1. The Moment Is Now GLOBAL MEGATRENDS IMPLICATIONS TO STRATEGY FORMULATION & EXECUTION: A CONTEXT FOR TRANSFORMATION Dr. Fariborz Ghadar William A. Schreyer Chair of Global Management, Policies and Planning; and Founding Director, Center for Global Business Studies Pennsylvania State University Email: fghadar@gmail.comfghadar@gmail.com Web Site: www.ghadar.com

2. 2| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL International Product Life Cycle u High Engineering Content u Few Manufacturers/ Less Competition u Unique/ Non-Standard u R&D Sales >10% u Technical Advertising u Small Market u Small Export Market u Price/Cost High u Manufactured in Triad Phase I High Tech Phase I High Tech

3. 3| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Phase I High Tech Phase I High Tech International Product Life Cycle Phase I High Tech u High Engineering Content u R&D Sales > 10% u Small export market u Small market u Few Manufacturers/ Less Competition u Price/Cost high u Manufactured in Triad u Technical advertising u Unique/ Non-Standard Phase I High Tech u High Engineering Content u R&D Sales > 10% u Small export market u Small market u Few Manufacturers/ Less Competition u Price/Cost high u Manufactured in Triad u Technical advertising u Unique/ Non-Standard u Process Engineering Emphasis u Mass Advertising u Growing Market u World Market u Growth of Export Market u More Standardized u R&D Drops u Rising Competition u International Manufacturing u Price/Cost Declines Phase II Growth and Internationalization Phase II Growth and Internationalization

4. 4| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL International Product Life Cycle Phase I High Tech u High Engineering Content u R&D Sales > 10% u Small export market u Small market u Few Manufacturers/ Less Competition u Price/Cost high u Manufactured in Triad u Technical advertising u Unique/ Non-Standard Phase I High Tech u High Engineering Content u R&D Sales > 10% u Small export market u Small market u Few Manufacturers/ Less Competition u Price/Cost high u Manufactured in Triad u Technical advertising u Unique/ Non-Standard Phase II Growth and Internationalization Phase II Growth and Internationalization Phase II Growth and Internationalization u More Standardized u R&D Drops u Rising Competition u International Manufacturing u Growth of export market u World market u Price/cost decline u Mass advertising u Growing Market u Process Engineering Emphasis Phase II Growth and Internationalization u More Standardized u R&D Drops u Rising Competition u International Manufacturing u Growth of export market u World market u Price/cost decline u Mass advertising u Growing Market u Process Engineering Emphasis u Standard Product u No Engineering Emphasis u High Competition u Manufactured where factors of production are lowest u No R&D u World Market u No Advertising u Saturated Market u Price/ Cost 1.0 Phase III Maturing Phase III Maturing Phase III Maturing u Manufactured where factors of production are lowest u No R&D u Standard Product u World Market u No engineering emphasis u Saturated market u No Advertising u Price/cost ~ 1.0 u High competition Phase III Maturing u Manufactured where factors of production are lowest u No R&D u Standard Product u World Market u No engineering emphasis u Saturated market u No Advertising u Price/cost ~ 1.0 u High competition

5. 5| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Global Competitive Positioning  Unique/Non-Standard  High Engineering Content  Few Manufacturers/ Less Competition  Price/Cost High  Manufactured in Triad  R&D/Sales >10%  Technical Advertising  Small Market  Small Export Market  Unique/Non-Standard  High Engineering Content  Few Manufacturers/ Less Competition  Price/Cost High  Manufactured in Triad  R&D/Sales >10%  Technical Advertising  Small Market  Small Export Market Phase I: High Tech  More Standardized  Process Engineering Emphasis  Rising Competition  Price/Cost Declines  International Manufacturing  R&D Drops  Mass Advertising  Growing Market  World Market  Growth of Export Market  More Standardized  Process Engineering Emphasis  Rising Competition  Price/Cost Declines  International Manufacturing  R&D Drops  Mass Advertising  Growing Market  World Market  Growth of Export Market Phase II: Growth & Internationalization  Standard Product  No Engineering Emphasis  High Competition  Price/Cost  1.0  Manufactured where factors of production are lowest  No R&D  No Advertising  Saturated Market  World Market  Standard Product  No Engineering Emphasis  High Competition  Price/Cost  1.0  Manufactured where factors of production are lowest  No R&D  No Advertising  Saturated Market  World Market Phase III: Maturing

6. 6| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL International Product Life Cycle Phase I: High Tech Phase II: Growth & Internationalization Phase III: Maturing

7. 7| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Factors Affecting Global Competitive Positioning  Employee Relations  Cultural Sensitivity  Marketing & Advertising  International Trade  Political Risk & Government Intervention  Ownership  Transfer Pricing, Management Fees, Royalty Payments, Profit Repatriation  Financing Product Life Cycle

8. 8| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Where are our… Markets? Customers Competitors? Culture? Where are we?

