ARM Holdings s response to changes in the microenvironment Essay

ARM Holdings s response to changes in the microenvironment - Essay Example The firm that is analyzed in the paper is ARM, the producer of most microprocessors used in mobile devices like mobile phones, smart phones, servers and embedded devices. Intel dominates the manufacture of microprocessors for laptops, desktops, tablets and other computer devices. Though they share a related field in different industries, both firms are different, and each dominates a section of the market that its competitor did not want to venture, until recently. Recent events in the information technology industry have caused a shift towards the mobile industry, and both firms have enough interest to invest in research that will enable them to produce microprocessors for use in the domain of its competitor. ARM intends to shift into building processor architectures for the PC, tablet, and laptop industry while Intel wants to shift to producing processors for the mobile industry. However, this shift is faced with limitations since the two companies are pushing their strengths that had resulted in their domination of their current market. ARM does not build its processors; rather it sells the architecture to firms like NVidia, QUALCOMM, Apple and Texas Instruments that have the necessary infrastructure to build the designs. It charges these companies for up to 2 % of the revenue from the processors for each processor that is incorporated into a device. The ARM processors are characterised by low energy consumption that makes them ideal for mobile devices, and the firm also designs some processor architecture that are incorporated into servers. ... ry has more potential for growth than the PC industry, and that is why Intel has shifted attention towards developing microprocessors for mobile devices. Intel aims at doing this by improving the energy consumption of its processors since their processing power is the best in the world. On the other hand, ARM has already developed processors for use in personal computers, tablets and other devices that use operating systems that are primarily built for computer systems. This will pose a threat to companies like AMD since ARM has the capacity to improve on its technologies since it does not build the processors (BDTi, 2011). Environmental Analysis Industry Cycle The microprocessor industry has reached its maturity stage as it has existed for a long time and firms have already established their niche markets. However, since this is a research, innovation and development-intensive market, the industry has retained the characteristic of an emerging market. In addition, due to the versati lity of information technologies, it is likely to remain so as firms come up with new architectures, forms, and configurations of processors. Therefore, in its strategy, ARM should not only look at current developments, but also anticipate future changes in order to have a competitive edge against leading market players like Intel, and avoid being overtaken by emerging firms (Porter, 2008: 89). Porter’s Forces There are five main environmental forces that ARM has to deal with in its quest to venture into the PC market and retain its competitive edge in the mobile market, three of which are macroeconomic and two microeconomic. The porter forces give an over view of the steps the firm should take in order to achieve its objectives; these changes include: The entry of Intel and other firms