ARM Holdings Business Strategy Analysis

This assignment delves into the strategic aspects of ARM Holdings. It examines their unique business model, exploring how they leverage an ecosystem of partners and IP management. The analysis covers various leadership styles employed by ARM and their impact on decision-making and innovation. Furthermore, it investigates the company's shift in strategy to enhance competitiveness against rivals like Intel, focusing on modularization and process engineering improvements. Finally, it discusses the role of platform technology in simplifying IoT product development within ARM's ecosystem.

1) Key Performance indicators of ARM Holdings and two of its largest competitors, Intel and Imagination Technologies
KPI ARM HOLDINGS Intel Imagination Technologies
2015
($)
(+/-
%)
201
4
($)
(+/-%) 201
3
($)
(+/-%) 201
2
($)
(+/-
%)
2011
($)
2013
($)
(+/-
%)
2012
($)
(+/-
%)
2011
($)
201
3
($)
(+/-
%)
2012
($)
(+/-
%)
2011
($)
Profitability ratios
Revenue ($ Mil) 968 22% 795 11% 715 24% 577 17% 492 5270
8
-1% 5334
1
-1% 5399
9
151 19
%
127 30
%
98
Cost of revenue ($ Mil) 39 3% 38 -3% 39 22% 32 14% 28 2118
7
5% 2019
0
0% 2024
2
21 0% 21 0% 21
Gross profit ($ Mil) 929 23% 757 12% 675 24% 545 17% 464 3152
1
-5% 3315
1
-2% 3375
7
131 24
%
106 38
%
77
Gross profit margin % 95.9 1% 95.2 1% 94.5 0% 94.5 0% 94.4 59.8 -4% 62.1 -1% 62.5 86.3 3% 83.5 6% 78.8
Operating Margin ($ Mil) 41.9 8% 38.9 81% 21.5
%
-40% 36.1 19% 30.3 23.3 -
15
%
27.4 -
15
%
32.4 7.45 -
67
%
22.2
5
34
%
16.5
8
ROCE % 20.33 13% 17.9
4
116% 8.3 -41% 14.1
2
23% 11.5
2
14.27 -
24
%
18.66 -
24
%
24.62 2.74 -
78
%
12.2
9
-
30
%
17.6
2
ROA % 17.17 17% 14.7 118% 6.75 -42% 11.6
2
23% 9.45 10.89 -
23
%
14.16 -
27
%
19.27 2.28 -
78
%
10.5
7
-
30
%
15.0
8
ROE % 20.43 14% 17.9
9
116% 8.33 -41% 14.1
8
23% 11.5
2
17.58 -
22
%
22.66 -
17
%
27.15 3.4 -
73
%
12.7
7
-
30
%
18.2
RESEARCH AND DEVELOPMENT
Research and development
($ Mil)
278 24% 224 10% 203 22% 166 1% 165 1061
1
5% 1014
8
22
%
8350 84 40
%
60 33
%
45
Total operating expenses 523 17% 448 -14% 522 55% 337 7% 315 1923 4% 1851 14 1628 119 45 82 37 60
1

($ Mil)
0 3 % 0 % %
Net income ($ Mil) 340 33% 255 143% 105 -35% 161 42% 113 9620 -
13
%
1100
5
-
15
%
1294
2
6 -
70
%
20 5% 19
GLOBAL MARKET SHARE
Basic 0.72 31% 0.55 150% 0.22 -37% 0.35 40% 0.25 1.94 -
12
%
2.2 -
11
%
2.46 0.02 -
75
%
0.08 0% 0.08
EBITDA 457 30% 352 84% 191 -20% 239 41% 170 2088
7
-7% 2248
5
-6% 2388
6
21 -
38
%
34 70
%
20
Current Ratio (%) 3.61 8% 3.35 21% 2.78 -2% 2.84 26% 2.26 2.36 -3% 2.43 13
%
2.15 1.55 -
63
%
4.2 -
11
%
4.7
Total Asset ($ Mil) 2120 15% 183
7
12% 163
8
12% 146
7
13% 1300 9235
8
9% 8435
1
19
%
7111
9
339 59
%
213 22
%
175
(Source: ARM Holdings PLC ADR, 2016), (Source: ARM Holding Plc, 2013), (Source: Intel Annual Report, 2015), (Source: Imagination Technologies Group plc Annual Report,
2015)
Graphs & Interpretation:
 Constant increase in revenue for ARM Holdings from 2011 to 2015 indicates that company’s products and
services possess great demand in the target market. However, it shows the positive hike of 5% from 17% to
22% in past five years. While on the other hand, Intel revenue has decreased significantly in 2011, 2012 and
2013 with the respect of -1%. Similar to this, KPI indicates poor condition of Imagination technologies as its
sales volume has declined considerably in past 3 years from 30% to 19%.
 In addition to this, cost R&D department for ARM Holdings and Imagination Technologies are showing
increasing figures whereas, for Intel it is showing decreasing results. This indicates Intel due to decreasing
revenue is unable to invest in the same [3]. While the other two companies have are constantly investing
2

huge in R&D department as their financial status are relatively stable.
 Negative net income for all three companies in past years indicates that they are not able to satisfy the needs
and wants of customers due to which they are unable to attract large number of audience for buying services
[48].
 ARM Holdings shown unstable return on equity till 2013 as thereafter firm is able to provide better return on
the equity capital for its stakeholders. On the other hand, Intel and Imagination Technologies has been
showing declining results which indeed created negative image within the minds of investors for the future
investments [31].
 Despite of decreasing ROCE, ARM Holdings plc has been able to maintain positive results whereas both its
competitors are unable to generate positive outcomes which clearly indicates that they are unable to generate
return on the employed capital [2].
 Liquidity position of ARM Holdings plc is showing significant outcomes which signify that firm has
adequate amount of currents assets to overcome its short term financial obligations. Contradicting to this,
current ratio of its art rival is showing negative outcomes in past year indicates their incapability in meeting
short term financial needs or commitments [41].
 Rationale behind decreasing net income in all three firms is because of incapability in generating profit from
the operations. It is because of the fact, operating margin ratio of the all three firms showcase declining
results [38].
 Significant decrease in earnings per share for all three firms indicates the incapability of providing expected
dividends to the shareholders.
Interpretations
As per the above graph showing return on equity of all the companies it depicts the true position of the three
companies in terms of the rate of return on equity. The growth of Intel shows declining position from 2011 to
2013 from high to low. The graph of imagination technology is inclining downward from moderate to
negative. This graph also depicts the growth rate of ARM from moderate to high position among all
companies.
3

