x2018;żđ?&#x2019;&#x160;đ?&#x2019;&#x160; ) + đ?&#x2018;ˇđ?&#x2018;ˇ (đ?&#x2018;żđ?&#x2018;żđ?&#x;?đ?&#x;? ) Ă&#x2014; đ?&#x2018;ˇđ?&#x2018;ˇ (đ?&#x2019;&#x20AC;đ?&#x2019;&#x20AC;|đ?&#x2018;żđ?&#x2018;żđ?&#x;?đ?&#x;? ) + â&#x2039;Ż + đ?&#x2018;ˇđ?&#x2018;ˇ (đ?&#x2018;żđ?&#x2018;żđ?&#x2019;?đ?&#x2019;? ) Ă&#x2014; đ?&#x2018;ˇđ?&#x2018;ˇ (đ?&#x2019;&#x20AC;đ?&#x2019;&#x20AC;|đ?&#x2018;żđ?&#x2018;żđ?&#x2019;?đ?&#x2019;? )

Prior Probabilities Intel sells one of its newer chipsets under its own brand name, however, the sets are produced by two Vietnamese subcontractors, Ho Chi Minh Advanced Chips and Thanh Cong Integrated Circuit. Ho Chi Minh Advanced Chips produces 58% of the chipsets, and Thanh Cong Integrated Circuit produces 42% of Intelâ&#x20AC;&#x2122;s chipsets for this this particular product. Both the Ho Chi Minh Advanced Chips and Thanh Cong Integrated Circuit of the chips have exactly the same specifications. and are transported to Intel Vietnam, where they are stamped with Intelâ&#x20AC;&#x2122;s branding. Once the chips are branded, it is nearly impossible to distinguish which subcontractor created them. If one of these chipsets was arbitrarily selected, the probability that the chipset was supplied by Ho Chi Minh Advanced Chips is fairly easy to calculate, since we know that Ho Chi Minh Advanced Chips produces 58% of the chipsets. The probability that an Intel chipset comes from Ho Chi Minh Advanced Chips, P(H), is .58 where H denotes Ho Chi Minh Advanced Chips. 11/18/2016

The probability that the chipsets were produced by Thanh Cong Integrated Circuit is P(TC) = .42 where TC denotes Thanh Cong Integrated Circuit. Defective Chips Recently a series of quality assurance tests found that the chipset contained defective chips. A quick calculation revealed that 6% of Ho Chi Minh Advanced Chips chipsets are defective and 15% of Thanh Cong Integrated Circuit chipsets are defective. The probability that a chipset is defective, given that it comes from Ho Chi Minh Advanced Chips is .6. This can be written as P(defective|Ho Chi Minh Advanced Chips) = .06. For Thanh Cong Integrated Circuit, the conditional probability is P(defective|Thanh Cong Integrated Circuit) = .15. Joint Probabilities The next step taken is to solve for the joint probabilities the chipset. If 58% of the chipsets are produced by Ho Chi Minh Advanced Chips and if 6% of Ho Chi Minh Advanced Chips chipsets are defective, then (.58)(.06) = .035 or 3.5% of all chipsets used by the Intel are Ho Chi Minh Advanced Chips chipsets and defective. If 42% of the chipsets are produced by Thanh Cong Integrated Circuit and if 6% of Ho Chi Minh Advanced Chips chipsets are defective, then (.42)(.15) = .063 or 6.3% of all chipsets used by the Intel are Ho Chi Minh Advanced Chips chipsets and defective. P(defective) 3.5% of all chipsets are from Ho Chi Minh Advanced Chips and 6.3% of all chipsets are from Ho Chi Minh Advanced Chips and are defective. After summing up the two joint probabilities from both of the suppliers we can tell that, .035 + .063 = .098, or 9.9% of all chipsets are defective. That is, P(defective) = .098. Revised Probabilities Probabilities are revised by dividing each supplier's joint probability by the total probability that a chipset is defective (.098). For Ho Chi Minh Advanced Chips, the revised probability that a randomly selected chipset is from Ho Chi Minh Advanced Chips being defective is .035/.098 = .357 or 35.7%. For Thanh Cong Integrated Circuit, the revised probability that a randomly selected chipset is from, Thanh Cong Integrated Circuit is .063/.098 = .643 or 64.3%. It is the recommendation of the BIA Team that the Marketing Team should use the Bayesian Paradigm in their upcoming analysis of chipsets. Although historically, there have been some perceived drawbacks to the use of Bayesian statistics, the BIA Team finds no cause at this time that is a barrier to its use. As demonstrated in the examples above Bayesâ&#x20AC;&#x2122; rule can be used quickly and efficiently to gain insights. In future marketing projects focusing on these Bayesâ&#x20AC;&#x2122; rule, the BIA Team offers assist with the initial set up in R or with Tree Diagraming modules.

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Proposed Solutions

Business Dilemma Projected Growth Report

Expanding into New Markets Over his many years of leadership, former CEO and Chief Visionary at Intel, Andrew Grove (1936-2016) guided the company through many phases of growth with much success. At the height of one such phase, Grove led Intel into the microprocessor business, casting aside Intel’s core product, memory chips, in the process [14]. Later during another growth phase, Grove made a critical decision to stick with CISC architecture that also fared well for the company [14]. Although Grove’s decisions generally led to positive outcomes, he has also had a few missteps, which taught him to take an analytical approach to strategic decision making. Today, Intel’s current CEO Brian Krzanich has a whole new set of tough decisions to make about Intel’s growth. Consider this, Intel has had solid growth in revenue and market share, but competitor Samsung has been steadily closing in on the semiconductor processor business over the past 5 years. Additionally, changes to the Internet and its use, have led to the rise of the idea that inexpensive network computers (NCs) will eventually replace their more expensive Intel-based rivals [14]. Lastly, Krzanich is facing the stark reality that some of Intel’s chips have little or no demand, because the average computer user already has an excess of processing power [14]. This means even though Intel’s newest chip are more efficient and better than its predecessors, Intel’s customer base has very little incentive to upgrade to Intel’s latest chip. Since during the during a growth phase, decisions need to be made about how to handle new business the BIA Team has created this informative report to address issues surrounding; • • • •

capacity, personnel, systems (including, business and finance), and marketing, during times of growth at Intel.

Additionally, the report addresses tools Krzanich can use based on Grove’s methodology for decision making and provides a background into Grove’s ability to identify the most optimal decision pathways for Intel. Grove had a distinct style and deployed a time-tested framework that has proven itself through the many challenges Intel has faced since the 1970s. Incidentally, Grove could not be a better choice for the subject of this paper, as he is often times referred to as “the guy who drove the growth phase” of all of Silicon Valley and was so successful, he even wrote a popular book on the topic [15].

Capacity Intel has been streamlining their facilities since 2015, with plans to continue to stay lean and focused for the foreseeable future. To supplement capacity, Intel uses subcontractors to handle the assembly and testing of specific products, mainly chipsets, “communications and connectivity products” [17]. Intel manufacturing centers can be found in over 40 countries around the world. One of the biggest questions Intel must ask is if rival, Samsung, will increase capacity or also move to streamline their operations and further what about Intel’s other competitors? The short answer is yes, Samsung will increase its capacity, while streamlining its operations taking a similar approach to Intel. Intel’s other competitors will also follow suit, although on a somewhat reduced scale. This is a notable cause for concern. In 2013, Samsung relocated its mobile phone manufacturing facilities from China to Vietnam to capitalize on the reduced Vietnamese wages and to guard its profits [8]. Today, roughly half of all of Samsung’s mobile phones are manufactured in Vietnam [8]. 11/18/2016

Intel has progressive plans in place to address capacity. Some of Intel’s plans involve the more efficient use of resources, such as renewable energy, as a future forward way to generate capacity. Intel’s additional plans include deploying a strategy to tap unused sections of the Oregon and Arizona facilities presently not in use for extra capacity [17]. Lastly in 2016, Intel will also begin using their brand new facility in Dalian, China to assist with the expansion of the company’s “manufacturing capacity for next-generation memory” [17].

Risk Due to the critical nature of making CEO-level decisions, risk is virtually inescapable, so managing it is a large part of being successful. Grove was no stranger to risk. If any one of his above described initiatives for the push to create consumer demand for the Pentium Pro had failed, Intel was looking at a potentially huge loss. For instance, if consumers failed to adopt video conferencing, Intel could have faced a $100 million loss. Additionally, Grove had to consider how to get consumers interested in the Pentium Pro and further how to ensure customer demand in the future or at least figure out how long the increased demand could continue.

