Key Flaws in Intel's 5-Point Plan

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Key flaws in Intel's five-point plan

Can you assist with notes and ideas?

NOTES 1:
In January 1995, Business Week, in an article entitled Intel's Pentium: A Study In Flawed Public Relations took note of a number of legal ethical mistakes that were made by Intel after its Pentium processor chip for PCs revealed some design problems. Journalist Leon Reinstein outlined in the article a five point plan that Intel had apparently followed in response to the public outrage against it.

PPS 1
Intel's five-point plan to handle public relations scandals consisted of:

1) Initially deny that the problem exists;

2) When irrefutable evidence is presented that the problem exists, downplay its significance;

3) Agree to only replace items for people who can demonstrate extreme hardship;

4) Continue running your current ad campaign extolling the virtues of the product as if nothing has happened;

5) Count the short-term profits.

NOTES 2:
This plan was apparently implemented when IBM halted all production of the its personal computers with the Intel Pentium processor chip on December 12, 1994, saying that the flaw in its design occasionally produces mistakes in spreadsheets that are made with them. This resulted in a large decrease in the value of Intel's stock shares and a reduction in its profits. Although there were, in fact, flaws in the processor chip made by Intel, there was reason to believe that IBM made this move in order to encourage the sales of its own processor, the PowerPC chip, in an effort to replace Intel's chip with their own. Most other computer manufacturers stuck with Intel, but this battle caused a loss in IBM's profits as well.

PPS 2:

Intel vs IBM
Pentium vs PowerPC

NOTES 3:
Intel initially denied the problem.

PPS 3
1) Initially deny that the problem exists.

Intel CEO Andrew S. Grove quickly tried to knock down IBM's (nicknamed Big Blue's) snipes at its chip, insisting that the "reaction is unwarranted."

NOTES 5 The article "Ethical and Unethical Business Practices" outlines some common breaches that companies are often found to be doing when competing with other companies:

PPS 5
Resorting to dishonesty, trickery or deception.
Distortion of facts to mislead or confuse.
Manipulating people emotionally by exploiting their vulnerabilities.
Greed to amass excessive profit.
Creation of false documents to show increased profits.
Avoiding penalty or compensation for unlawful act.
Lack of transparency and resistance to investigation.
Harming the environment by exceeding the government prescribed norms for pollution.
Invasion of privacy used as leverage, for obtaining personal or professional gains.
Sexual discrimination

Notes 6
Ethical integrity involves treating all stakeholders by making decisions that benefits them all through lawful and moral actions. This is important because it minimizes problems and fosters trust. These are important actions and activities that illustrate the activities of an ethical company:

PPS 6
Ethical Business Practices
Investors: Ensuring safety of their money and timely payment of interest.
Employees: Provision of fair opportunities in promotions and training, good working conditions, and timely payment of salaries.
Customer: Complete information of the service and product should be made available. Personal information of the customers should not be used for personal gain.
Competition: Unscrupulous tactics and methods should be avoided while handling competitors.
Government: Rules and regulations regarding taxes, duties, restrictive and monopolistic trade practices, and unlawful activities like corruption and bribing should be adhered to.
Environment: Polluting industries should ensure compliance with the government norms regarding air, water and noise pollution.

NOTES 7
The role of ethics in business is clear, even when the management feels that the main goal of a business is to make profits. Ethical Corporation, a British organization that features an online newsletter and other resources, outlines certain benefits for businesses that enhances its bottom line through ethical behavior:

PPS7
Ethical organisations, compared to unethical organisations, are more likely to:

attract and retain high-quality employees.
attract and retain high-quality customers.
attract and retain high-quality suppliers.
attract and retain high-quality investors.
earn good will with community members and government officials.

Organisations that attract and retain high-quality employees, customers, suppliers, and investors, and earn good will with community members and government officials, are more likely to have:

greater trustworthy information for decision making.
higher product and service quality.
higher levels of employee productivity.
less employee theft.
less need for employee supervision.
increased flexibility from stakeholders in times of emergency.

Denis Collins.Convincing your boss on ethical performance is all about the money. Apr 17, 2014 Ethical Corporation.
http://www.ethicalcorp.com/business-strategy/convincing-your-boss-ethical-performance-all-about-money

NOTES 8
Here is a broad definition of corporate social responsibility in business, from an Indian Management Consultancy group:

PPS 8
Corporate Social Responsibility is the continuing commitment by business to
behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large."
by Lord Holme and Richard Watts

http://megamindservices.in/pdfs/CORPORATE%20SOCIAL%20RESPONSIBILITY.pdf

NOTES 9
The second of the five point strategy used by Intel is this:

2) When irrefutable evidence is presented that the problem exists, downplay its significance.

When it was found that Intel's processor chip did in fact cause problems in calculations, the following was stated by its CEO:

PPS 9
Intel, which has shipped at least 4 million of the chips, says the odds of a Pentium error are 1 in 9 billion division calculations--or once in 27,000 years of running a spreadsheet. "If IBM's contention was right, the problem would have shown up thousands of times."

PPT 11
The third point is

3) Agree to only replace items for people who can demonstrate extreme hardship;

NOTES 11
Tuesday, December 20: Intel finally apologizes and says it will replace all flawed Pentiums upon request. It sets aside a reserve of $420 million to cover costs. It hires hundreds of customer service employees to deal with customer requests. And it dedicates four full-time employees to read Internet newsgroups and respond immediately to any postings about Intel or its products.

Vince Emery The Pentium Chip Story: A Learning Experience 1996. Vince Emery Productions
http://www.emery.com/1e/pentium.htm

PPT 11
Emin Mamedov, in his Ethics Paper on Intel Case, showed that in order to get the Pentium chips replaced, the customer must prove that there is something wrong. This is in breach of the IEEE Code of Ethics. He states:

NOTES 11
First, bylaw nine of IEEE code of ethics states that all members of any corporationshould "avoid injuring others, their property, reputation, or employment by false or maliciousaction." [3]. Knowing about problem with chip, Intel still decides to release it. However, if acustomer can demonstrate that they have a problem, using this chip, it will be replaced forthem. Andrew Grove, a famous engineer who receivedIEEEEngineering LeadershipRecognition award in 1987, states that earlier policy was not "the right thing to do" andreplacing processors with flaw would "fix that lapse". [2] However, to have a processorreplaced, customers had to prove that they were eligible to do that. One of users wrote in Internet about this replacement situation:
"I'm mad as h--l at the suggestion that Intel wouldask me for proof of what I'm using the chip for before offering to replace it. I paid out myhard-earned dollars for a chip and I want it to operate 100 percent or I want my money back."

PPT 12
The fourth rule that Intel has been following is:

4) Continue running your current ad campaign extolling the virtues of the product as if nothing has happened;

Intel has been honored for its ethics and its use of IT over the last few years.

NOTES 12
Intel was recognized by the Ethisphere Institute, the leading business ethics think-tank, as one of the 2013 World's Most Ethical Companies. By implementing and maintaining ethical business practices and initiatives, Intel earned a spot on this year's list. Intel was previously recognized on this list in 2009 and 2012. Learn more about Intel's corporate responsibility initiatives.

Christine Dotts. Chip Shot: Intel Named a 2013 World's Most Ethical Company (Mar 6, 2013)Intel Newsroom ...