Interpretation of KPI
Name of KPI Interpretation Difference from other KPI
Revenue (GPB Mil) In context to ARM Holding, sales performance of company has shown increasing
results from 2011 to 2015 as it has increased from 17% to 22%.
In case of Intel, revenue has decreased significantly, in between year2011 and 2012
by -1%.
While for Imagination technologies as well the revenue has declined from 30% to
19% within 3 years of functioning.
Through the means of revenue, variance between
performances of all three businesses can be evaluated.
Through the means of this, researcher can evaluate that,
ARM Holding is satisfying the need of its customers more
appropriately as compared to other companies.
Cost of revenue (GPB Mil) For ARM, COGS has declined within the tenure of 4 years from 14% to 3%. While
for Intel it has increased to 5% in last 3 years. Apart from this, imagination
technology possess the highest cost of revenue of 21%.
This outcome clearly indicates that imagination and Intel
have to incur high cost to generate sales in comparison to
the ARM holding.
Gross profit (GPB Mil) Increasing revenue and declining cost has improved gross profit for ARM holding.
Wherein for Intel, decreasing results due to increasing costs. Contradicting to this,
GP of Imagination technology indicates declining results of -14% that is from 38%
to 24%.
This indicates the capability of firm in generating better
returns through the sale of goods. Herein, ARM showing
better results indicates increasing returns through sale of
products as compared to both the rivals.
Gross profit margin % It is similar to gross profit but it is shown in percentage from. Increasing percentage
indicates higher profitability for ARM as compared to its both competitors.
This illustrates how much percentage does companies
investing in to generate higher revenues.
Operating Margin (GPB Mil) For ARM it has declined significantly from 15% to 8%. While for Intel and
Imagination technology it is showing negative outcomes.
Improving operation margin ratio is good as indicates that
firm generated higher profitability.
ROCE % Return on capital employed for ARM Holding have decreased over a period of four
years this is ranging from 23% to 13%. Further it is for 2011 to 2015.
ROCE has shown significant decline for both Intel and Imagination Technologies.
This is -24% and -30% to -78% respectively. It ranges from the year 2011 to 2013.
Return on capital employed is regarded as the key
performance indicator as such it demonstrates the total
earning over the investment that is being made by three
firms. It needs to be presented that ROCE is not similar as
ROE as such it includes the capital employed and not the
retained earnings or anything else.
ROA % ROA for ARM Holding have decreased over a period of four years this is ranging
from 23% to 17%. Further it is for 2011 to 2015.
ROA has shown significant decline for both Imagination Technologies. This is -27%
Return on asset is one that being earned by employing
current and fixed assets within the business
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TO -23% and -30% to -78% respectively. It ranges from the year 2011 to 2013.
ROE % ROE for ARM Holding have decreased over a period of four years this is ranging
from 23% to 14%. Further it is for 2011 to 2015.
ROE has shown significant decline for both Intel and Imagination Technologies.
This is -17% TO -22% and -30% to -73% respectively. It ranges from the year 2011
to 2013.
ROE includes total equity of the firm that includes capital
employed, reserves, retaining earnings and issues of
shares. It is regarded as key performance indicators that
assist in making differentiation of the return in comparison
to ROCE.
Current Asset
Current ratio of ARM holding has been declined from 19% to 8% in the year 2015.
However, in case of Imagination Technologies, it has been reduced from -11% to -
63% while in case of Intel, it has been declined from 13% to -3% respectively.
Current ratio helps to determine liquidity position of the
business. Increasing current ratio is a sign that indicates
that ARM improved its ability to pay its short-term liability
more effectively. Thus, it is helpful to measure financial
strength.
Total Asset
Assets turnover ratio has been inclined from 13% to 15% in 2015. However, Intel's
assets turnover ratio has been reduced from 19% to 9% in 2013 whereas in case of
Imagination Technologies, it has been significantly increased from 22% to 59% in
the year 2013.
Assets turnover ratio is important as it indicates that how
effectively assets are using by the management to acquire
more revenues. High assets turnover ratio is a good sign of
manager's efficiency.
Research and
development
The cost of research and development are being undertaken by IBM
Microelectronics, ARM Holdings and Intel. Such are being borne for the purpose of
capitalizing the latest trends within the technology as well as trends in the market.
Research and development cost of ARM Holdings has increased from 2011 to 2015
this ranges from 1% to 24%.
R&D costs for Intel have decreased from 22% to 5% from the year 2011 to 2013.
This reflects that firm has not made adequate amount investment in investigation.
Research and Development costs for Imagination Technologies has Increased from
33% to 40% in the year 2011-13.
For Imagination Technologies, Intel, and ARM Holdings,
the research and development costs are important to be
analysed because they have to remain technologically
competitive in the market. This nature of cost cannot be
compared with any other cost because firms need to realise
how much they are investing to bring innovation in
business.
Total operating expenses Total operating expenses for ARM Holding has also increased almost in from 2011
to 2015. This ranges from 7% to 17%.
Total operating expenses for Intel and IBM Microelectronics has decreased. In case
of Intel it is 14% to 4%. However for Imagination Technologies it has increased that
The total operating expenses is being computed by adding
all expenditures essential for incurring operational
activities at the organization. Such cannot be avoided or
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is from 37% to 45% which ranges from 2011-2013. replaced as every firm expenses are surely to exist.
Net income
The Net income of ARM Holding is demonstrating significant decreased that is
from 42% to 33% from the year 2011 to 2015.
The Net income for Intel demonstrate negative outcomes that is -15% to -13%. This
is from the year 2011 to 2013. However for Imagination Technologies, it has
reduced from 5 to -70%. This implies that both the firms are not making profitable
business.
Net income is regarded as the total amount of profit that is
being possessed by any firm after making payment of
interest, taxes as well as operational expenses. Such kind
of key performance indicator has been taken for the
purpose of making analysis of net profit that is being
generated by every firms including Imagination
Technologies, Intel, and ARM Holdings.
Basic Earnings per share
Earnings per share for ARM Holding company has reduced that is from 40% to
31% from the year 2011 to 2015.
Further for Intel and Imagination Technologies this has decreased. This is from -
11% to -12% as well as 0% to -75% respectively ranging from year 2011 to 2013.
Earnings per share comparison for the three companies
taken reflects the profits that is being earned by each
shareholder after making purchase of their shares.
EBITDA
Earnings Before Interest, Taxes, Depreciation and Amortization for ARM Holding
have decreased over a period of four years this is ranging from 41% to 30%. Further
it is for 2011 to 2015.
EBITDA for Intel and Imagination Technologies has decreased. This is from -6% to
-7% as well as 70% to -38% respectively ranging from year 2011 to 2013.
EBITDA is essential for analysis of the performance
among the industries or companies as such it does not
undertake the effect of accounting decisions and financing
2 Positioning of ARM Holdings: 3C’s as component of ARM’s Eco-system
2.1Completion ARM Holding Vs
Intel and Imagination
Technologies
Revenue ARM holdings has gained sales revenue of $795.2 million in 2014, which is 11.2% increase from
previous year.
The Sales revenue of Intel, as of 2014 was recorded $ 55870 Million with 5.6% increase from previous
year that is 2012.
Imagination Technologies net revenue is $ 171 million in 2014 which is 13% increase from earlier year.
Competition ARM holding is competing with its rivalries by launching the strategies that relates with repositioning of its products
and technological innovations. ARM holding is regarded as one of the leading organization that brings innovation in its
product, network and branding value. Likewise the firm is making effort for beating its competitors by the means of
enhancing its channel of distribution across the globe and offers products and comparative prices to its corporate
clients.
Market Share The global market share of ARM holdings in the year 2010 is 95% in smartphones market, 10% in mobile computers,
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35% in digital TV’s and setup boxes in comparison with its other rivals in 2010 and 2011. This is due to the reason of
increasing innovation within the technologies that is being adopted by the organization. Both Intel and Imagination
Technologies possess less market share due to less number of innovations being made.
2.2 Change Revenue ARM Holdings Intel and Imagination Technologies
The revenue of ARM Holdings in global market has enhanced from
$715 million to $ 968. This is from 2013 to 2015.
The revenue of Imagination Technologies in
global market has declined from $ 177
million to $ 151. This is from 2013 to 2015.
This presents 13% increase from previous
years to current years.
On the other hand, the revenue of Intel in
global market has enhanced from $ 52708
million to $ 55355. This is from 2013 to
2015. This reflects 5.02% increase in the
value of the current year in comparison with
previous year.
Competition The daily sales ARM Holdings is 2.6 million globally The daily sales of Intel is $151.6 million
globally.
The daily sales of Imagination Technologies
is $ 0.484 million globally.
2.3 Hyper
Competition
ARM Holdings Intel Imagination Technologies
The company like
ARM holding is
responding to the
competition by
making innovation
on continuous basis.
This is by making
investment in getting
the highly talented
Intel is making investment in research and development so that it gain
knowledge regarding the needs of the target market.
Imagination Technologies is making greater
efforts towards making electronics updation
in order to gain edge in the market.
7

