Texas Instruments 13.4

In: Business and Management

Submitted By gardenofstars
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1. Summarize the major features of Texas Instruments’ management systems. To what extent, and how, are these system mutually reinforcing?
In 1960, Texas Instruments’ (TI) revenue reached $232 million, which was $32 million over company’s president Pat Haggerty’s announced goal of $200 million. However, the industry was facing a recession at the time, and Patrick Haggerty knew that TI needed to develop a system that would help with innovation and growth of the company. In 1962, Duddy Harris was assigned to find such system, which resulted in development of the OST System: Objectives, Strategies and Tactics.
Pat Haggert believed that Texas Instruments must be consumer product centered. Under his leadership TI has organized itself into six major business groups. Each group was subdivided into divisions, which in turn is further divided into product customer centers (PCC), or profit centers. Each Product Customer Center (PCC) manager had responsibilities to Create, Make and Market product in their respective area. The goal of PCC is to allow the business to have a close relationship with customers, and enable an entrepreneurial environment for TI’s middle level managers.
The major drawback of Texas Instruments profit center’s decentralized matrix system is the lack of control by top management, possibility of friction and conflict of interest between organization units. With over 80 different PCCs within TI; business cohesion can be a major issue.
In order to keep individual business units, divisions and PCCs aligned with the same corporate business objectives, Texas Instruments implemented OST system through matrix organization, as a “method whereby long-range, strategic goals could become the primary motivator of the company” (Ref. 4). The OST process starts with the strategic planning; an overall statement that defines Texas Instruments’ long term goal at…...

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