Lost Opportunity Flash forward to today and Krzanich is facing similar issues. One of the main reasons why Intel’s BIA Team was tasked with figuring out the lost opportunity if Intel fails to meet customer demands, is because of the level of associated risk. Krzanich shared with the team in the last meeting that if the Axiom X3 demand increases, Intel may be unable to add capacity fast enough to meet market demand [17]. Further, Intel’s revenue and gross margin could also be disturbed tremendously by the timing of Intel’s other product introductions and related expenses [17]. Intel’s operations have high costs that are either locked in or extremely difficult to decrease in the short term [17]. Further, there are two scenarios in which Intel might be required to “write off inventory or record excess capacity charges, which would lower the gross margin” [17]. The first is if consumer product demand decreases. The second is if the BIA Team fails to forecast demand correctly. The final point to consider is that Intel’s manufacturing and test capacity could be under used, and as a result the company could be forced to “write down their long-lived assets”, which would in turn increase Intel’s expenses [17].

Personnel It’s no secret that Grove could be a difficult boss. Grove was fully committed to Intel’s survival and expected others to match his level of dedication. At one point, Intel historians note, Grove even asked employees to forgo wages for the good of the company [14]. Grove had a deep and complex history with his staff and realized that using a longterm strategy for personnel was critical to decision making. Finding the balance within a long-term personnel strategy is a major challenge that Krzanich faces today. In April 2016, Intel announced that it would lay off roughly “11% of its total workforce”, or “around 12,000 employees worldwide” [16]. Jobs relating to mobile business and smartphone chips, as well as, PC business have been cut drastically since the announcement. As Intel, moves towards; • • • •

cloud-based solutions, data center, Internet of Things (IoT), and non-volatile memory,

new opportunities have risen to attract top talent and to diversify Intel’s pool of candidates [16]. Intel is actively going through a growth and restructuring phase. At the center of this growth, top leadership is wasting no time leveraging ongoing restructuring efforts to discover and attract talented managers from a variety of backgrounds, as part of the company’s diversity and inclusion goals [11]. Intel has set aside $300 million to reach drive initiatives that call for the “full representation of women and underrepresented minorities in our U.S. 11/18/2016

workforce by 2020” [11]. Additionally, Intel has several strategic partners who are working with them to raise awareness of career possibilities, such as Rebecca Minkoff, Oakland Unified School District (OUSD), Arizona’s Navajo Nation and the Historic Foundation of Silicon Valley’s Latinos in Technology Scholarship program [11]. These actions are not happening without contention. Krzanich has faced substantial scrutiny for his hiring practices. Setting aside millions of dollars for hiring initiatives, while simultaneously slashing 12,000 jobs is a fairly controversial move. Particularly, in today’s political environment. Intel is also a company that has historically, relied on H-1B visas to offset their workforce, which is something that the public does not look favorably upon.

Systems, Business, & Finance Two of Intel’s largest struggles in recent year have been stagnant PC sales, in tandem with an equally dismal run in the mobile markets. The company lost billions on subsidies designed to entice smartphone makers into using its Atom chips [16]. For all of its efforts, Intel only captured a disappointing 1% of the market in 2015 [16]. Following these events, Krzanich made decisions to “slash jobs, abandon Intel's mobile efforts, and pivot the company away from PCs” [16]. Intel's earnings are “only expected to rise 3% this year, compared to an average growth rate of 8% for the broader semiconductor industry” [16]. Intel may receive help in the form of its stock’s “low 5-year PEG ratio of 1.3 and its forward annual yield of 3.3%”, which “could prevent it from falling much further” [16]. Intel plans to take the funds derived from the layoffs and; • cut costs, • constrict its channel sales and marketing, and • fine-tune its reporting system. Intel is further considering selling off its cybersecurity business to quickly increase its cash flows [17].

Marketing Intel promotes brand awareness while generating demand via direct marketing and co-marketing programs [17]. Intel’s direct marketing activities primarily include “social media advertising, television, consumer and trade events, industry and consumer communications”, and lastly, “press relations” [17]. Intel’s co-marketing activities mainly include advertising through shared marketing activities with certain customers after reaching a general agreement [17].

Pricing Intel’s pricing on particular products varies widely based on volumes ordered, features, design aspects and other factors [17]. Intel offers; • discounts, • rebates, and • other incentives to customers to boost the sales of their products and technology [17].

Distribution At Intel agreements are made in advance to ensure fairness to both of the parties involved. Sales to distributors, for instance, offer price protection on unsold merchandise [17]. The price protection program gives credits to the distributors for the “difference between the original price paid and the current price” that Intel is offering [17]. Additionally, sales to distributors agreements also guarantee “a right of return on stipulated quantities of unsold merchandise” [17]. 11/18/2016

Purchasing At Intel, purchases by customers are used to bring them into the company’s partnership program with advertising and marketing programs, such as, the Intel Inside program [17]. Intel works hard to broaden its brand reach of “beyond the scope of our own direct marketing” [17]. Certain customers are even licensed to display Intel logos on their PCs and other devices containing Intel microprocessors and processor technologies [17]. These customers are further encouraged to use Intel’s branding in their marketing activities [17].

Suppliers Intel has a thousands of suppliers in its pipelines. One of the chief concerns Krzanich faces in this area is that production could be disrupted by the several states of nature stemming from the unavailability of resources used in during manufacturing processes, “such as water, silicon, electricity, gases, and other materials” [17]. The reduced availability of resources would likely require Intel to reduce production and/or incur extra costs, which could impair Intel’s business worldwide. Intel’s primarily customer base consists of original equipment manufacturers (OEMs) and original design manufacturers (ODMs) [17]. Intel has sales and marketing offices all over the world that typically within close proximity to key concentrations of the company’s top consumers [17]. Since Intel’s customers are all over the world maintaining a global marketing effort makes sense.

New Market Segments Currently, Intel is expanding into the following new market segments; cloud-based solutions, data center, IoT, and non-volatile memory [17]. As Intel’s entire structure has been reformed around these operating segments, it is imperative that these areas are supported with marketing and sales initiatives.

Vertical Integration Despite having a strong supplier network and strategic partnership program, vertical integration is very much a part of the business culture at Intel. Intel has in-house teams that work diligently on research, development and manufacturing. Vertical integration is a highly competitive approach that gives Intel an advantage by ensuring that sensitive information and trade secrets are protected.

Optimal Decision Pathways In the past, Grove used Intel’s strategic partnerships with OEMs and ODMs to develop new products and drive excitement for the Pentium Pro product. In addition, Intel reached out to push demand for the Pentium Pro by “…working with MCI to provide more bandwidth for networks” [14]. Moreover, under Grove’s leadership, Intel worked with other leading technology companies to create brand new “hybrid applications” that leveraged the unique capabilities of the Pentium Pro [14]. Grove, who likes to hedge his bets, was also involved with Intel’s decision to invest over $100 million into desktop videoconferencing company, ProShare [14]. Grove was of the opinion that the demand for the Pentium Pro would rise with user’s needs for increased bandwidth, as well as with their desire for advanced internet applications. Especially for activities such as gaming, and video streaming for web conferencing. In his efforts, Grove made sure that Intel supported these endeavors and helped companies in these complementary fields to excel. In order to have access to the latest data and to increase productivity, Intel uses OLAP, in the form of a Microsoft BI solution. OLAP cubes are known for their speed and the simplicity of their models, which is a good benefit to leverage when a company has complex logistics and insight needs. Having an OLAP solutions keeps Intel’s sales and marketing staff, as well, as the BIA Team agile. This was one of the many tools Grove put in place, prior to his retirement.

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Grove was a constant proponent of using a framework and an analytical strategy to solve his toughest decisions. Likewise, today Krzanich can apply similar techniques to vet choices for selling the Axiom X3 processor. The BIA Team hopes by looking at the alternative courses of action, events, payoffs and decision criteria this report will help with determining the facts around selling the processors to top customer vs. regional customers. Additionally, in future reports it is the hope of the BIA Team to apply Bayes’ Rule to some of the hypothesizes that Grove had throughout his career in future iterations of the report. Bayes Rule is a model for a significant process in human reasoning, learning from experience. Bayes can tell us if we are on the right track with a hypothesis and works best when there is historical data to base the equations on. The BIA Team feels that information from Intel’s OLAP solution, Microsoft BI would be work well for future reports of a more granular nature.

