Evaluating a Strategic Business Decision
Two competing electronics companies, 'Future Gadgets' and 'Innovate Corp', are deciding between two marketing strategies: 'Online Ads' or 'TV Commercials'. The payoff matrix below shows their expected profits in millions of dollars. The first number in each pair is the profit for Future Gadgets, and the second is for Innovate Corp.
| Innovate Corp | |||
| Online Ads | TV Commercials | ||
| Future Gadgets | Online Ads | (10, 12) | (15, 8) |
| TV Commercials | (8, 14) | (12, 10) | |
Suppose Future Gadgets commits to using 'Online Ads'. In response, an analyst at Innovate Corp recommends they should run 'TV Commercials'. Critically evaluate this recommendation. Is it the best response for Innovate Corp? Justify your conclusion by comparing the relevant payoffs.
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