Texas Instrument Case Analysis

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..Problem Statement:
How can Texas Instruments maintain market share and profitability while other companies are conforming to global pricing systems? Company Assessment:
Financial Assessment:
Throughout the 1980’s, Texas Instruments was the leader in sales for the semiconductor manufacturing industry. In 1980, TI recorded sales of $1.453 million. However, by 1985 competition became more intense and Motorola (along with NEC) became the industry leaders in the semiconductor market. By 1992, as a result of the intense competition, Texas Instruments had fallen from an industry leading first, to a middle of the pack sixth. However, sales and profits were increasing each year. Their income statements show that sales have nearly double in a five year span (1990-94). Working capital has more than doubled while long-term debt rose slightly. In 1994, Texas Instruments reported record breaking sales of $10.3 billion, a 21% increase from the previous year. The split was among components ($6.8 billion), defense electronics ($1.7 billion), digital products ($1.66 billion), and metallurgical materials ($177 million). Components, alone, made a profit of $1.1 billion, while defense electronics recorded a profit of $172 million. 1994’s performance was record breaking for Texas Instruments and it marked the first time the company exceeded sales of $10 billion and over $1 billion in profit. From a financial point of view, Texas Instruments is in good position to make the necessary changes in order to accommodate their recent problems with distributors.

Company Background:

Texas Instruments (TI) is considered to be the pioneer of the American electronics industry. TI was first established, in 1951 as an electronics company serving the American defense industry. In 1958, TI developed the first semiconductor integrated circuit. After receiving market attention with its development of such innovative consumer products as the pocket calculator and the electronic wrist watch, Texas Instruments lost its business in both markets to cheap Asian imports. Throughout the 1980’s, intense competition arose and TI struggled to maintain its position in the electronics industry. Their semiconductor market demand was shrinking and the company was faced with heavy losses in many of its core areas. Realizing that their company was beginning a downward spiral, Texas Instruments reorganized its businesses to foster innovation and embarked on a program of cost-cutting. By 1985, the company refocused its efforts on its strengths in semiconductors, relinquishing market dominance in favor of greater margins. TI not only began to grow its technological leadership, it also began to build stronger relationships with its customers. By 1995 Texas Instruments had developed a strong position in the electronics industry. They were now a leading manufacturer of semi-conductors, defense electronics, software, personal productivity products and materials, and controls. TI’s dominance in the semiconductor industry was in part because it was the only American company that continued to manufacture dynamic random access memory chips in the face of intense Japanese competition. TI now had manufacturing sites spread throughout North America, Asia, and Europe, and was pursuing its strategy of increasing manufacturing capacity and developing manufacturing excellence. Marketing Assessment:

Products and Target Market
Texas Instruments manufactures a wide array of electronic products. From pocket calculators to semiconductors; TI produces almost every product needed to scratch a computer geek’s technological itch. Semiconductors are their flavor of choice, too which the case focuses on. Semiconductors are silicon chips which transmit heat, light, and electrical charges which perform critical functions in virtually all electronic devices. They are a core technology in industrial robots, computers, office equipment, consumer electronics, the aerospace industry,...
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