Critiquing a Strategic Business Decision
Two companies, Innovate Inc. and Partner Co., are collaborating on a joint venture. They must choose between two technology standards, 'Helios' and 'Apollo'. The table below shows the profits for each company (Innovate Inc., Partner Co.) based on their choices. A 'stable outcome' is one where neither company has an incentive to change its choice if the other's choice is fixed.
| Partner Co.: Helios | Partner Co.: Apollo | |
|---|---|---|
| Innovate Inc.: Helios | (15, 8) | (0, 0) |
| Innovate Inc.: Apollo | (0, 0) | (10, 20) |
The CEO of Innovate Inc. makes the following argument: 'We must push for the Helios standard. It is a stable outcome and it yields the highest possible profit for our company. From a business perspective, any other choice is inferior for us.'
Critique the CEO's argument. Is the reasoning sound? What potential risks or alternative perspectives does this argument fail to consider regarding the overall success and efficiency of the joint venture?
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