Develop long-run strategies to increase firm value

Assignment Help Microeconomics
Reference no: EM132184004

Question: The 2 discussion answer(s) must be a minimum of 125 words of substance each with any references cited in APA format. No copying and pasting of work previously done for someone else.

Discussion: Intel made large loyalty payments to HP in exchange for HP buying most of their chips from Intel instead of rival AMD. AMD sued Intel under the antitrust laws, and Intel settled the case by paying $1.25 billion to AMD.

• What incentive conflict was being controlled by these loyalty payments?

• What advice did Intel ignore when they adopted this practice?

• Why did they ignore it?

Discussion: We have really covered a lot of subjects. We would love to hear what your take away is:

• for those things you think you will use the most;

• what you found most interesting; and

• what you never knew before.

Looking back here is the list:

1. Use the rational-actor paradigm, identify problems, and then fix them.

2. Use benefit-cost analysis to evaluate decisions.

3. Use marginal analysis to make extent (how much) decisions.

4. Make profitable investment and shut-down decisions.

5. Set optimal prices and price discriminate.

6. Predict industry-level changes using demand and supply analysis.

7. Understand the long-run forces that erode profitability.

8. Develop long-run strategies to increase firm value.

9. Predict how your own actions will influence other people's actions.

10. Bargain effectively.

11. Make decisions in uncertain environments.

12. Solve the problems caused by moral hazard and adverse selection.

13. Motivate employees to work in the firm's best interests.

14. Motivate divisions to work in the best interests of the parent company.

15. Manage vertical relationships with upstream suppliers or downstream customers.

Reference no: EM132184004

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