9. 9| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Global Competitive Positioning Survey A B C D Where are our customers? 1234567 Where are our markets? 1234567 Where are our competitors? 1234567 Where is our corporate culture? 1234567 Where will we be? 1234567

10. 10| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Discussion at Tables What are the implications of these trends to our firm? How are businesses attempting to respond to some of these global economic and social trends?

11. 11| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL International Product Life Cycle Phase I: High Tech Phase II: Growth & Internationalization Phase III: Maturing

12. 12| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL International Product Life Cycle Phase I: High Tech Phase II: Growth & Internationalization Phase III: Maturing

13. 13| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Does the Rule of Three Work? ?3

14. 14| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL The Rewards go to #1 or #2 Earnings 3 - 4 Years 3.) $0 1.) $100M 2.) $36M 3.) $0 4.) - $28M predevelopment cost doubling reduces earnings to $96M predevelopment cost doubling reduces earnings to $96M

15. 15| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Market Share & Return on Investment Return on Investment Market Share Cost of Capital

16. 16| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Market Position Inner Circle  Rule of Three  Full Line  Market Coverage  Field Forces  SOA Tech R&D  Vertical Integration  Scale

17. 17| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Inner Circle Challenges  Monitor Outer Circle for “Breakouts”  Penetrate Niches  Manage costs  Convergence of other “Circles”  Modernize/Recreate Industry  Stabilize Inner Circle  Cover Innovations  Globalization Inner Circle  Rule of Three  Full Line  Market Coverage  Field Forces  SOA Tech R&D  Vertical Integration  Scale

18. 18| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Market Position & Market Valuation Market CAP X X X X X X X Market Share

19. 19| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Our Total Resource Network Expanded Resource Network Core Resource Network Our Business

20. 20| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Global Competitive Positioning Phase I: High Tech Phase II: Growth & Internationalization Phase III: Maturing Product Innovativeness Product capabilities Process technology Information technology R&D capability A Customer Intimacy Brand franchise Distribution systems B Market research Competitive position Operational Excellence Efficient operations Financial strength Low cost D C Leadership Organizational Capability Shared mindset Reward system/metrics Structure

21. 21| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Innovation & Core Competencies  Customer Intimacy  Operational Excellence  Innovation

22. 22| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Recent Research Shows the Rise of the Niche Players Reference:  Wall Street Journal Article  Financial Times Article  Harvard Business Review Article MMonitor Outer Circle for “Breakouts”  Cover Innovations CConvergence of other “Circles”  Modernize/Recreate Industry  Stabilize Inner Circle PPenetrate Niches  Globalization Inner Circle  Rule of Three  Full Line  Market Coverage  Field Forces  SOA Tech R&D  Vertical Integration  Scale MManage costs

23. 23| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Create a Culture that Lives The Value Promise Effective Leadership Employee Enthusiasm Customer Satisfaction Improved Profits Commit to creating a valuable, differentiated employee experience Commit to creating a valuable, differentiated employee experience

24. 24| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL What Will it Take to Succeed?  Focused operations based on core competencies  Customer responsiveness  Relentless improvement  Innovative products & services  Value delivery  Reward for global focus New. Quick. Global, “Good Deal”

25. 25| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Global Tectonics Environmental Degradation Economic Integration Environmental Degradation Economic Integration Population Urbanization Disease & Globalization Resource Management Population Urbanization Disease & Globalization Resource Management Knowledge Dissemination Information Technology Biotechnology Nanotechnology Knowledge Dissemination Information Technology Biotechnology Nanotechnology Future Conflict Governance Future Conflict Governance

26. 26| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL What To Do? Empower the people to do the right thing Core Competencies Strategic Intent LET’S DO IT!

27. 27| AMD Executive Forum | January, 2010 © 2011 Fariborz Ghadar All Rights reserved - CONFIDENTIAL Trademark Attribution AMD, the AMD Arrow logo and combinations thereof are trademarks of Advanced Micro Devices, Inc. in the United States and/or other jurisdictions. Other names used in this presentation are for identification purposes only and may be trademarks of their respective owners. ©2010 Advanced Micro Devices, Inc. All rights reserved.