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Advanced Micro Devices Corporation’s Survival Essay

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Updated: Jun 27th, 2021

Introduction

Advanced Micro Devices (AMD) is a technology-focused global corporation that was established almost five decades ago in California. Nonetheless, the company faces tough rivalry from other superior organizations, namely, Intel and NVIDIA, both of which have invested heavily in their research and development (R&D) personnel in relation to AMD. In addition, while Intel has a substantial capital base to facilitate its global operations, NVIDIA has recorded continuous productivity over the years, thanks to its CEO, Jen-Hsun Huan, compelling leadership and management expertise. As a result, AMD underwent constant restructuring with the view of beating both NVIDIA and Intel, although the move was poorly calculated because the company ended up recording negative organizational performance. In addition to examining what went wrong with the AMD, this paper discusses the input that an organizational development consultant and I would have given to save it.

AMD’s Change and Negative Organizational Performance

In the context of AMD, despite recording substantial sales and possessing assets amounting to close to 45 billion American dollars in 2000, it took less than one and half decades to realize negative performance characterized by losses to the tune of more than USD 40 billion (Kurtulmus 142). The change process, specifically, the way AMD handled its restructuring process with the view of remaining competitive, is responsible for the company’s negative performance. This reconfiguration could not eliminate the company’s prevailing management issues that led to the resigning of talented engineers such as Atiq Raza and even its founder, Jerry Sanders.

In particular, issues had been raised and left unaddressed regarding the company’s spending that exceeded its sales. After acquiring ATI Technologies as part of its change process, the company did not do thorough market research regarding its competitors’ inventions before producing its innovative processors, namely, Phenom and Phenom II, because its rivals such as Intel had already supplied superior items, a situation that made AMD record losses in 2007 (Kurtulmus 143). In addition, the company’s acquisition plans resulted in a weak R&D team that steered the production of items such as the Bulldozer class of processors, which could not beat its rivals’ commodities. Hence, while its competitors were making huge sales of their innovative and competitive products, AMD was counting losses and hence the reason for its negative performance even in the 2016 financial year.

AMD’s Organizational Structure and Culture

To regain the lost glory, AMD can alter the prevailing organizational structure and culture to match its goals and objectives of being the best in its line of business. Consequently, it is crucial to note that rivalry determines the direction that interested parties take to remain operational and profitable. In this case, any actions that an organization takes are preceded by elaborate research concerning the prevailing market situation. In addition, any change should also consider workers’ reaction to it, including proposing some of the practical steps to take in case resistance is witnessed. According to Shimoni, workers’ resistance to change is founded on various social and administrative elements (262). Another study by Akan et al. introduces the issue of communication as among major causes of employees’ resistance to change, especially when they are not informed about any transformations, involved in the change decision-making procedure, or prepared to deal with the underlying outcomes (53). In the context of AMD, the company still has the opportunity to introduce strategies such as seeking employees’ opinions before embarking on change.

In addition, it can develop shared automated forums whereby the CEO can interact with the current pool of workers in real-time to address matters such as the need for the proposed change and the benefit that they stand to gain after implementing the transformation. This strategy will eliminate issues related to employees’ resistance to change witnessed when the boss, Hector Ruiz, suggested various transformational ideas of altering the prevailing ordinary promotion plan, including the lack of a lasting strategic map and an international marketing approach. The company can also amend the current culture by investing in training and developing its employees, a move that can transform the perception that they are inferior compared to rival businesses. This mentality indicates that AMD’s workers are not proficient enough to believe that their input that can position the company ahead of its competitors.

The Mistake During AMD’s Change Process

AMD made the first mistake by allowing a CEO who could not cooperate with employees to correct matters that were ruining its financial muscles. For instance, the failure to heed Atiq Raza’s proposal and counsel was the root of the company’s financial tribulations because it ended up amassing debts that it could not settle without affecting its operations. Such levels of ignorance also affected employees’ self-esteem and, consequently, their capacity to produce competitive items. In addition, operating without a clear vision, a strategic map, and a global promotion technique made AMD fail in most of its business endeavors. In a study by Ali, strategic planning is presented as among various strategies that boost institutional performance (9). In particular, it helps in the “determination of the mission, major objectives, strategies, and policies that govern the acquisition and allocation of resources to achieve organizational aims” (Ali 9). Issues that are captured in a strategic map lacked in AMD’s operations. For instance, in addition to its failure to implement employee-based strategies such as training, development, and the use of incentives, it had weak policies that could not minimize its financial extravagance.

