Case Analysis: The Intel Pentium Chip Controversy (A)
Immediate Issue: As Andrew Grove, during my meeting of December 17,1994 with my internal team, Should I approve replacing the defective Intel chips of all concerned users with no-question asked? Also, should we also pay for the labor and other incidental costs? How should we integrate our decision into our financial books?
Basic Issues:
• Negative Publicity: Since Oct 30th, we have encountered a self-propelled negative publicity campaign against Pentium brand and it doesn’t seem to fade away if we don’t do anything.
• Business Ethics: We knew this problem since October, but tried to hide it with the hope that it will fade away. We will be scrutinized from an ethical perspective.
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To find out all available options and their pros and cons my team has put together the following analysis:
In one and half month the single word of one mathematician has turned into a worldwide campaign against us. AMD, Cyrix, and Nexgen are benefiting most from these events. They proved to have become quicker in manufacturing clones of our innovative products. Given this shorter time to market, they may jump on this opportunity to deliver Pentium clones any time. Our strategy to stop competitors copying our new products was heavy patent protection for the Pentium brand, however if our brand image is continually damaged to such extent, that protection would not give us the competitive advantage we expected. Although we have been the chips of choice for most of users, with the current negative publicity, the competitors may find their niche and expand their market share. Cost of switching from one type of processor to another (for example from Intel to AMD) is not significant for computer manufacturers due to the modular nature of this product. We know that this flaw would not affect any significant portion of the personal users (about 3.7 millions chips sold). The business users with heavy calculation needs such as engineering and specifically financial sectors would
Sexual Harassment and Falsifying data are an unethical practice that could happen in an organization. Leaders are required to take action. In the case of the Mysterious Roses and the case of the Cold Feet G BioSport find themselves resolving serious dilemmas. This discuss will address decision-making steps, ethical lenses used to make decisions, and ethical lenses that influence decisions.
On the 1st of June, 2015, Intel announced that they acquired Altera, another chip maker in the high technology industry who is particularly professional in producing programmable chips, by $16.7 billion as well as about $54 per share for Altera shareholders, which was the largest acquisition that Intel ever made (Nusca, 2015). The price is quite close to which was proposed by Intel, but in fact, just two months before Intel approved the acquisition, Altera rejected the price that Intel proposed. In the last few years, Intel suffered from the declining sales of personal computers, of which has been the main profitability source, and has been dominated by Intel for a long time, as consumers switch their preference from laptops and personal computers to tablets and other mobile devices (Huddleston, 2015). As a result, away from PCs, Intel has to work harder to get
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Securities and Exchange Commission antitrust allegations to in the past. This article explains somewhat how Intel was buying out there competitors like a monopoly. If there is only 1 company called Intel that sells these advanced microchips then they could set their price at what they wanted. This is bad for customers at that time because there was less market of options to choose from and as the price of AMD’s went up the other industries were sinking and could not compete with lower prices that Intel offered. Consumers could have benefited through Intel’s monopoly at that time by enjoying the latest and fastest technology even though pricing was
Although the author has demonstrated that the ethical code of business, as an instrumental requirement for justice, has difficult to prevent the company from misconducts, personal thinking, we should have
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After analyzing the Merced case, there are several routes the CEO could take regarding the direction of Hewlett-Packard’s Enterprise Systems Group (ESG). Ultimately, one of these solutions needs to be executed to ensure HP remains a leader in the enterprise server space. The problem with HP’s current (RISC-PA) processors is they are approaching the end of their technological relevance s-curve. Newer technology is rapidly gaining traction within the computing world and HP needs to find a way to participate in this movement.
As a consequence of its “MAID” project, AMD is focusing in major OEM players. In spite of that, the reduced market share (in units) didn’t affect AMD’s market share that reached is high in mid 2006. According to this, two assumptions can be made: • AMD’s market share could be higher in 2006, and if its major clients keep loosing market share, AMD will be facing a short term problem in its most profitable segment (assuming that the loss of OEM’s market share will not be compensated with the increase in demand, as verified in First Half of 2006); • There is considerable volume to explore by AMD in other OEM players. Although there is no information available in the case about this considerable change, the hypothesis of a new major player in the market should be explored by AMD.
On December 20, 1994, in response to the public's mounting pressure, Intel announces plans for a total recall, replacement and destruction of all the flawed Pentium microprocessors. On January 17, 1995, Intel announces a pre-tax charge of 475 million dollars against their earnings, ostensibly the total cost associated with replacement of flawed microprocessors.
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