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Risk Analysis Amd - Ati

Essay by   •  March 31, 2011  •  3,177 Words (13 Pages)  •  1,565 Views

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Situation Analysis and Problem Statement

The businesses of the world today are always in a state of fluctuation trying to maintain their competitiveness within their respective industries. For various opportunities to be determined for a company to stay competitive, companies need to define the "right" problem and challenges. Once they do this reaching their end state goals are just an implementation away.

This paper will describe the situations of AMD-ATI and what lead to the decision for AMD to acquire ATI. . We will look at the opportunities available to both companies which will make them more competitive in the computer processing market and begin to work towards their goal of being on the same level as Intel. Also, what it will take for ADM-ATI to reach their desired end state along with a few goals to ensure the desired end state is met. This will in turn allow a problem or opportunity statement defining the "right" problem in the "right" way to be developed.

Situation Background (Step 1)

AMD is a leading global provider of innovative microprocessor solutions for computing, communications and consumer electronics markets. AMD is dedicated to delivering superior computing solutions based on customer needs that empower users worldwide.

ATI is a world leader in the design and manufacture of innovative 3D graphics, PC platform technologies and digital media silicon solutions. ATI is the world's foremost graphics processor unit provider and is dedicated to deliver leading edge performance solutions for full range of PC and Macintosh desktop and notebook platforms, workstation, set-top and digital television, game console and handheld device markets.

AMD needs to acquire ATI to become more competitive in their current line of micro-processing products, to try to compete with Intel in the areas of graphics, chipsets and consumer electronics and to compete in the enterprise market. By acquiring ATI, AMD hopes to create a processing powerhouse by bringing AMD's technology leadership in micro-processors together with ATI's strengths in graphics, chipsets and consumer electronics.

Issue Identification

How the following issues should be prioritized I am not sure but they are all equally important. First there is the tough competition, which is only Intel the way AMD sees it. Intel has had the platform that includes graphics, chipsets and consumer electronics for quite a while. In order for AMD to even think about giving Intel a run for their money they need to at least offer the same type of product line. By acquiring ATI, AMD hopes to offer not only the same types of products, but with better quality and more innovation. When AMD acquires ATI, this will open up the same them up to the market that Intel is servicing.

Reducing cost is always apart of a companies strategic plan. The question is how well does a company do this and still maintain productivity. AMD is no different. In this situation the issue of cutting costs depends on where facilities will continue to be located and how personnel will be brought together. This presents a huge problem with personnel in the areas of work productivity, combining work cultures, keeping the stress levels low and minimizing layoffs. Communication between employees and management are of the utmost importance in this situation. While all this is going on, AMD-ATI still needs to be able to keep moral high amongst the employees'. When moral is low then usually productivity will be low also. These two issues alone I think present the biggest challenge of all.

AMD and ATI both currently have partnerships and vendors that they deal with. AMD has an ongoing partnership with a company named, Nvidia who is a main rival of ATI in the graphics space industry. As well, ATI provides service to and has a relationship with Intel OEMs. If the acquisition goes through Intel is predicted to of course cut off their relationship with ATI, but AMD officials say that the deal does not threaten their relationship with Nvidia (Lemon and Sayer, 2006).

Opportunity Identification

The first opportunity that everyone I am sure will see is to expand AMD's product line. By acquiring ATI, AMD will be able to offer graphic chips and chipsets with integrated graphic capabilities to its current customer base. At the same time with will open up a larger customer base for them as well. On this level AMD will have a better chance at increasing their momentum to compete with Intel.

Reducing cost can be done by combining operations. The merger is expected to save AMD and ATI $75 million in operational cost in the first year and as much as $125 million in the second year, without the need for job cuts (Lemon and Sayer, 2006).

AMD and ATI will be able to increase customer benefits. As a combined company, AMD and ATI will develop and offer better commercial platforms, advance mobile computing and digital entertainment across multiple consumer devices. AMD will realize future growth in micro-processor sales in the market for mobile PC's.

Stakeholder Perspectives/Ethical Dilemmas

Shareholders, employees, and current partners with AMD and ATI should be concerned ethically with what this merger could bring about. On behalf of the stakeholders from ATI the questioned can be asked is one of the main reasons AMD buying our company to increase their value in their shares. Personnel, customers, vendors and partners have a right to know how this directly affects them. Employees have a valid concern about how the two work cultures will be combined. Will some people be demoted while others are promoted? Relationships and partnerships with other companies will be deeply affected. Intel will not be doing any more co-marketing with ATI (Yager, 2006). Nvidia, who currently has a partnership with AMD has a right to be concerned since ATI is their number one competitor. Is it ethical to acquire a competing firm knowing you have a partnership with their number one competitor and why did AMD not consider purchasing Nvidia?

Problem Definition (Step 2)

AMD has just recently grabbed attention with significant gains in market shares, much of the shift in momentum is the result of many changes in the company, market, and technology. AMD is now facing changing market dynamics and an invigorated competitor. In addition, the war between AMD and Intel is moving beyond the processors to a new battle over the entire platform. AMD has to come up with a sure fire way to continue to be innovative and keep

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