Case Analysis: Case 13-3
Texas Instruments and Hewlett-Packard
Texas Instruments and Hewlett-Packard competed in similar industries which both developed, manufactured, and sold high-technology electric and electronic products; however, they had very different strategies. TI’s general business strategy was competitive advantage for large, standard markets based on long-run cost position; however, HP’s general business strategy was competitive advantage for selected small markets based on unique, high-value/high-features products. TI tended to enter early in a product’s life cycle, and stayed through maturity; however HP tended to create a new product and then replaced it when it matured. HP’s environment was uncertain which compared to TI’s, because develop a new product and sell it into a new market exited a lot of potential risk and also extra profit. HP as a build business, the managers realized and made strategic plan more critical and more important than TI, a harvest business. HP’s budgeting systems were in short-term cycles. HP focused on product differentiation and a product innovation, therefore a short-term budgeting systems was more suitable for a business environment which was quite uncertainty and changeable. Furthermore, HP’s business unit manager highly influenced in preparing the budget, and also the revisions to the budget during the year was relatively easy. On the other hand, as a harvest business unit, TI’s business unit managers did not have much influence in preparing the budget, and the budget could be easily changed during the year. The difference of reporting systems is that TI separated operating expenses from strategic expenses on the income statement which HP did not. Compared to HP, TI had less innovation. In TI, the strategic expenses indicated innovative progress, therefore spent the full amount of the budgeted strategic expense considered desirable. It was easier to review the strategic expenditures if separating the...
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