Meeting Demand for the Axiom X3 For very large volumes, Intel purchases Axiom X3 processors for $700 each from third-party foundries in the AsiaPacific regions and mainly sells them to various top customers, such as Apple Inc. and Sun Microsystems for $2550 apiece. On Axiom X3 processors sold to top customers, Intel makes a $1850 profit on each unit. Any lots not sold to the customers by the end of the quarter can also be sold to regional companies at a discounted price of $600 per unit. When the Axiom X3 lots are sold regional vendors, Intel takes a $100 loss on each unit. Intel’s customers can purchase lots of 10, 20, or 50 million, as market demand typically favors those quantities and purchasing lots of these sizes must be made in advance on Intel’s end. In the event the market shifts, Intel must figure out which action to take, try to sell to top customers for a profit, or sell the product to regional customers at a slight loss. The BIA Team’s recent Axiom X3 forecast report found the following probabilities for the various levels of demand for each lot size, most likely to occur in 2017: Table 8 Demand and Probability

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Demand (Millions of Axiom X3 Processors)

Probability

0.15

0.40

0.25

Decision Tables Below, Table 9 features a payoff table showing the demand and possible course of sales actions for the Intel Axiom X3 processor. Table 9 Axiom X3 Payoff Table

Maximax and Maximin Criterion First the BIA Team found the maximum profit for each action. For selling to top companies, the maximum profit is $92.5 billion. For selling to regional customers, there was a loss of $1 billion. Because the maximum of the maximum profits is $92.5 billion, the BIA Team supports choosing the action that involves selling to top customers. First, the BIA Team found the minimum profit for each action. For selling to top customers, the minimum profit is $18.5 billion. For selling to regional customers, there was a loss of $5 billion. Because the maximum of the minimum profits is $18.5 billion, the BIA Team supports choosing the action that involves selling to top customers. Table 10 Axiom X3 Maximax & Maximin Criterion

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Decision Tree In Figure 20, the first set of branches relates to the two alternative courses of action: the selling to top companies and selling to regional companies. The second set of branches represents the possible events of low demand (10MM), medium demand (20MM) and high demand (50MM). These events occur for each of the alternative courses of action on the decision tree. Figure 17 Axiom X3 Processors Decision Tree

EMV (Expected Monetary Value) The EMV if Intel sells the Axiom X3 processors to top companies the EMV is $40.7 billion. The EMV for selling to regional companies is -$1.48 million. Consequently, if Intelâ&#x20AC;&#x2122;s objective is to choose the action that maximizes EMV, the company should choose to sell to top companies in the market, since this is where the EMV is highest. Table 11 Axiom X3 EMV Table

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Standard Deviation & Variation If Intel sells the Axion X3 to top customers, the EMV(A1) = 𝜇𝜇A = 40.7, and the variance is; 𝝈𝝈𝟐𝟐𝑨𝑨𝟏𝟏

𝑵𝑵

= �(𝑿𝑿𝟏𝟏 − 𝝁𝝁)𝟐𝟐 𝑷𝑷(𝑿𝑿𝒊𝒊 ) 𝒊𝒊=𝟏𝟏

= (𝟏𝟏𝟏𝟏. 𝟓𝟓 − 𝟒𝟒𝟒𝟒. 𝟕𝟕)𝟐𝟐 (𝟎𝟎. 𝟏𝟏𝟏𝟏) + (𝟑𝟑𝟑𝟑 − 𝟒𝟒𝟒𝟒. 𝟕𝟕)𝟐𝟐 (𝟎𝟎. 𝟒𝟒𝟒𝟒) + (𝟗𝟗𝟗𝟗. 𝟓𝟓 − 𝟒𝟒𝟒𝟒. 𝟕𝟕)𝟐𝟐 (𝟎𝟎. 𝟐𝟐𝟐𝟐)

= 𝟕𝟕𝟕𝟕𝟕𝟕. 𝟐𝟐𝟐𝟐𝟐𝟐

𝝈𝝈𝑨𝑨𝟏𝟏 = √𝟕𝟕𝟕𝟕𝟕𝟕. 𝟐𝟐𝟐𝟐𝟐𝟐 = 𝟐𝟐𝟐𝟐. 𝟑𝟑𝟑𝟑

If Intel sells the Axion X3 to regional customers at a discount, the EMV(A2) = 𝜇𝜇A = -1.48, the variance is; 𝝈𝝈𝟐𝟐𝑨𝑨𝟐𝟐

𝑵𝑵

= �(𝑿𝑿𝟏𝟏 − 𝝁𝝁)𝟐𝟐 𝑷𝑷(𝑿𝑿𝒊𝒊 ) 𝒊𝒊=𝟏𝟏

𝟐𝟐

= ((−𝟏𝟏) − (−𝟏𝟏. 𝟒𝟒𝟒𝟒))𝟐𝟐 (𝟎𝟎. 𝟏𝟏𝟏𝟏) + ((−𝟐𝟐) − (−𝟏𝟏. 𝟒𝟒𝟒𝟒))𝟐𝟐 (𝟎𝟎. 𝟒𝟒𝟒𝟒) + �(−𝟓𝟓) − (−𝟏𝟏. 𝟒𝟒𝟒𝟒)� (𝟎𝟎. 𝟐𝟐𝟐𝟐)

= 𝟑𝟑. 𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐

𝝈𝝈𝑨𝑨𝟐𝟐 = √𝟑𝟑. 𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐𝟐 = 𝟏𝟏. 𝟖𝟖𝟖𝟖

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Opportunity Loss Table & Expected Opportunity Loss (EOL) For the event “Demand 10MM,” the maximum profit occurs when selling to top companies is $18.5 billion. The opportunity that is lost when selling to a regional company is the difference between $18.5 billion and -$1 billion, which is $19.5 million. For the event “Demand 20MM,” the maximum profit occurs when selling to top companies is $37 billion. The opportunity that is lost when selling to a regional company is the difference between $37 billion and $2 billion, which is $39 million. For the event “Demand 50MM,” the maximum profit occurs when selling to top companies is $92.5 billion. The opportunity that is lost when selling to a regional company is the difference between $92.5 billion and -$5 billion, which is $97.5 million. Table 12 Axiom X3 Opportunity & Loss Table

The expected opportunity loss is lower for selling to top companies at $0, than to the top companies at $42.9 billion. Therefore, the BIA Team is of the opinion that based on the EOL criterion, the optimal decision is to sell to top companies whenever possible. This outcome aligns with the equivalent EMV criterion produced by the same optimal strategy. Table 13 Axiom X3 EOL Table

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Expected Value of Perfect Information (EVPI) If the BIA Team could constantly predict the future, a profit of $92.5 billion would be made 25% of the time when demand is at 10MM, $37 billion would be made for the 40% of the time when demand is at 20MM and $18.5 billion would be made for the 15% of the time when demand is at 10MM. Expected profit under certainty

= 0.25($92.5) + 0.40($37) + 0.15(18.5) = $40.7

$40.7 billion represents the profit Intel could make if the BIA Team knew with certainty what the demand would be for the Axiom X3 processors. = Expected Profit Under Certainty - Expected Monetary Value of the Alternative = $40.7 â&#x20AC;&#x201C; $40.7 = $0 This EVPI value of $0 represents, which represents the maximum amount that Intel should be willing to pay for perfect information. Additionally, EOL(A1) = EVPI = $0.

Coefficient of Variation The BIA Teamâ&#x20AC;&#x2122;s calculation for the coefficient of variation for selling the Axion X3 to top customers is as follows: đ?&#x2018;Şđ?&#x2018;Şđ?&#x2018;Şđ?&#x2018;Şđ?&#x2018;¨đ?&#x2018;¨đ?&#x;?đ?&#x;? = ďż˝

đ??&#x2C6;đ??&#x2C6;đ?&#x2018;¨đ?&#x2018;¨đ?&#x;?đ?&#x;? ďż˝ đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?% đ?&#x2018;Źđ?&#x2018;Źđ?&#x2018;Źđ?&#x2018;Źđ?&#x2018;Źđ?&#x2018;Źđ?&#x2018;¨đ?&#x2018;¨đ?&#x;?đ?&#x;?

đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?. đ?&#x;&#x2018;đ?&#x;&#x2018;đ?&#x;&#x2018;đ?&#x;&#x2018; = ďż˝ ďż˝ đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?% = đ?&#x;&#x17D;đ?&#x;&#x17D;. đ?&#x;&#x201D;đ?&#x;&#x201D;đ?&#x;&#x201D;đ?&#x;&#x201D;đ?&#x;&#x201D;đ?&#x;&#x201D; đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;. đ?&#x;&#x2022;đ?&#x;&#x2022;

Further, the coefficient of variation for selling the Axion X3 to regional customers is as follows: đ?&#x2018;Şđ?&#x2018;Şđ?&#x2018;Şđ?&#x2018;Şđ?&#x2018;¨đ?&#x2018;¨đ?&#x;?đ?&#x;? = ďż˝

đ?&#x;?đ?&#x;?. đ?&#x;&#x2013;đ?&#x;&#x2013; = ďż˝ ďż˝ đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?% = â&#x2C6;&#x2019;đ?&#x;?đ?&#x;?. đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;? â&#x2C6;&#x2019;đ?&#x;?đ?&#x;?. đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;

Return-to-Risk Ratio (RTRR) đ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;š(đ?&#x2019;&#x2039;đ?&#x2019;&#x2039;) =

đ?&#x2018;Źđ?&#x2018;Źđ?&#x2018;Źđ?&#x2018;Źđ?&#x2018;Źđ?&#x2018;Ź(đ?&#x2019;&#x2039;đ?&#x2019;&#x2039;) đ??&#x2C6;đ??&#x2C6;đ?&#x2019;&#x2039;đ?&#x2019;&#x2039;

The BIA Teamâ&#x20AC;&#x2122;s calculation the return-to-risk ratio (RTRR) for selling the Axion X3 to top customers is as follows: đ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;š(đ?&#x2018;¨đ?&#x2018;¨đ?&#x;?đ?&#x;? ) =

đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;. đ?&#x;&#x2022;đ?&#x;&#x2022; = đ?&#x;?đ?&#x;?. đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019; đ?&#x;?đ?&#x;?đ?&#x;?đ?&#x;?. đ?&#x;&#x2018;đ?&#x;&#x2018;đ?&#x;&#x2018;đ?&#x;&#x2018;

đ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;šđ?&#x2018;š(đ?&#x2018;¨đ?&#x2018;¨đ?&#x;?đ?&#x;? ) =

â&#x2C6;&#x2019;đ?&#x;?đ?&#x;?. đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019;đ?&#x;&#x2019; ďż˝ = â&#x2C6;&#x2019;đ?&#x;&#x17D;đ?&#x;&#x17D;. đ?&#x;&#x2013;đ?&#x;&#x2013;đ?&#x;?đ?&#x;? đ?&#x;?đ?&#x;?. đ?&#x;&#x2013;đ?&#x;&#x2013;

The return-to-risk ratio selling the Axion X3 to regional customers is as follows:

The expected return is much higher for selling to top customers, as opposed to selling to regional customers. The return-to-risk ratio shows selling to top customers to selling to regional customers.

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Outcome of Calculations Based on the BIA Teamâ&#x20AC;&#x2122;s calculations for expected monetary value (EMV) criterion and expected opportunity loss (EOL), it is their final recommendation that Intel should choose to sell Axiom X3 processors to top customers at higher profit margins, whenever possible. None of the criteria for decision making supported selling to the regional customers.

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Proposed Solutions Projection Report

Forecast & Future About a year ago, the U.S. government banned Intel from selling high-performance Xeon chips to China’s top supercomputing research centers [18]. This contentious move was spurred on by the belief that China was using their Tianhe-2 system, which runs on Xeon processors, for nuclear explosive testing activities [18]. Opponents of the ban, theorize that the U.S. is deliberately seeking to slow China's supercomputing development efforts [18]. The U.S. who has relied on computer simulation models since the 1990’s (as opposed to live nuclear testing) maintains this is not the case [18]. After the ban was issued, its effect became pronounced very quickly. Rather than deterring the Chinese, the ban reinforced their resolve to actualize their high performance computing goals. Only a few months later in June of 2016, China unveiled the Sunway TaihuLight, the fastest supercomputer in the world boasting a “theoretical peak performance of 124.5 petaflops” [19]. A petaflop is equivalent to one quadrillion sustained floating-point operations per second. The Sunway TaihuLight, which contains just over 10 million computing cores, is the first to ever exceed 100 petaflops [19]. The Sunway TaihuLight represents an area of concern for Intel, because in the wake of the U.S. ban, the TaihuLight was built entirely with Chinese microprocessors [18]. As a result, the Data Center Group (DCG) operating segment is under pressure to streamline production on the next-generation Intel® Xeon Phi™ product family, code-named “Knights Landing,” [15]. Intel’s foremost priority is delivering the microprocessors quickly, efficiently, and without defect [15]. As nations around the world fiercely compete to be number one in supercomputing power, the U.S. is counting on Intel to deliver in order for the country to retake the number one spot.

Figure 18 China's Sunway TaihuLight Supercomputer, Source: Xinhua

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Forecast Analysis Over the course of the past year, Production Managers report stated in a number of meetings that they feel their workers are spending less time working on supercomputer components due to a decline in orders. The BIA team collected data on the average hours per week spent manufacturing supercomputer components by Intel workers across the entire organization. The raw data was then used to create a series of regression statistics and further analyzed using regression trend analysis with quadratic models. Below Table 14 provides the data required to calculate a quadratic regression trend model on the manufacturing workweek data. Table 14 includes the original data, the time periods, and the time periods squared. Table 15 contains the regression statistics computed from the data in Table 14. Figure 19 shows the completed regression trend analysis with quadratic models. The BIA Team noted that quadratic regression model produced an R2 of .449 with both Xt and Xt2 in the model, however, the linear model R2 of .354 with Xt alone. The quadratic regression was found to add predictability to the trend model. A quick review of the regression trend analysis shows clearly that the Production Managers were correct in their assumptions. Since there is a small portion of time usually left over at the end of the week, the BIA Team is reviewing options to changes scheduling to keep the employees working for a full 40 hours a week and to consolidate the remaining time. With the consolidated time the BIA Team is hoping employees can use the extra time for training and enrichment activates geared at preparing for the upcoming Knights Landing release. Table 15 Regression Statistics

Table 14 Regression Raw Data

Figure 19 Regression Trend Analysis (Quadratic Models)

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Deming’s 14 Points In order for Intel to be successful moving forward quality control must remain a top priority. To that end, Deming’s 14 points can offer a roadmap for success. Intel recently went through a restructuring and reengineering phase, in which the entire core of the company was reimagined from the ground up. This was a massive undertaking for the company and underscores Intel’s dedication to ensuring its place in the future.

I. Constancy of Purpose For Intel to stay in business, it is very important for the company to focus on the problems of tomorrow and have a strong sense of constancy of purpose. It is going to take dedication to keep the DGC’s supercomputer goals within reach. Timely decisions will need to be by leadership that foster innovation, raise funding for research and education, and help expand product design and service.

II. A New Philosophy One of Intel’s top priorities is making sure government regulations and antitrust activities support the well-being of people. Intel facilities and sales centers can be found all over the world so keeping up with so many legalities can be a daunting task. When building components that will drive the next generation of supercomputers there are no accepted levels of mistakes. Defects cannot be abided. Employees will receive effective training so that they understand their job functions and also recognize that they have nothing to fear by asking for help when needed.

III. The End of Dependence on Mass Inspection Time after time, the BIA Team’s research has demonstrated that the current quality inspection process is ineffective and costly. By the time inspection takes place the results come too late to react to the quality of a product in a timely manner. This leads to reduced quality products shipping to the customer. This BIA Team believes that quality originates from improving the production process, as opposed to inspections.

IV. Awarding Business on Price Alone… Not a Chance At Intel, it is no secret that price and quality must be in harmony. By using strategic partners and respecting them by not pushing them to drive down the price of purchase without regard to quality, the company hopes to continue to formulate lasting relationships with suppliers. Intel knows unfair pricing can drive good suppliers and service providers out of business. Intel has a highly evolved qualification process for suppliers. Suppliers present evidence of active involvement of finance, product design and management, as they will become partners and possibly codevelopers on patents. The BIA Team is planning a formal review of the strategic partnership methodology this spring as part of Intel’s continual process improvement.

V. Improve Constantly At Intel, there is a need to constantly improve test methods. Intel actively seeks a more in-depth understanding of how its customers use and misuse their products. Intel recognizes that work must be done recurrently with suppliers to advance their processes.

VI. Training At Intel, one of the largest obstacles exists when there are breakdowns in standards that lead to varying interpretations of what defines acceptable work. The BIA Team is aware that management has several pressing needs for comprehensive training to learn about all aspects of the company that impact that process variation. Management has relayed in recent meetings that they understand some of the problems that their employees have performing tasks fittingly, but also acknowledged they are not aware of all of the issues employees face. This is an area that the BIA Team is actively creating a plan for and will be a part of upcoming reports.

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VII. Leadership Supervision by management and the supervision of production workers are 2 areas that the BIA Team has currently under review. Recent conversations and meetings with top Leaders have led to the knowledge that a growing percentage is unfamiliar with at least a portion of the work that they directly supervise. Leadership must be entrusted and guided on how to communicate and further to act on situations that need correction.