personnel.
5C’s of ARM Holding Plc
Company
Strength
 Strong brand name enhances the ability to charge high for its products and services.
 Asset leverage assist the course of ARM Holdings to make the best possible use of operational
assets for expanding business and improving market share.
 High customer loyalty [3].
 Superior technology leads to satisfy diverse expectations of customers.
 Uniqueness of products distinguish ARM from its competitors and allow company to charge higher
prices [47].
Weakness
 Weak R&D slow down the growth of ARM Holdings.
 Weak online presence restrict firm to lose the opportunity of generating high revenues [5].
 High debt burden enhances the risks of business as one bad decision may lead to situation of
bankruptcy [50].
Threats
 Availability of substitute product is one of the major threat for the firm.
 Recession or bad economy may affect adversely on the number of customers [6].
 Increasing international competition can negatively affect the course of ARM Holdings [52].
Resources
 Acquisition of Sansa Security, provider of hardware security IP in 2015.
 Acquisition of Wicentric and Sunrise Micro Devices for Bluetooth smart stack and radio
intellectual property (IP) in the same year [56].
 ARM renewed its $5 million research partnership with University of Michigan in 2011 to focus on
ultra-low energy and sustainable computing.
 More than 50 billion chips have been produced by ARM Holdings plc in 2014 [7].
Competition  Intel invest $1.5 million in loT chuip R&D in Ireland. [14]
 Imagination made a loss of $63.2 million pre-tax in 2016, which is down from 2.2 million profit of
the previous year. Further, company’s revenue has dropped by 23% to $120 million. [13]
 Acquisition of companies like Vuzix, Lantiq, Altera, Recon, Saffron technology in 2015 has
enhanced the level of business for Intel. [17] Recently, Intel has acquire German and Italian firms
8

i.e. Ascending Technologies and Yogitech to enhance its UAVs and loT security. [15] [16]
Customers  B2C: ARM processors are used in all modern mobile phones, CPUs which are easily used by
consumers around the globe.
 B2B: ARM processors are used as the main CPU for smartphones which includes the manufactures
like Apple, HTC, Nokia, Sony Ericsson and Samsung.
Collaborators
Alliances ARM and Samsung are extending their strategic alliance through long term licensing agreements.
Acquisitions  Sansa Security [35]
 Wicentric
 Sunrise Micro devices
 Carbon design system [60]
 PolarSSl
Partners  Microsoft: In 2011, Microsoft revealed that Windows 8 operating system will run on ARM
architecture platform [17].
 University of Michigan: $5 million researcher partnership which emphasize on ultra-low energy
and sustainable computing.
Licenses
 ARM Core licensees: There are several companies that possess 64-bit ARMv8-A core licensees i.e.
Samsung, Broadcom, HiSilicon etc [57].
 ARM Architectural licensees: It is 64-bit ARMv8-A architectural license [33].
 Mali licensees: This indicates the licensees of the Mali GPU designs hold by Rockchip and
Allwinner.
Suppliers Deals as an IP firm, ARM Holding does not hold widespread supply chain of raw materials but makes
purchase of varied goods and services from 900 suppliers around the globe.
3. ARM Holding Business model Canvas
Key partners
 Microsoft: In 2011, ARM Holding signed the partnership deal with Microsoft for providing architecture platform to the Windows 8
operating system [58].
 University of Michigan: Is one of the major partner of ARM Holdings wherein, both the firms aim at developing ultra-low energy and
sustainable computing. However, the deal of research partnership was signed at $5 million [32].
Key Activities
 Manufacturing: Primary business is to design ARM processors (CPUs) which are used by leading companies like Apple, Samsung etc.
Further, it manufactures Mali line of graphics processing units (GPU) which are used in laptops in over 50% of android tablets. ARM’s
9