Organizational Development Consultant and AMD’s Leadership

Virtually all companies encounter situations that require opinions from experts. Leaders, managers, and even employees may lack the professionalism required to address particular organizational predicaments, especially those that are linked to leadership positions. Organizational development consultants are specifically experienced in investigating issues in institutions. In particular, they assess a company’s commercial environment by interrogating workers and administrators or even observing its operations with the view of identifying the root of problems being experienced (Cameron 53). After getting this information, they propose the most appropriate transformation to implement to boost workers’ morale and institutional profitability.

In the current context, an organizational development consultant would have been fruitful to AMD. Firstly, their interview with employees such as Atiq Raza would have revealed issues, including financial wastage and the lack of a strategic map, both of which had a bearing on the company’s leadership. Thus, the consultant would have recommended better leadership strategies that value employees’ opinions in addition to conflict and financial management approaches (Cameron 53). This recommendation would have enhanced workers’ engagement after realizing they were not only valued but also viewed as crucial assets that could position AMD among top-performing companies in semiconductor production and supply. The company would have also benefited from pieces of advice regarding the best way forward, including whether to adopt mergers and acquisitions or to drop others in the effort to attain maximum profitability while retaining its global public image.

My Input Towards Enhancing the Change Process

Change is an inevitable endeavor that virtually all organizations have to deal with in the course of their operations. As an interested party, it would have been imperative to let the leader and employees realize that change is executed for the betterment of the organization and its workforce. Some employees view change as a threat to their current job since they sense the possibility of being laid off or regarded as redundant. However, I would have suggested to the leader to incorporate all workers in the change implementation process, regardless of whether some of them were to be fired or not. This approach would have ensured that employees to be laid off left the corporation knowing the actual company-specific reason that informed such a decision. Firing them abruptly may have created the impression that they were incompetent, a situation that could have lowered their morale and, consequently, productivity and commitment. I would have also suggested the need for a change management expert who could have advised on the best structural and culture-based adjustments to be emphasized during the change execution process.

Conclusion

AMD is well known for its large-scale production and supply of semiconductors that are presently deployed to facilitate computer operations. In particular, AMD takes the second position regarding the volume of X86 microprocessors manufactured globally. It has been recognized for its exceptional technological capability to the extent of being ranked among top corporations that are licensed to carry out the manufacture of computer components. Nonetheless, this paper has revealed that indeed poor leadership, unsubstantiated change management practices, and the failure to seek opinions from experts led to its negative performance. Opinions from experts such as an organizational development consultant and I would have saved it.

Works Cited

Akan, Betül, et al. “The Effect of Organizational Communication Towards Resistance to Change: A Case Study in Banking Sector.” Economic Review: Journal of Economics & Business, vol. 14, no. 1, 2016, pp. 53-67.

Ali, Albadri. Strategic planning–organizational performance relationship: Perspectives of previous studies and literature review.” International Journal of Healthcare Management, vol. 11, no. 1, 2018, pp. 8-24.

Cameron, Celia. “A Case for Change in Higher Education.” OD Practitioner, vol. 49, no. 4, 2017, pp. 52-56.

Kurtulmus, Bekir. “AMD’s Struggle for Survival: A Technology Giant’s Restructuring and Changing Process to Win Competition.” Cases and Exercises in Organization Development & Change, edited by Donald L. Anderson, SAGE Publications, Inc. 2012, pp. 140-147.

Shimoni, Baruch. “What is Resistance to Change? A Habitus-Oriented Approach.” Academy of Management Perspectives, vol. 31, no. 4, 2017, pp. 257-270.

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