VIII. Drive Off Fear No one can give his best performance unless he feels secure. Employees should not be afraid to express their ideas or ask questions. Fear can take many forms, resulting in impaired performance and padded figures. Industries should embrace new knowledge because it can yield better job performance and should not be fearful of this knowledge because it could disclose some of their failings.

IX. Breaking Down Barriers The BIA Team has found that the company works best when teamwork is found throughout the company. Since a great many types of issues happen when communication is not effective the BIA Team has initiatives that will be disclosed in Tuesday’s meeting on the topic. One of the initiatives featured in the latest BIA Team newsletter showed a new program where service personnel worked with consumers who know a great deal about Intel’s products. The BIA Team was capturing this data for the first time and hopes it will lead to new discoveries in the future.

X. Eliminating Slogans Upon reviewing several posters, targets, and slogans, the BIA Team found several that were directed at the wrong groups of people. This in turn causing a great deal of frustration and in some cases, even resentment. The BIA Team is working with Management needs to improve the process. The BIA Team will eliminate any distinct causes for defects as found by statistical methods.

XI. Eliminating Numerical Quotas The BIA Team found several organizational goals in the last annual report that had stiff quotas and no actionable plans attached. One of note was “improve Xeon Phi supplier productivity by 10 percent next quarter”. There was no tangible plan in place for reaching this goal and data tracking any possible data was highly questionable. These goals have since been retired or rewritten to include plans for success. A full list will be made available in the upcoming BIA newsletter.

XII. Removing Barriers to Pride of Workmanship Over the years the responsibility of Intel’s supervisors has shifted from a numbers focus to a quality focus. Recent trainings have encouraged those in management to be better listeners and to aggressively correct process issues that take away from the employee’s sense of pride of workmanship. The BIA Team recently reviewed the Employee Excellence rating rewards and found that employees do not get rewarded for attempts to improve the system. The BIA Team found that the current performance appraisal incorrectly focuses on the end product. The BIA Team is of the opinion that employees who are measured by counting are at a disadvantage for pride of workmanship.

XIII. Education & Retraining In order to thrive, Intel needs good employee who are constantly improving themselves through education. The BIA Team is working with human resources and management on ways to encourage Intel’s employees to get additional education and to engage in self-improvement. New incentives for education will be included in the revised employee handbook for 2017.

XIV. Taking Action Management needs to take action to accomplish the transformation. To do this, first consider that every job and activity is part of a process. A flow diagram breaks a process into stages. Questions then need to be asked about what 11/18/2016

changes could be made at each stage to improve the effectiveness of other upstream or downstream stages. Everyone can be a part of the team effort to improve the input and output of the stages. Everyone on a team has a chance to contribute ideas and plans. A team has an aim and goal toward meeting the needs of the customer.

Six Sigma & Lean Manufacturing Intel has used Six Sigma and lean manufacturing practices as a part of their total quality control for some time. Since Six Sigma was designed for manufacturing, the methodology was a natural fit at Intel and has assisted with company growth over the years. At Intel, not all business processes capture enough data for Six Sigma to be effective, however, for the processes that do, the Six Sigma system is put in place. In order to stay competitive, Intel will need to continue its efforts to reduce costs and to become even more predictive through Six Sigma and lean manufacturing.

The DMAIC Process (Define, Measure, Analyze, Improve, and Control). At the start of each Six Sigma project, during the Define stage, the BIA and appropriate project teams identify the problem. Since the scope of these projects is restricted they can typically be completed within 4 to 6 months’ time. Next during the Measure stage, a substantial emphasis is placed on obtaining metrics and various measurements of current operating systems. Additionally, during the Measure stage variables will be identified and targeting data collected. Then the Analyze stage takes place and there is a shift of concentration as teams analyze data in an effort to determine what is happening. From here the teams move into the Improve stage, this is where the BIA team and the project team produce a series of ideas. These ideas are aimed at solving problems and improving performance. Finally, in the Control stage, ideas turn into action as tools, resources and standards are put into place. Fulfilling the need to maintain the new higher quality attained through the Six Sigma project.

Getting Lean by Reducing Waste At Intel, reducing waste is strong part of the company’s total quality-management philosophy. Lean manufacturing efforts at Intel seek out and eliminate waste across all areas of organization. Lean practices can be found in Intel’s strategic partner networks, customer and employee relations, organizational management, and design. Overproduction, waiting time, transportation, processing, inventory, motion, and scrap.

A Lean Six Sigma Approach Intel’s Lean Six Sigma approach is all about empowering the company to do more value added things that enhance customer experience. The program was established some years ago and as a result most employees are well trained in the tools needed to make the Six Sigma process work. The BIA Team found that they were able to reenergize employees and get significantly higher rates of employee adoption, if they shared the successes and wins that the program achieved over time through regular communications.

Six Sigma Challenges Six Sigma maintenance has its challenges. One shortcoming has been ensuring that employees document the process by talking to people who are intimate with the process. Another issue has been ensuring regular feedback to management. Process owners must do their job for Six Sigma to be successful at Intel. Part of the job is ensuring that senior management actively supports and puts in resources to facilitate the process.

Six Sigma Final Thoughts So far with Six Sigma, Intel has established and maintained high quality output goals in order to stay legal and meet government regulations around the world. Throughout the project, the BIA team facilitated continued management endorsement to support these activities. Now Intel seeks to bring this success to all of their business processes. Intel is committed to maintaining their status as a world-class international competitor and foundational infrastructure supplier and the BIA team believes Six Sigma will help the company to realize its goals. 11/18/2016

Process Flow Diagram On Figure 20 below, is a simplified data flow chart for the sales office for a person who comes in to place an order. The process starts with the customer arriving at the sales office. The flow takes the customer to the front office receptionist who inquires why the customer came into the sales office. Is the customer there to place an order, for a meeting to inquire about becoming a strategic partner or for some other reason? When the customer responds that they want to place an order, they are escorted back to the sales officeâ&#x20AC;&#x2122;s main greeting room when a dedicated sales liaison asks about the quantity of the order. If the quantity is small the sales liaison has the customer fill out the paperwork and completes the order, but if the sale is large, than the customer is given the paperwork to fill out but a more highly trained sales rep is assigned to the customer for the remainder of the process. After meeting with the sales rep, the customer is asked if they would like to place the order and if they do they are given the appropriate paperwork. Once delivery options are set, the customer leaves the sales building. Figure 20 Data Flow Chart: Sales Office

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FINAL THOUGHTS

Business Dilemma Projected Growth Report

Conclusion The BIA Team has presented many diverse business dilemmas, case studies and potential solutions surrounding company growth and CEO-level decision making at Intel. While the raw data in many of these reports is fabricated due to lack of access, the business dilemmas themselves and the solutions are based in reality. If or when the actual data becomes available these methods can work for proper assessment by simply plugging in the correct values and completing the full analysis process. In the first report, the BIA Team looked at Intel’s restructuring and gave reasons for why expanding to Vietnam may be in the company’s best interest. In the second report, the BIA Team delved into existing BI analytics issues and offered solutions that can be used to begin to understand the issues for fully. In the third report, the BIA Team looked at Intel’s expansion into new markets. Finally, in the last report, the BIA Team offered some forecasts and insights relating to the Xeon Phi and the future of the supercomputer component market. The future of Intel could take many different paths. Will the semiconductor giant falter after a 35 year lead in the market place? Will Samsung be able to capture an enough of a portion of the semiconductor market share to overtake Intel’s number one spot? Will the U.S. make a valiant return on the Top 500 list and reclaim its number one place as the top supercomputing power in the world? Only time will tell, but it is the hope of the BIA Team that this compilation of reports brings some much needed clarity to steps that Intel can take right now to ensure and positive outlook in the years to come.

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SUPPLEMENTARY ARTICLES Business Dilemma Projected Growth Report

Article 1: Intel® RealSense™ Technology Intel Corporation designs and manufactures a vast array of, “integrated digital technology products like integrated circuits, for industries such as computing and communications” (Morningstar, Inc.). In addition to the semi-conductor chips that made the company famous, Intel also designs and manufactures technology that crosses over into the virtual reality (VR) and 3D camera market, such as the Intel® RealSense™ Camera. When Intel released the RealSense™ Camera in 2014, the company established a strong competitive advantage by seizing first mover advantage on a variety of product lines (Burgess, 2016). Obtaining first mover advantage is critical to market share, an important variable that business statisticians can use to find measurements for analysis. According to a recent market research report from Marketers MEDIA, the 3D camera market will see a 41.31% compound annual growth rate (CAGR) until at least 2019 (Tiwari, 2015). The report notes that one of the key influencers of this trend is Intel’s RealSense™ Technology (Tiwari, 2015).