core designs are used in chips that support many common network related technologies in smartphones i.e. Bluetooth, WiFi, and
broadband [36].
 Research and Development: High investment is made in R&D department of the company to bring constant innovation and updation
within the processors manufactured by the firm. This also aids in satisfying the needs and wants of B2B clients [18]. Normalised
expenses on research and development has increased to $217 million in 2015 to extend the product portfolio. Along with this, another 74
million was invested in acquisitions to accelerate product development and create new revenue streams [34].
 Acquisitions: Acquisition of Sansa Security, provider of hardware security IP in 2015. Further, acquisition of Wicentric and Sunrise
Micro Devices for Bluetooth smart stack and radio intellectual property (IP) in the same year.
Key Resources
 Human resource: ARM Holdings consist of 3300 employees which aims to carry out given tasks and operations in effective and
efficient manner [34].
 Intellectual property: In year 2013, ARM Holdings became the part of consortium of the firms that has acquired the right to patent
portfolio of MIPS technologies. This indeed minimizes the potential risks of future litigation with the patents. In the following year, cited
firm filled 171 patents application across the globe which increased the number of patents owned by ARM to 2500 [51].
 Development tool: The major portfolio of ARM is to manufacture microprocessor designs and graphics processing unit (GPU) designs
which are mainly used in smart phones, tablets, laptops etc. of leading companies like Apple, Samsung, Nokia, HTC and Sony Ericsson
etc [19].
 Brand value: In 2014, brand value of ARM Holdings was recorded at $567 million which clearly indicates the better goodwill of the
company in the market [37].
 Physical resources: ARM operates in different parts of the world that comprises of Europe, United States and Asia Pacific with 35 well
established offices in the countries of these continents [54].
Value proposition  ARM create value for partners by employing engineers to develop advanced processors, IP, tools and software that company license to
its B2B segment for the development of consumer electronics. Licensing helps the course of partners to acquire technology at cost
effective [51].
 By recovering costs from licensing technology helps in generating high revenues and profits which indeed leads to create value of
shareholder by providing them better returns at the end of year [20].
 In context to long term value preposition, company reinvest in R&D as well as hire more skilled and capable engineers to develop new
technology and bring constant innovation within the firm [40].
 ARM creates value by shipping chips to different parts of the world. Along with this, licence and royalty income in which till date 1348
cumulative licences are signed [55].
Customer segment  B2C: ARM processors are used in all modern mobile phones, CPUs which are easily used by consumers around the globe.
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 B2B: ARM processors are used as the main CPU for smartphones which includes the manufactures like Apple, HTC, Nokia, Sony
Ericsson and Samsung [21].
Customer Relationship  In this, management aims at developing innovative processors for the companies that have license to create value for money as well as
maintain long term relationship with them [53].
 Herein, managerial level people are encouraged to emphasize on after sale services for several service centers has been established in
different parts of the target market [22].
Distribution Channel  Directly with the clients
 Through factories or licenses
Cost structure
 There are different costs that are associated with the functioning of ARM Holdings plc:
 Manufacturing: Producer of different microprocessor chips and IP is the major costs that cited firm has to incur to satisfy needs and
expectations of clients [39].
 R&D: High investment of $217 million in research and development department to extent the product portfolio of the ARM Holdings
[23].
 Distribution: There are two method through which ARM distributes its quality of products and services i.e. directly to the clients and
through licensing [69].
 Marketing and advertisement: Huge investment is made in the marketing prospects of the business as to overcome the level of
competition as well as create awareness among the target markets of international boundaries [76].
Revenue Streams  Total revenue of $968.3 million has been generated in year 2015 from different portfolios.
 However, revenue grew by 15% in 2015 as existing customers adopted and deployed ARM latest technology in their current and future
products [73].
 Along with this, 39 new companies signed the license with ARM technology [70].
 In 2015, 15 billion units of chips containing ARM cores has been sold within the target markets.
11

4. Acquisition of ARM Holdings Plc
Company Standard Industrial classification Value added to ARM Holding
Sansa Security (2015) Hardware security and software
industry
This added value by enhancing ARM’s IP security and software for advanced system on chip
components [9].
Wicentric (2015) Value for partners by adding Bluetooth smart smack [64].
Sunrise Micro Devices (2015) Intellectual property company The acquisition resulted in development of ARM® Cordio® portfolio in which IP of both companies
were integrated [13].
Carbon design system System validation solution industry This acquisition added value for ARM by improving its operating system as well as software system
verification and interconnect performance analysis has been improved significantly [46].
PolarSSI (2014) FlowLink Driver Software Software library implementing the SSL and TLS protocols [63].
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INFRASTRUCTURE
employing engineers to develop advanced processors
recovering costs
ARM create value for partners by employing engineers to develop advanced
processors, IP, tools and software that company license to its B2B segment for the
development of consumer electronics.
VALUE PROPOSAL
ARM creates value by shipping chips
ARM processors are used in all modern mobile phones
ARM creates value by shipping chips to different parts of the world. Along with this,
licence and royalty income in which till date 1348 cumulative licences are signed
CUSTOMER RELATIONSHIP
developing innovative processors
emphasize on after sale services
Management aims at developing innovative processors for the companies that
have license to create value for money as well as maintain long term relationship
with clients
PROFIT MODEL
Total revenue of $968.3 million
15 billion units of chips containing ARM cores
Along with this, 39 new companies signed the license with ARM technology
ARM Holding's BM Canvas

