Case 13.4: Texas Instruments
1. Summarize the major features of Texas Instruments’ management systems. 2. How does Texas Instruments ensure that its operating managers appropriately allocate their time between short term and long term? 3. Why do you believe the OST System worked so effectively for TI in the 70s? why was not working effectively for company in the mid-to-late 80s? 4. Would systems like these be appropriate in other organizations, such as Harvey-Hudson Electronics? What implementation problems would you foresee? ANSWERS:
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. TI has three main lines of business in 1984: components, which included semiconductor integrated circuits, semiconductor subassemblies, and electronic control devices; digital products, which included mini computers, personal computers, scientific instruments, and calculators; and government electronics, which included radar system, missile guidance and control systems, and infrared surveillance systems. The major management system of TI is OST System, which is Objective, Strategies, and Tactics System. OST System is a system for managing change and innovation. The system was employed to define the strategies the company intended to follow for further growth and development and to identify the tactics required to successfully implement such strategies. The OST System can be more easily understood if viewed in three strategies: 1. Presentation of the hierarchy goals
2. Dual responsibility of line management
3. Impact of matrix organization composed of strategic and operating modes The other main management system of TI is resource allocation system. This system included planning cycle, strategic fund, operating fund, and timing of planning cycle. The next major management system of TI is incentive compensation system, which is included the Key Personnel Analysis and stock-option plan. Planning and control system on TI encourage the development of new product. Strategic planning systems are more critical to survive the uncertain environment. Budgeting systems are used as short term planning tools that are flexible to adapt to a fast-changing environment. Reporting system are concentrated on policy issues. Performance evaluation system highlight the uncertainty in the environment.