Understanding the Competitive Landscape So how did Intel, use analytics to rise to the fore-front of the deep-sensing camera sector? First, let’s take a look at the competition. The primary goal almost all VR technologies is for users to achieve true immersion. Level five is similar to how the human eyes see and gives users the freedom to move around and level one feels closer to the feeling of being in a planetarium in a static seat. Unfortunately, there are very real limitations to the technology available on the market today, due to factors, such as the often debated, Moore’s law. Intel’s RealSense™ Technology is makes achieving level five immersive experiences a real reality and being used in new and surprising ways.

Immersion, Making Virtual Reality Feel Real Immersion is an important variable that is used as a baseline for assessing how realistic VR content is. Immersion speaks to rank, more than categorization, and therefore, overall it represents ordinal-level data. The levels of immersion are essentially a measurement process for determining the level of “realness” one feel while having a VR experience (Bowman & McMahan, 2007, p. 36).

Inferential Process When the VR industry wanted to understand what made a VR experience feel realistic, research scientists studied a sample population of VR users (Bowman & McMahan, 2007). This was a necessity because of the cost of the VR equipment, the need for a fast turn-around time and the complex logistics and distribution of VR users. Readers who have received our Kraft Business Case Study on DiGiorno Pizza might liken this inferential process to when SMI-Alcott sent out 1000 surveys to “pizza-lovers” to gauge how all "pizza-lovers" might answer questions, such as, "why do people eat pizza"?

What The Team Found After analyzing all of the data, a new way to rank a VR experience emerged. The levels of immersion from least to greatest are generally considered to be; 1.360° non-3D (or ordinary 3D Video), 2.180° + 3D, 3.360° + 3D, 4.360° + 3D with limited holographic range, and 5.360° + Holographic + 3D cameras (Oscillada, 2016).

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Often one of the first steps in assessing immersion takes place at a nominal-level when analysts categorize whether a device is monoscopic (Not 3D) or stereoscopic (3D) (Bowman & McMahan, 2007, p. 38). Drilling down into immersion one of the most important pieces of interval-level data used is the field of view (FOV) which is the” size of the visual field (in degrees of visual angle) that can be viewed instantaneously” (Bowman & McMahan, 2007, p. 38). The full benefits of immersion are still largely unexplored, however, based on available research, its generally accepted that the higher the level of immersion, the better a VR User's spatial understanding will be (Bowman & McMahan, 2007, p. 39). Additionally, more fully immersed VR Users also benefit from a decrease in information clutter (Bowman & McMahan, 2007, p. 39). The RealSense™ Camera is able to get to level five immersion and delivers six degrees of freedom (6DoF).

Intel has several major competitors in the depth-sensing camera sector, however, the camera has some unique qualities that may make it an exceptional camera for a full VR array, such as price. The RealSense™ Camera only costs $139 for a single development camera, so building an array for VR, or embedding several RealSense™ Cameras into a single camera unit is fairly affordable, even with six or more units. It’s nearest VR camera competitor, Lytro, creator of the $100,000 to $500,000 Immerge camera, reaches level four immersion and also offers 6DoF (Oscillada, 2016). Other VR camera competitors with lesser levels of immersion include, Nokia, producer of the $60,000 Ozo and Google, creator of the $8,000 Jump camera, a 16-unit GoPro HERO array (Oscillada, 2016). In terms of 3D cameras, Canon, Nikon, Sony and Faro Technologies are some of Intel’s other competitors.

Lingering Questions There are still many questions surrounding the benefits of VR immersion that are yet to be solved and are of interest to Intel’s future activities. For instance, Intel’s engineers want to know if the effect of increasing display resolution will have any bearing on the amount of time it takes to complete a visual search task in a VR environment (Bowman & McMahan, 2007)? Do the individual components of immersion affect measurable user performance (Bowman & McMahan, 2007)? And how does immersion impact artificial intelligence and are the benefits the same as for humans?

Better Together Intel has developed hundreds or products over the years and faced many challenges. In recent years, Intel faced giant hurdles when several of products met with minimal consumer adoption (Boedeker & Hughes, 2005). The products were well received by critics, but they just were not thriving on the consumer market. The surprising solution to this problem takes the form of strategic partnerships. Intel’s partnership programs have been in place since the 1980’s. In 2006, Intel redesigned their The Intel Channel Partner Programme (ICPP), which boasts a whopping 185,000 members globally (Boedeker & Hughes, 2005). After much research, Intel developed its partnerships into a “best-practice approach to achieve operating and financial excellence” (Boedeker & Hughes, 2005). After studying various relationships, within their partnership networks they found that a "highly competent general manager in combination with a strong finance professional formed an effective partnership, where great accomplishments were made" (Boedeker & Hughes, 2005).

Descriptive Statistics In order to better understand how to leverage their strategic partners, Intel studied their entire population of partnerships. They found that the best strategic partnerships were those that had both business and financial team members involved in discussions (Boedeker & Hughes, 2005). Thus, when Intel took their technology to their network of partners they were able

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to ask them how their product could apply to their business and how economic implementation would be. Readers of the Kraft Case Study that was sent out earlier this week, might liken this to when AIB International conducted research on all of the pizza brands on the U.S. and decided DiGiorno was the top frozen pizza brand.

Measuring Up In the various market research reports related to forming strategic partnerships, some of the measurements that appear are;

Qualitative, Nominal-Level Measurements • What is the name of Partner Program your organization belongs to? • What is the name of the last Partner Program conference you attended (CRN, 2015)?

Qualitative, Ordinal-Level Measurements • Which Partner Program tier level is your organization? • Rate your Partner Program experience on a scale of one to five (CRN, 2015).

Quantitative “Interval-Level” Measurements • How long was it before the North American Partners were able to embed the devices once they received them? • What was the total number of employees working on complaints for all of the Worldwide Partners at any given time

(CRN, 2015)?

Seeing the Future Recently, one such partnership led to a RealSense™ Camera array was built as a pair of “eyes” for advanced drones and robots. The result was the machines gained collision control and guidance that was better than a GPS.

The Bottom Line Just Got a Whole Lot Greener So how does this relate to competition? Intel’s competitors, like Lytro and Nikon, have to collect a large one-time payment up front from consumers while Intel gets paid on every device the camera is embedded in. Since Intel met strategically with their partner base and got insights for the best ways to use the product from them prior to figuring out how to deploy their technology into the market they had some serious advantages and insights. Knowledge pulled from these consultative meetings, in addition to the benefits of already having first mover advantage led to a tremendous variety of products and uses that Intel's competitors are unable to realize. For these reasons, Intel’s market share is huge. RealSense™ Technology is popping up everywhere… it’s already appearing in cutting-edge smartphones, being vetted in experimental drones and rolled out to the mainstream in popular laptop brands, like ASUS, Dell, and Lenovo (Intel).

Visualizing Intel’s Manufacturing Data with Tableau and Maya MASH Networks Intel is a leading-edge technology company. As an organization, Intel is committed to big data analytics and has its own Intel® Architecture-Based Advanced Analytics solution. Intel also has strategic partnerships with SAS, SAP and Cloudera (Intel). Although, Intel has many capable BI tools in place, the BI team working on the upcoming manufacturing project decided that to create visualizations quickly and easily, as well as, to best complement their skill-sets, they would need to find an auxiliary solution. Additional consideration was given towards finding a BI tool with an eye towards agile centralized BI provisioning and governed data discovery to align it with the overall requirements of the company.

BIA Tools Comparison In order to compare BI tools, to where the results are truly meaningful for Intel, a focus was placed on a finding a tool with a strong ability to execute and that supports a vertical, industry-based strategy. For the BI tool to be relevant, making sure it met the needs of manufacturing industry was a top priority. Although, Intel has several very advanced BI tools at their disposal, the call was made to use Tableau and Maya’s MASH Networks to meet the specific needs of the upcoming manufacturing analysis project.

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Beyond being the industry standard, Tableau’s easy to use and versatile interface, as well, as abundance of support and training options make the software a good match for the team. Moreover, Tableau’s Gartner ranking for being the BI tool with the strongest ability to execute, places the BI tool squarely in alignment with Intel’s requirements (Parenteau et al. 2016). For the marketing team, the BI team plans to use Maya’s MASH networks in an innovative way to create some 3D visualizations that echo Intel’s brand and help drive the company’s theme of being the “Sponsors of Tomorrow” (Intel). In the chart below are key points pulled from Gartner that were used in the overall assessment of several tools, prior to the selection of Tableau. For our purposes, vendors were ranked based on five factors, ease of use, ability to scale, analytics capabilities, visual exploration and connectivity. Figure 21 BI Vendor Comparison

Upcoming Analytics Reports In the upcoming data analytics reports, we will be looking at entire populations of employees and production workers. Additionally, in other upcoming analytics reports, we plan to study populations specific to RealSense™ Technology, such as developers, beta testers, early adopters, resellers and particularly strategic partners, as the data becomes available. For populations outside of Intel, such as users of cameras embedded in ASUS laptops, the BI team will collect samples.