Falanx (2006) Security and intelligence provider This added value by incorporating portfolio of 3D graphics accelerators. Along with this, acquisition
assist in hiring specialists who are proficient in developing silicon on insulator physical [49].
5. TWOS Analysis of ARM Holdings
External opportunities (O) External Threats (T)
 Constantly increasing demand of smartphone
leads to generate better revenue for the
microprocessor portfolio of the company [62].
 Improving outlook for semiconductor market
[24].
 Demand of low electric power consumption in
portable devices is increasing at significant pace
[67].
 High degree of competition especially in
microprocessor portfolio has affected the course of
ARM Holding [65].
 Constantly advancement in technology is
major threat as it could hinder the overall processes
of ARM Holdings [66].
Internal strength (S) S-O S-T
 Strong brand name enhances the ability to
charge high for its products and services.
 Asset leverage assist the course of ARM
Holdings to make the best possible use of
operational assets for expanding business and
improving market share.
 High customer loyalty
 Superior technology leads to satisfy diverse
expectations of customers.
 Uniqueness of products distinguish ARM from
its competitors and allow company to charge
higher prices.
 Use customer loyalty to increase the sales of
microprocessor portfolio so as to generate higher
profits [25].
 Make optimum utilisation of superior
technology for enhancing the outlook for
semiconductor market [68].
 Develop USP in low electric power
consumption for the portable devises to charge high
than competitors and enhance sales volume [71].
 Make optimum use of brand image to maintain
the sales performance of different portfolio of the
ARM.
 Use of asset leverage in acquiring advanced
technology will help in enhancing the overall
functioning of ARM [72].
Internal Weakness (W) W-O W-T
 Weak R&D slow down the growth of ARM
Holdings.
 Weak online presence restrict firm to lose the
 Invest in R&D to acquire advanced
technology for enhancing future contingency [75].
 Set proper budget for enhancing the R&D
department of ARM Holdings [78].
 Legal and compliance to ensure that disputes
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opportunity of generating high revenues.
 High debt burden enhances the risks of
business as one bad decision may lead to situation
of bankruptcy.

 Create USP of sustainable computing through
making use of online marketing or promotional;
campaign [74].
 Develop revenue streams through meeting the
demand of microprocessor portfolio in varied target
markets [80].
regarding patents are addressed before progressing
to lawsuit stage [81].
 Focus on licensees in B2B and B2C segments
[26].
 Increasing debt may create obstacle in
acquiring advanced technology [79].
Ecosystem of ARM Holding
Knowledge Testing Standards
Innovations, working with partners and self-selectors.
Research and development investments.
Advantage from partners IP and sharing of patents by
the means of licensing [27].
Use of new and unique technologies
Increasing efficiency of its employees
Enhancing business operations
Company constantly emphasizing on investing high
amount of funds in R&D department so that they can
evaluate needs and wants of customers and accordingly
produce the microprocessor.
In year 2013, ARM Holdings became the part of
consortium of the firms that has acquired the right to
patent portfolio of MIPS technologies. This indeed
minimizes the potential risks of future litigation with the
patents. In the following year, cited firm filled 171
patents application across the globe which increased the
number of patents owned by ARM to 2500.
Assist in creating road map for developing, trail and
market new products [42].
Offers ideal environment for testing and trail of the
innovative technologies.
Creative talent of employees judged by giving
challenges
Secure long lasting relations.
Focusing on making use of creative and innovative
technology for creating value for money for the
customers.
Growth of IP that is by means of exchanging of services,
products and interaction in the eco-system [45].
Pre-determine standards help company to improve its
services.
Growth of IP
Self-recruitment process
There are several companies who have purchased
licensees of the ARM to manufacture their own
products. This indeed sets the high standard of products
and services delivered by the cited firm in comparison to
Intel and Imagination Technology.
14

The above depicted image illustrates the ecosystem of ARM Holdings which mainly emphasize on building profitability. However, ecosystem requires high degree of
disintegration which comprises of healthier collaboration of stakeholders, business development and OEM and partnership to gain competitive advantageous. At present, ARM
design an creative and revolutionary ecosystem by power efficient server innovation with Dell’s Collaboration. In addition to this, its joint partnership with NVIDIA, AMCC,
Linaro and Xilinx has helped the course of cited firm to make sure an eco-friendly environment within the community they operate.
7. ARM Leadership – Synthesis of McKinsey’s 7S Framework, Balanced Score Card and Senge’s 5th Discipline.
System Considering the increasing opportunities as well as obstacles in foreign market, ARM Holdings abiding the collaborative system in which
management emphasize on developing and maintaining quality of long term relationship with stakeholders and partners [82].
Strategy The purpose of ARM existence is to prepare chip for smart phones, tablets, laptops etc. however, increasing demand of smartphones has
helped the course of ARM to generate higher business volume. Further, company employ strategy of license to develop customers for the
microprocessor [28]. Furthermore, acquisition strategy is paying great returns as ARM is constantly enhancing its operating system and IP
for meeting the expectations of clients or customers.
Skills, learning and growth Management of ARM constantly focus on training and development so as to enhance learning and skills of engineers. Innovation and
creativity is the base for growth of ARM in existing market [84].
Style and staff
 Staff: At present, ARM Holdings plc possess 3300 skilful and capable workers who are highly educated engineers. Herein, better
15

working environment encourages employees to put their best in delivering the best to clients [83].
 Style: Managerial level people abide democratic leadership style to guide and direct workers. It leads to enhance employee
engagement within the organisation. This leads to maintain coordination between the employees and helps them to execute operations
in correct manner [29].
Structure At present, ARM Holdings possess vertical structure which consists of board of directors, top, middle and lower level of management.
Shared values ARM create value for partners by employing engineers to develop advanced processors, IP, tools and software that company license to its
B2B segment for the development of consumer electronics. Licensing helps the course of partners to acquire technology at cost effective
[30].
8. ARM Leadership and Style
Years Incidents
2005  ARM acquired Keil software
 Launched designStart program
 ARM listed by Electronic business as one of the top ten important companies electronics over past 30 years.
2006  ARM Cortex-A8 processor recognized as "Best In 2005" by four leading electronics industry publications
2007  Warren East, CEO, wins Orange business leader award
 ARM unveils Cortex-A9 processors for scalable performance and low-power designs
 Five billionth ARM Powered processor shipped to the mobile device market.
2008  ARM announces 10 billionth processor shipment
 ARM wins Britain's Top Employer Award 2008 from crf.com
2009  ARM extends its leadership in media processing by acquiring Logipard AB
 ARM Ltd. receives Best Companies accreditation
2010  Microsoft becomes ARM Architecture Licensee
 ARM together with key Partners form Linaro to speed rollout of Linux based devices
 Giesecke & Devrient secure mobile payments announcement via ARM TrustZoneand G&D's Mobicore technologies
2011  ARM CEO Warren East makes Barron’s list of the World’s Top 30 CEOs
 WIRED magazine named Warren East in the UK’s Most Influential Leaders
 ARM ranked #12 in FastCompany’s 50 Most Innovative Companies
2012  MIT Technology Review named ARM in its list of 50 Most Innovative Companies
16

