Apply froeb's analytic method to a real-life example

Full Answer Section

Intel's incentive for these payments was likely to:

• Secure a major customer: Locking in HP meant guaranteed sales and potentially higher market share.
• Stifle competition: By limiting HP's options, Intel could potentially weaken AMD's position in the market.

Analysis through Froebel's Lens

Based on Froebel's method, we can see potential flaws in Intel's decision:

• Consequences: The $1.25 billion settlement with AMD shows a significant negative consequence.
• Alternatives: Intel could have focused on product innovation and competitive pricing to attract HP.
• Necessity: There was likely no real necessity to use such tactics to secure HP's business.

Conclusion

Intel's decision to use loyalty payments appears to be a bad one based on Froebel's method. The potential negative consequences (antitrust lawsuit) were not outweighed by the benefits (securing HP). Alternative strategies, like focusing on product development, could have achieved similar results without legal trouble.

This situation also highlights the importance of considering the impact on competition and potential legal ramifications before making business decisions.

Sample Solution

Applying Froebel's Analytic Method to Intel's Loyalty Payments

Who made the bad decision?

In this case, Intel made a bad decision by offering loyalty payments to HP.

What information did they have?

We can only speculate on the specific information Intel had, but it likely included:

• Market share: Intel likely knew they held a dominant market share compared to AMD.
• HP's buying power: HP is a major PC manufacturer and a significant customer for processors.
• Potential impact on AMD: Intel might have understood the payments could harm AMD's competitiveness.
• Antitrust laws: It's likely Intel was aware of antitrust regulations, but perhaps underestimated the legal risk.

What was their incentive?