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Article 2: Background & General Observations According to Intel’s company website, Intel Corporation has been the foremost semiconductor manufacturer in the world since the 1970s, shortly after introducing the world to its first general-purpose programmable processor, the Intel® 4004 (http://www.intel.com/). However, by the close of 2015, Intel’s main rival, Samsung, had improved its market share to the point that over taking Intel’s lead, was not just possible, but more than likely. Today, Samsung’s total global market share sits at 11.6 percent, narrowly trailing Intel, who is holding steady at 14.8 percent [3]. Samsung is making a valiant push through various initiatives to close the gap, since the goal is now attainable for the first time since the company entered the market in the 1980s [3].

A Challenger Emerges Currently, the only semiconductor vendor positioned to challenge Intel is Samsung. In 2012, the market share gap between the two companies was 5.3 percent, however, it dropped in 2013 down to 4.2 percent, and by 2015 the difference was just 3.2 percent [3]. Moreover, none of Intel’s other competitors have enough resources or backing to challenge the industry giant anytime in the near future. For these reasons, plus strong market cap and assets to back up its aggressive sales initiatives, Samsung will likely match Intel’s market share and potentially surpass Intel within the next few years. The stage is set for a knock down drag out fight, unless, of course, Samsung decides to self-destruct.

Forecast: Cloudy with a Chance of …Fireworks?! One of the biggest challenges in the semiconductor manufacturing sector is that the PC market is narrowing, as people move towards laptops and tablets. Further, there is an upsurge in number of smartphone shipments is expected to take place over the next year [2]. This increase in shipments is projected to motivate business in the chip manufacturing sector. Additionally, the market is primed for a semiconductor company that can deliver better mobile solutions, and that leaves Samsung; with its substantial advantage on DRAM, NAND flash and image sensors [2], in a very good place. Despite having better technology, a stronger pool of resources, the timing of the marketplace and several other advantages, Samsung is Samsung’s own worst enemy. Over the past few months, who could forget the epic saga of Samsung’s “explosive” Galaxy Note 7 phone issues, in which the device notoriously exploded on a plane, in cars and in people’s pockets [9]. The total cost of the fallout may exceed $3 billion, and has all but destroyed the company’s standing [9]. However, PR nightmare aside, Samsung is still Intel’s only formidable foe. Samsung said is in full rebound mode and recently made the somewhat misguided and overly positive statement that it believes profits next quarter will return to about $2 billion, similar to last year’s levels [9]. Consider this, when Samsung closed out their latest quarter, after the exploding device fiasco, the mobile division made an operating profit of $87.9 million… this a confounding 96 percent cut from last year [9]. Consumers will look past many things, but an exploding device is not typically one of them. Intel’s chip sales are forecast to increase 6.3 percent, taking the company to $49.96 billion, however, its market share is predicted to drop 0.4 percent points to 14.2 percent [10]. Exchange rates and the escalation of the US dollar against other currencies and is not doing either company any favors, although more predictions still call for the gap in market share between Intel and Samsung to continue to shrink.

Final Thoughts So which company will come out victorious? No one knows. There are too many unforeseen variables relating to Samsung’s PR crisis, the exchange rates and the tumultuous PC markets to make a decisive call one way or the other. However, one thing is for sure the next year is going to be a year to watch.

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Market Share Market share can be thought of in math terms as;

Market Share = (Particular Company's Sales Revenue in Time Period X) / (Relevant Market's Total Sales Revenue in Time Period X) As the market for semiconductors grows, many analysts view changes in market share, as a sign of a company's competitiveness. And, in terms of competitiveness, Intel is the unified world champion of semiconductor manufacturing. Growths in market share can come from innovation, increasing demographic appeal, lower prices, or advertising. For instance, Samsung's innovations with their memory business helped facilitate growth, at a rate of 11.8 percent [2].

Supplemental Maths

(Computed with Wolfram Alpha /Wolfram Research, LLC)

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Article 3: Past Decision Review & I/O Card Import Report Intel Corporation Managers have had to make many tough choices over the years, typically during times of great uncertainty. During the mid-1980s, Intel was plagued by particularly economic tough times that drove the company to the very brink of survival. Turning back the clock to 1985, Intel’s earnings were only a scant penny per share [13]. Then in 1986, Intel took a huge financial hit losing a staggering total of $173 million [13]. However, the early days of computing were brutal, and today Intel is one of the few companies that was able to pull through, and the only, to attain their consistent level of success.

Product Concerns & Considerations Although Intel created the first microprocessor in the early 1970s, it was a second tier product for Intel, as the corporation mainly focused on the production of memory chips. By the mid-1980s, however, Intel was being confronted the following challenges surrounding their memory chip business; • "second sourcing" that led to multiple new and increasingly aggressive competitors, such as, the Japanese

Memory Chip Producers, who staged a takeover of Intel’s memory market using “10% rule”, and • a “downturn caused a build up excess capacity” [13].

The “10% rule” was a very successful strategy, where Intel’s memory chip competitors belligerently undercut Intel’s memory chip prices by 10% in a bid to attract Intel’s customers. When, or if, Intel matched their prices, the memory chip producers would slash their price by another 10%, and another, until they finally landed the customer, even if it was at a loss. Even though, microprocessors were a just secondary background stream of revenue for the company, Intel’s top leadership felt it was prudent, to think outside the box and to let go of their struggling memory business.

Getting Hypothetical to see the Light at the End of the Tunnel In the heat of the unfolding chaos, Andrew Grove, Intel’s CEO and Chief Visionary, posed a hypothetical question to his Intel Chairman, Gordon Moore, “If we got kicked out and the board brought in a new CEO, what do you think he would do?” Moore’s reply was palpable, “He would get us out of memories”. Grove retorted, “Why shouldn’t you and I walk out the door, come back and do it ourselves?” [13]. What happened next was the stuff of Intel legend. Intel Management dropped the memory chip products entirely and refocused their future on microprocessors. This singular decision is what saved the company from impending financial ruin and eventually propelled Intel to its place, as the top semiconductor processing company in the world.

Staff & Location Strategy During these crucial years, Intel’s Management Team had to pull together and decide; • which plants to close, • which employees to layoff, • which employees’ salaries were going to be cut, and • which employees would get time off without pay.

Additionally, Intel’s Management Team had to figure out how many people and plants the changes would effect.

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Global economic conditions had a tremendous influence on the outcomes of the decisions made by Intel’s Management Teams. Consider this, during the early to mid-1980’s, several states of nature were in play that they had to account for, including, but not limited to; • Worldwide Recession, • stemming from the energy and oil crises of the 1970s and market stagnation, • High Inflation, • Record Unemployment Rates, • Financial Industry Crisis, • Political Discord and Fallout.

Intel & I/O Card Imports Flash forward to today and Intel is still making decisions critical to its bottom line. Earlier this year, Intel’s leadership needed to make a decision regarding whether or not to import its own private line of I/O Cards. This is a commodity that has been marked for international purchasing out of Intel’s European and United Kingdom Operations. If Intel imports the I/O cards, the company will need to consider concerns about the purchasing value of the dollar overseas.

Background Scenario For instance, supposing the value of the dollar went up, Intel could expect to see profits conservatively estimated to be around $3,500,000. Moreover, if the dollar maintained its current position, Intel could still expect profits of around $2,750,000. However, if the value of the dollar decreased, Intel would find itself in the precarious position of trying to explain and justify a loss of $5,550,000 to its shareholders. In a recent economic report, it was noted that there was a “25% chance that the dollar would increase in value overseas, a 35% chance that it would remain constant, and a 40% chance that it would lose value overseas”. If Intel decides not to import its own microprocessors, it would have a $2,20,000 loss no matter what the value of the dollar was overseas.