 ARM named one of Britain’s Top Employers
 ARM, Gemalto and G&D form joint venture to deliver next-generation mobile security
2013  Warren East receives the Morgan Stanley Leadership Award for Global Commerce
 ARM launches the 'ARM Connected Community' a social business platform for partners and developers in the ARM ecosystem
 Simon Segars becomes ARM's 3rd CEO
2014  ARM becomes principal sponsor of London Science Museum's new Information Age Gallery
 ARM ranked as 3 most innovative company in the world by Forbes
 ARM appoints Stuart Chambers as Chairman
 ARM acquires Duolog Technologies
2015  Simon Segars named 3 on Computer Weekly’s Top 50 Influential People in UK IT
 ARM Ranked 7 Best Place to Work in the UK by Glassdoor
 ARM Ranked 16 in Empathy Brand Index of Companies
 ARM acquires Sansa Security, Offspark, Wicentric, Sunrise Micro Devices and product portfolio and business assets from Carbon Design
Systems
LEADERSHIP
In year 2007, Warren East awarded with Orange business leader award this shows the ability of managing people and carrying of operations of such large company in
effective and efficient manner has provide return in the form of cited award. In addition to this, the top employer award in 2008 indicates the effectiveness of the leadership that is
core of ARM Holdings plc has led the company to achieve high peaks in the targeted market. However, during the tenure of last 10 years two CEO has been appointed i.e. Warren
East and Simon Segars. Looking at the growth and success of ARM both leaders carry out operations in different manner. However, wherein Warren emphasize on partnership with
other companies to expands the operations contradicting to this, Simon emphasize on acquiring companies with the aim of enhancing different prospects of the business. Both the
leaders have employed democratic leadership approach to execute operations as well as guide the employees in right manner.
Incident and how CEO overcome the problem
In 2015, ARM Holdings, the microchip design whose technology powers the iPhone, has defied stalling smartphone sales as it focuses on creating the processors for a
new generation of electronics. However, the Cambridge based company posted a 22pc increase in annual revenues and said that 15 billion chips featuring its design had been made
last year. In this regard, many of the ARM’s partners or fellow microchip companies have suffered from slowing sales of smartphones after years of growth. Herein, market expert
depict that sales of mobile phones are forecast to grow by just 2.6pc this year as markets saturate and companies that rely on the market have suffered ( The Telegraph, 2015). But
ARM, which licenses its designs to chip manufactures and claims royalties on them has grown profits by focusing on high-end chip designs and areas such as associated cars and
17

smart home devices. In this regard, CEO Simon Segars, clearly states that company has managed to shrug off a tough market because smartphone manufacturers were increasing
paying for its more powerful V8 chip designs. The V8 has previously been included in high-end devices but half of the smartphones sold around the world previous year included
it. Through the means of this, approach incorporated by CEO Simon Segars, ARM was able to generate 22pc rise in sales to £968.3 million for 2015, pushing pre-tax profits 24pc
higher to £511.5 million (The Telegraph, 2015).
18

9. SWOT Analysis
19
STRENGTHS
Strong brand name enhances the ability
to charge high for its products and
services.
Superior technology leads to satisfy
diverse expectations of customers.
Uniqueness of products distinguish ARM
from its competitors and allow company
to charge higher prices.
WEAKNESSES
Weak R&D slow down the growth of
ARM Holdings.
Weak online presence restrict firm to
lose the opportunity of generating high
revenues.
High debt burden enhances the risks of
business as one bad decision may lead to
situation of bankruptcy.
OPPORTUNITIES
Use customer loyalty to increase the
sales of microprocessor portfolio so as to
generate higher profits.
Develop USP in low electric power
consumption for the portable devises to
charge high than competitors and
enhance sales volume.
Constantly increasing demand of
smartphone leads to generate better
revenue for the microprocessor portfolio
of the company.
THREATS
High degree of competition especially in
microprocessor portfolio has affected
the course of ARM Holding.
Constantly advancement in technology is
major threat as it could hinder the
overall processes of ARM Holdings.

10. Success factors of ARM holding
Innovative design and products ARM holding is known for developing innovative products. In past years it bring many changes in its product lines. It also
develop new products. This is the reason due to which it is one of the top company in its sector. Forbes put ARM holding in the
list of most innovative company [86]. Mentioned company always remain ahead of its competitors in terms of revenue earning
and product development. Hence, technology development play an important role in growth of an organization.
Management practice Management of ARM holding is sound and innovative in nature. Managers of the firm always try to identify the new ways that
they can adopt for speeding up growth rate of an organization. They time to time evaluate business environment and identify the
changes that can be bring in their products to meet business requirements [90]. This is the reason due tom which firm is ahead
of its competitors.
Capital power Firm is earning sufficient amount of revenue in its business. Thus, it have huge quantity of capital in its business. The available
capital is used to make heavy expenditure on research and development projects [91].This is the reason due to which firm is
known for innovation in its product.
Capability to create new market Firm is capable to create new market for itself. This is because it is known for doing innovation in its product line. Its product is
acceptable around the world by top companies [89]. Hence, when it introduce any new innovative product in the market firms
adopt same. As a result, firm is capable to create new market for itself.
Ethic in organization ARM holding have good culture and it is adopted and strictly implement by the firm managers and employees. It is ensured by
the top managers of the firm that discrimination is not done among the employees on the basis of sex, caste and religion etc
[90].
Openness to change ARM holding is very open to change because its managers always try to identify the needs of the people. They try to identify
the changes that are coming in the market and accordingly firm innovate its existing product line [93]. This is the reason due to
which firm is market leader in its industry.
Heavy investment in research and development
project
ARM holding every year makes heavy investment in research and development program. Under this it carry out research
activities that will bring change in its products [88]. This is one of the main core competency of an organization.
20

11. Balance Scorecard
Perspectives Objectives Measurements Initiatives
Internal business The main objective of ARM holding is
to recruit talented people as employees
in an organization and to retain them
for long term [89].
Firm is bringing changes in technology
infrastructure.
Managers time to time evaluate business environment and
decide that in which direction they needs to work for
benefit of an organization [99].
Customer To create new and retain old customers
[96].
Increase in number of customers and
number of times old client place order
for purchase of items
Firm consistently take a feedback from its customer's in
order to get idea about changes that they needs to make in
their products [95].
Financial perspective To raise fund for financing of research
and development projects at cheaper
rate [100].
To make best use of funds in business
activities to maximize ROI.
Percentage change in the finance cost of
funds.
To raise funds from different sources of finance that have
low cost in balanced manner [94].
Learning and growth perspective To admit new engineers to the research
and development team of an
organization.
Performance of newly selected
employees in research and development
projects [98].
Placing newly selected employees under leadership of
experienced engineers [97].
21

