Weebly



Intel’s “Rebates” and Other Ways it “Helped” CustomersGroup 3: Summer Doak, Tammy Dunham, Sara Wittrock, Rafael Alvis, Leslie Wiggins, and Emily RamseyIn your judgment is Intel a “monopoly”? Did Intel use monopoly-like power; in other words, did Intel achieve its objectives by relying on power that it had due to its control of a large portion of the market? Explain your answers. I – use We believe Intel is considered a monopoly even though they do not control all but the majority of the market. Pure monopoly exists when a single firm is the sole producer of a product for which there are no close substitutes. The firm is the price maker and entry and exits are blocked. In this case study, there was some evidence that Intel attempted to create a monopoly. First, Intel developed and patented a new microprocessor which legally barred AMD from making it. Then Intel used an exclusive dealing arrangement (Vasquez 220). – point a - please refer to your APA resource - note how text citation should be cited - note when page nos. should be cited Intel negotiated a deal with Dell, a computer manufacturer, to only purchase microprocessors from Intel and stop buying them from AMD. This caused AMD’s sales to decrease substantially. In return, Dell received rebates from Intel. According to Tom McCoy, executive vice president for legal affairs in AMD, a rebate is “payment based on the number of products a customer purchases, and so are in effect discounts that are paid after the customer buys the product” (Vasquez, 2012). – see point a above However, the rebates Intel gave out to Dell were payments “not related to the number of processors they bought” (Vasquez, 2012). Another way Intel used monopoly-like power is that – was when they coded software to intentionally run slow on AMD processors and not on Intel processors, making customers believe AMD processors were defective. In your judgment were Intel’s rebates ethical or unethical? Explain.Without a doubt Intel operated unethically when offering rebates to their customers. In no way is it ethical to pay someone for your business. It is dishonest and should not be allowed. AMD was trying to come by production honestly and by building their business the way it should be. The business plan was extremely monopolistic with unmoral standards towards their competition - AMD. Whether it was their method of threatening other companies that used AMD (which manipulated – their manipulation of the supply and demand curve is viewed unethical in a free market (Vasquez, 2012) or their request of boycotting their competitor, their actions spoke volumes when they decided to tamper AMD’s merchandise. Intel violated AMD’s right of operating a business by offering a ‘rebate’ that in actuality was not benefiting the consumer in any way, meanwhile crippling the value of AMD’s product and reputation. If Intel did not have the best price at one time, then it is only fair that they invent something else that beats out the market leader. I don’t believe Intel received the proper punishment from their unethical behavior in this case study. The lawsuit FTC should have never been dropped. Unethical behavior like this with large corporations that gets any media attention inevitably just plants negative seeds into future companies’ marketing strategies. Was it unethical for Intel to use its compilers and its libraries of software code in the way it did, or is this permissible for companies in a free market economy? Explain your answer.This is a very arguable subject; however, if we go by the three moral values that perfectly competitive free markets achieve to be ethical, the answer seems clear. In such a market, buyers and sellers exchange with one another that is just and “equal” for each party. They maximize the amount of goods they want to allocate, and bring the achievements in such a way that the buyer’s and sellers’ have a right to be of free consent (Vasquez, 2012) – see point a above. As far as - for Intel, they tried their best to sell it at a competitive price. The second value, on page 206, is that the goods and resources are efficient. This is where Intel’s morals become cloudy. Intel created a product in an area in the economy where demand was high. On the other hand, Intel was not being “morally ethical” to their consumer knowing that they product they created could work with the AMD processor, but was altered so that it didn’t. By Intel knowing and purposefully doing that, I think they were wrong. The last moral value listed on page 207, is to establish justice and maximize utility that respects buyers and sellers negative rights (Vasquez, 2012). This is achieved by freedom of opportunity and voluntary exchange. Intel wasn’t forcing their buyers to by its libraries or resource material, they – Intel just tried to persuade/bribe them – their buyers by offering rebates or monies back. I believe this can leave a company having a pernicious effect on its outcome of a product. By Intel’s action doing this, it left its own company to be put “under the microscope.” Even though they priced the product lower, it still didn’t prove a viable outcome or provide buyers with a satisfying bundle. I can think of “Ford/Pinto Nightmares” all over again. By offering rebates, it made other companies subject to fail such as Dell Computers. Without Intel, it would be hard for companies such as HP, Dell, etc., to try and be a viable functioning company.ReferenceVasquez, M.G. (2012) Business Ethics: Concepts and Cases. 7th Ed. Pearson EducationQuality of AnswersContent and OrganizationOutstandingAbove AvAverageBelow Av or NonePoints Earned15 points11.3- 157.6- 11.23.9 -6.50 -3.8All key elements of the assignment are covered in a substantive way. The content is comprehensive, accurate, and/or persuasive. Major points are stated clearly and well supported. 15Readability & StyleOutstandingAbove AveAverageBelow Av or None6 points4.6 - 63.1 – 4.51.6 - 30 -1.5Sentences are well-constructed, complete, clear, and concise with logical flow of thoughts. Tone is appropriate.6MechanicsOutstandingAbove AvAverageBelow Av or None4 points3.1- 42.1 - 31.1- 20 – 1Rules of grammar, usage and punctuation a are followed. Spelling is correct.Text sources (if included) are correctly cited with reference listing. 3.8CommentsNice job, Group 3, with your early completion of your Case study Four, and with your well-constructed answers. Enjoy your final case study. Remember to post your group’s task delegation from page 2 of your group contract.24.8/25 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download