Decision Table Table 16 I/O Card Payoff Table

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Decision Tree In Figure 19, the first set of branches relates to 2 alternate courses of action, to import the I/O Cards or to build the I/O Cards in-house. The second set of branches represents the possible events, the dollar increasing, the dollar maintaining its current valuation and lastly, the dollar decreasing. These alternate courses of action occur for each of the events on the base of the decision tree. Figure 22 I/O Card Import Decision Tree

EMV (Expected Monetary Value) After carefully considering the events surrounding the dollar, the possible alternate courses of action Intel could take, and the potential payoffs; the BIA Team is of the opinion that the best course of action is to compute the expected monetary value (EMV) to aid in decision making. The calculations are completed below for review. From the recent economic report, the BIA Team obtained the following probabilities for the various economic conditions relating to the dollar; • P1(Dollar Increase) =.25 • P2(Dollar Maintains) = .35 • P3(Dollar Decrease) = .40

Using these probabilities, plus the payoff’s shown in Table 6, the BIA Team created the following table to show EMV (Table 7).

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Table 17 I/O Card EMV Table

Thus based on Table 7, the expected monetary value, if Intel imports the I/O cards is a -$382,500, and the expected monetary value, for building the I/O cards in-house is -$2,200,000. Either way, Intel is looking at a loss. Using just these results, Intel should choose to import the I/O cards until another solution can be determined since the company will lose less money in the interim.

Risk Aversion & Risk Taking Standard Deviation & Variance The BIA Team also decided to take a look at the return-to-risk ratio, in order to take into account, the variability of the events (in this instance, the various economic conditions surrounding the dollar). The BIA Team computed the variance and standard deviation of each option. If Intel decides to import the I/O cards, for this option EMV(A1) = ÎźA = -0.3825, and the variance is;

If Intel decides to build the I/O cards in-house, for this option EMV(A2) = ÎźA = -2.2, the variance is;

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Relative Risk of Each Choice â&#x20AC;&#x201C; Pending Comments from the Director Since the BIA Team is comparing two options with different means, they decided to evaluate the relative risk associated with each stock. Take note below that the coefficient of variation for importing the I/O cards is equal to:

Further, the coefficient of variation for building the I/O cards in-house is equal to:

The BIA Team Is unsure of what to make of these negative numbers and is going to inquire with their Director to see if these calculations are correct.

Return-to-Risk Ratio â&#x20AC;&#x201C; Pending Comments from the Director The BIA Team additionally calculate the return-to-risk ratio for both options, as well. The return-to-risk ratio for importing the I/O cards is:

The return-to-risk ratio for building the I/O cards in-house is:

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Again, the BIA Team Is unsure of what to make of these negative numbers and is going to inquire with their Director to see if these calculations are correct. There is some debate regarding using log functions or alternate methods, however, in lieu of a concrete answer, they will be sending an email memo forthwith.

Final Recommendations Based on maximax payoff criterion, the maximum profit for importing the I/O cards that can be realized is $3,500,000. Further, based on maximax payoff criterion, the maximum profit for building the I/O cards in-house is a loss of $2,200,000. The expected profit under certainty is:

Based on the expected value of perfect information calculated above for this decision, Intel should not lose more than $4,825,000. Based on the current analysis and the fact that Intel has not yet implemented either solution, it is the recommendation of the BIA Team that Intel should hold off on reaching any decisions until alternate ideas can be presented and concrete numbers can be reached regarding risk.

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Article 4: Expanding The Next-Generation Memory Market As organizations develop and enhance applications, hardware, and services, the demand to quickly access and analyze large sets of data grows. Intel imagines the world, as a place where processing happens in real time and the company is taking steps to actualize their vision [17]. Intel’s recent breakthroughs in next-generation memory have led to better speed, endurance, and density in their upcoming processor lineup. Intel’s advancements particularly impact processors designed to handle multiple applications, as well as activities related to; big data, virtualization, high-performance computing, cloud, storage, and gaming [17]. Consider this; with better functioning applications and hardware, researchers in the science and healthcare sectors could complete intricate tasks much more rapidly. Genetic analysis and disease tracking could take place in real time. Countless lives could be saved. Moreover, in the financial, retail, and insurance sectors, having powerful processing capabilities could help spot fraud detection patterns faster, saving massive amounts of money and protecting consumers. With Intel’s latest next-generation memory offerings enabling trillions of calculations per second, the company is poised to bring emerging data analytics solutions to the market [17].

Non-Volatile Memory (NVM) Solutions Intel is already well known for their NAND flash memory products, which are chiefly found in solid-state drives. Non-volatile memory-based solid state drives represent a significant part of Intel’s strategy, keeping the company competitive as a foundational infrastructure supplier [17]. Non-volatile memory-based solid state drives are also deeply aligned to Intel’s core computing business [17]. Last year, Intel and partner Micron announced its 3D NAND and the new 3D XPoint™ technology, a non-volatile memory (NVM) product [17]. 3D XPoint™ technology has been described as the culmination of power, density and performance between the present NAND product lines and conventional memories like DRAM [17]. In 2016, the company further expanded its next-generation memory market offerings by adding Intel® Optane™ technology to its production [17].

Figure 23 3D XPoint Technology, Source: Intel

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Figure 24 Storage Performance, Source: Intel

Figure 25 New Class of Non-volatile Memory, Source: Intel

Increasing Capacity in China Now, as Intel seeks to bring Optane™, 3D NAND, and 3D XPoint™ technology to market, the company is actively expanding their operations in Dalian, China to increase manufacturing capacity for next-generation memory [17]. Memory, like data center and Internet of Things (IoT), is a growth market segment for Intel and this expansion is an integral part of the company’s multi-source supply strategy. Intel has earmarked $5.5 billion to outfit the facility in Dalian, as a cutting-edge non-volatile memory production center [17].

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Figure 26 SSD & Mobile Driving NAND Bit Growth, Source: Micron

Challenges Intel’s NAND flash memory products are manufactured by 2 suppliers; IM Flash Technologies, LLC (IMFT) and Micron Technology, Inc. (Micron) [17]. Micron has been a strong strategic partner and co-developed some the new NVM solutions alongside Intel. Additionally, Intel depends on other third-party suppliers to manufacture and assemble and test certain components, related to NAND flash memory [17]. If any of the third-party suppliers falls short and fails to perform these services on a timely basis, Intel faces potential supply delays or disruptions that could deeply impact the company’s bottom-line. These are some of the key factors driving the push for expansion in Dalian. The facility in Dalian with its friendly government, skilled workforce, low overhead, and wages, is ideal for expansion. One of Intel’s biggest challenges is explaining why the company is willing to increase operations in Dalian, when the company’s current restructuring is calling for the closing of facilities and reduction of workforce in the U.S. These concerns are especially heightened in the wake of the ongoing political climate in the U.S. In order to gain insight into the issue the BIA Team compared the cost per unit for production in the U.S. versus the cost per unit for production in China.

Central Tendency There are 3 measures of central tendency, median (Mdn), mean (M) and mode (Md). The measure of data that we use is dependent on the type of data and the distribution. For categorical scores, the mode (Md) is the ideal choice for measuring central tendency. For ordinal data and scores the median (Mdn) is the ideal choice for measuring central tendency. For quantitative (ratio & interval) scores the mean (M) is the ideal choice for measuring central tendency. Generally, if the quantitative data has outliers or is skewed the median may also be a viable alternate. The BIA Team created a study of 141 SKUs. Two datasets were compiled, one containing the cost per unit for each SKU in the U.S., and one containing the cost per unit for each SKU in China. The mean for the U.S. cost per unit is 123.792857142857, for the China's dataset, it is 86.9571428571429. The median for the U.S. cost per unit is 75, for the China's dataset, it is 52. The mode for the U.S. cost per unit is 17, for the China's dataset, it is 2.

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Table 18 Central Tendencies, Skewness, & Variability

Variability Variation occurs in every distribution. Failure to account for it in measures of central tendency can lead to misleading results. The measures of dispersion are range, variance, and standard deviation. These provide a more complete understanding of the data set. The range for the U.S. cost per unit is 771, while for the China's dataset, it is 633. The sample variance for the U.S. cost per unit is 19061.2157759507, for the China's dataset, it is 10437.4657759507. Lastly, the standard deviation for the U.S. cost per unit is 138.062361909214, for China's dataset, it is 102.163916212872 .

Skewness Skewness is vital to describing asymmetry within a set of statistical data. The skewness for the U.S. cost per unit is 2.35196651333058, for the China's dataset, it is 2.79567648545502.

Competition 3D XPoint Technology is fairly new and fills a much-needed niche. It terms of the technology; Intel is enjoying the benefit of first mover advantage. However, Samsung remains Intel's biggest competition on many fronts, including next-generation memory. There are rumors of a potential partnership forming between Samsung and Netlist and a new technology set to challenge 3D XPoint Technology in the near future. In order to offset this Intel will need to move quickly and make strategic moves in the marketplace to ensure their position and stay on track with their current plans for expansion in Dalian.

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