12. BCG Matrix
Figure 1: BCG Matrix of ARM Holdings
22
Stars
Microprocessor
designs
Graphics processing
unit (GPU) designs
Question Marks
ARM® Socrates™ IP
Tooling provides
System IP Tooling.
Cash Cows
64-bit ARMv8-A core
licensees
64-bit ARMv8-A
architectural license
Licensees of the Mali
GPU designs
Pets/Dogs
ARM® Cordio®
portfolio in IP

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Short Answers
1. Why KPI is important?
Operating in such a competitive market it is important for the senior authority of ARM Holdings plc to assess KPIs
to evaluate the overall performance of firm. The main purpose behind evaluating KPI is to identify those areas which required
improvement for future contingency. There are several KPIs used in the present report to assess the overall performance of
ARM Holding Plc. Every organisation operating in the market has its own corporate goals and objectives. Similarly, ARM
Holdings also defined certain target that management through vital efforts try to achieve those. In this regard, KPIs assist in
measuring whether company’s progress is in right direction to achieve the desired gaols and objectives. Further, KPI
considered as the backbone of business which is used by managers, leaders, executives to help them understand whether
activities are on right track or not. Herein, through the KPI analysis it has been identified that ARM plc is performing
relatively good in order to maintain its position within the market and attain long term sustainability. Key performance
indicator is important because it reflects the areas where firm perform better and domain where it give a worst performance.
By formulating strategies firm can convert its weakness in to strength. In addition to this, through the means of KPI manager
or entrepreneur can easily assess the actual condition of business as well as compare it with the past performances or industry
averages. In the present study, researcher emphasize on assessing different KPI’s i.e. profitability, research and development,
and global market share. By the means of these KPI’s investigator is able to understand different prospects about the ARM and
make judgement on the performance of the company. Moreover, KPI’s are significant in context to make decisions for the
future contingency. Operating in such a competitive working environment it is important for the management of ARM to make
sure that it assess the overall condition of business effectively and accordingly makes strategic decisions regarding future
contingency.
2. What business model and what part of Eco system play along their business model?
Herein, directors of ARM Holdings plc has adopted business canvas model to assist the strategic management. The
main purpose of developing this model is that it assist the course of managers to showcase different essential elements of
business enterprise i.e. products, value proposition, infrastructure, customers and costs and revenue streams. On the basis of
this model one can easily assess outer structure of business and its procedures. Furthermore, this model assist in aligning the
functioning of ARM Holdings through highlighting potential trade-offs. Through the means of this model, management can
assess the key partners that business possess as well as the resources available so that allocation decisions can be made
smartly to generate effective results. This is the model which provide an information about the factors on which firm needs to
pay due attention. The factors of the canvas model are infrastructure, offering, customer, channels, customer relationship, and
finance and revenue stream. By evaluating firm on these factors top managers can identify the direction in which they needs to
work to propel organisation towards growth path. Furthermore, in regards to ARM holding, senior authority undertakes
Canvas as a business model to design intellectual property for the corporate clients as well as its individual customers.
However, as studied, canvas is a strategic management tool which allow ARM Holdings to design, describe and invest new
technological products for the customers. Through the means of this, model it has been evaluated that company focusing on
partnership with Microsoft and University of Michigan to manufacture CPU, GPU. In context to its ecosystem, business
model has played significant role as for ARM it clearly indicates that, firm sustain its profitability by building an eco-system,
industrial architecture and IP management.
3. Who are the key partners and what value they add?
There are mainly two partnership deed that ARM Holdings carried out in the year 2014-15 which indeed assisted the
course of enhancing different prospects of business enterprise. Following are the partners:
 Microsoft: In 2011, ARM Holding signed the partnership deal with Microsoft for providing architecture
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platform to the Windows 8 operating system.
 University of Michigan: Is one of the major partner of ARM Holdings wherein, both the firms aim at
developing ultra-low energy and sustainable computing. However, the deal of research partnership was signed
at $5 million.
The main purpose of collaborating with these firms is to enhance the overall functioning of ARM Holdings as well
as assist in satisfying changing needs and wants of customers and clients.
4. What is ARM Holdings strategy to retain customers?
Operating in such a competitive market it is important for ARM Holding’s management to make sure that they
employ effective strategies and tactics to satisfy the needs and wants of customers. Herein, senior authority of ARM Holdings
mainly focuses on customer relationship strategies by offering wide range of superior quality of services as well as emphasis
on providing after sale services so that customers or clients can be retained for longer period of time. Further, ARM provide
value for money to its customers by delivering products and services on timely basis and as per the expectations.
5. Who are the customers?
There are two types of customer segment that, ARM Holdings possess and make valiant efforts to satisfy needs and
wants of each customer. Following are the types of customers segments that ARM deals with:
 B2C: ARM processors are used in all modern mobile phones, CPUs which are easily used by consumers around the
globe.
 B2B: ARM processors are used as the main CPU for smartphones which includes the manufactures like Apple,
HTC, Nokia, Sony Ericsson and Samsung.
On the basis of both these segments, ARM aims to generate revenue by selling different portfolios. Mainly the
microprocessors that are used in smartphones and are sold to large level companies. Herein, targeting two segments help the
course of company to satisfy its financial needs and commitments.
6. SIC Codes
In general, SIC codes can be defined as the Standard Industrial Classification (SIC) which is a system of classifying
industries on the basis of four digit code. The main purpose of using this code is that it helps distinguishing companies or
industries on the basis of areas.
7. Who are the buyers and where are they geographically located and how much they buy?
As studied above there are two major customer segment for ARM Holdings on the basis of which company fulfill its
financial expectations and commitments. However, company is renowned for supplying quality of semiconductor systems to
different companies that uses them in manufacturing their products or commodities. On the basis of geographical areas, there
are several clients of ARM Holdings that belongs to Asia Pacific, Europe and United States. In these continents, companies
like Apple Inc, Samsung, Nokia, HTC, Sony Ericsson etc. buy microprocessor of the ARM which are prominently used in
smartphones of all these companies.
8. ARMs Distribution Channels
Distribution channels of ARM Holdings consist of two modes i.e.
 Directly with the clients
 Through factories or licenses
On the basis of both these methods cited company aims at delivering its goods and commodities within the target
market and satisfy needs and wants of different customers. Along with this, distribution channel of ARM consist of design
centers, integrated systems of logistics, social networking, B2B selling etc.
9. Strategic Alliance:
In general, strategic alliance can be defined as the agreement between two or more parties that pursue a set of agreed
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objectives while still remaining independent at the time of carrying out operations. In this mainly companies either merge or
acquire one another. On the basis of ARM Holdings, it possess strategic alliance with Samsung on the base of long term
licensing. At present, ARM mainly emphasize on strategic alliance because of the approach undertaken by Simon Segar CEO
is promoting more of expansion of the ARM operations. Along with Samsung, company has its strategic alliance with
Microsoft for providing architectural support to Windows 8 operating system. Through the means of this association, company
revenues has jumped significantly and it is because of the increasing sale of windows computers within the market. Along
with this, strategic association with University of Michigan has enhanced the process of ultra-low energy and sustainable
computing operations. However, society is the major component for the business within they operate, thus, it becomes
important to serve that is best for the community or society so that long term sustainability can be achieved within the target
market.
10. Collaborations
There are several collaborations that ARM Holdings made during the tenure of 2013-14 and 2014-15 which consist
of acquisition of Sansa security, Wicentric, Sunrise Micro device, Carbon design system, PolarSS1, Microsoft, License and
suppliers are some of the major one. Further, association with these companies have helped the course of ARM in different
portfolios as management is able to improve the level of microprocessor, GPU, CPU etc. Operating in such a competitive
market it is important for the top level management of ARM to make sure that they expand business operations at timely basis
by acquiring small level companies which supports the overall functioning of the firm. In addition to this, strategic approach
of CEO, Simon has promoted the integration and has changed the perception of employees towards the operations which
indeed has helped in attaining competitive edge.
11. ARMs business model
Top level management of ARM Holdings has employed canvas model for outlining the overall functioning of
business. It clearly indicates the value proposition of the firm that its offers to its clients and shareholders. There are several
revenue streams for ARM which consist of royalties, factories, license etc. Firm is closely focusing on all these streams of
income and is earning huge profit in its business. It develop its business model in such a way that it can operate its concern in
systematic way.
12. ARMs Holdings Position
ARM plc has position itself on the basis of its strengths and opportunities available to it. In this regard, main focus
of top level management is on Strong brand name which indeed assist in enhancing the ability of firm to charge high for its
products and services. In addition to it, uniqueness of products distinguish ARM from its competitors and allow company to
charge higher prices. In context to the market share, ARM has positioned itself at the global stage in significant manner.
However, it is because of the fact that, in year 2010 company has acquired 95% of smartphone market, 10% of the mobile
computers, 35% in digital TV’s and setup boxes as compared to its competitors. The main reason behind this was constantly
improving technological prospects of the company. However, the daily sales figures of ARM Holdings are showing better
results than its competitor like imagination technologies.
13. Key partners
To establish business in different target market, top level management of ARM has always focused on collaboration
or partnership in this following are some of the major partners of citied firm in the present era:
 Microsoft: In 2011, ARM Holding signed the partnership deal with Microsoft for providing architecture platform to
the Windows 8 operating system.
 University of Michigan: Is one of the major partner of ARM Holdings wherein, both the firms aim at developing
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ultra-low energy and sustainable computing. However, the deal of research partnership was signed at $5 million.
14. ARMs Key Activities
Manufacturing, research and development and investment in start-ups are the key activities of ARM.
15. Resources:
Its resources comprises development tools like microprocessor, virtual prototype, simulation models. Moreover,
workers are engaging in completing their tasks regarding management, marketing, sales and other operations. Marketing
intelligence system looks at MKIS and ARMS roots in the market. Further, it includes intellectual property by acquiring patent
rights of MIPS technology.
16. Value preposition:
It derive value by investing in new technology, superior design and nurturing the ecosystem as well. All this make
an significant contribution to satisfy customer need with greatest technology which results in increase value.
17. Core competencies
Best quality products at affordable prices, large customer base, skilled and talented workforce, advanced
technological products with having great feature are the factors that helps ARM to compete effectively in the market.
18. Cost structure:
ARMS incurred manufacturing cost, research and development cost, distribution cost, marketing and advertisement
cost.
19. Leadership and its style
Warren East who was the CEO of the firm left his post in 2013 after handling company for 12 years. At his place Simon Segar
comes and he overtook his position. Any big change is not observed after Segar took over leadership position and this was
indicated by him in his press conference. The big change that comes in organisation is that know firm is viewing Apple as its
major competitor then before. Segar is following democratic leadership style and his ability to foresee future is the major
element of his leadership. After Segar took over his position firm business strategy get changed and now it is focusing on
developing new technology for preparing high quality of processors. Hence, its KPI also get changed. There are several
leadership styles that are adopted by different entrepreneurs with the aim of managing the operations effectively and
efficiently. In this regard, democratic is the often used approach because it assist the manager or leaders or the entrepreneur to
execute the operations of business by taking together all the employees. Further, democratic leaders like Simon of ARM
Holdings encourages the subordinates to share their views and thoughts on the processes so that innovation and creativity can
be promoted within different portfolios of the ARM. Apart from this, there are autocratic leader as well who does not involve
any people during the time of decision making. Such type of leaders make judgement on their on to execute the operations of
business effectively and efficiently. Further, such leaders may adversely impact on the morale of the employees as they are not
involved in any strategic process. The main advantage this leadership style is that it assist in making quick decisions at the
time of crunch situations. In addition to this, Laissez faire is another leadership style that is adopted by different leaders in
which they provide freedom to the team members so that they work accordingly and set the deadlines on their own. However,
through the means of this company maintains high percentage of employee retention which is a good sign in such competitive
environment. On the other hand, transactional leadership emphasize on motivating followers through a system of rewards and
punishments. This type of leaders carry out their work on two factors i.e. contingent rewards and management by exception.
Contradicting to this leadership style transformation leader is the individual who is not limited by his or her own followers.
However, such leaders mainly emphasize on bringing change or entirely transforming the subordinates so that they can
compete in the competitive market and positively contribute towards the functioning of business.
20. McKinney’s 7S
When news comes that Warren East is leaving his position there was fear among the shareholders that something went wrong.
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