Om Sri Sai Ram

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An offering at His Lotus Feet

Hewlett Packard and Texas Instruments

Harish Ramachandran09507

Company Background

Texas Instruments• Founded in

1935 by Bill Hewlett and Dave Packard

• Went public in 1947

Hewlett Packard• Founded by Cecil

H. Green, J. Erik Jonsson, Eugene McDermott, and Patrick E. Haggerty in 1947

Levels of strategy

• In which businesses one wants to be.• Allocating resources to the business to create value

Corporate level strategy

• Clarifying the boundaries of the business to be served• Selecting the competitive advantage to be pursued

Business level strategy

• Determining the basis one which the functions will serve the business unit objectives

• Integrating and coordinating these functions

Unit level strategy

Texas Instruments- Business Lines

Components

•Semi conductor integrated circuits•Semiconductor subassemblies•Electronic control devices

Digital Products

•Minicomputers•Personal computers•Scientific Instruments•Calculators

Government Electronics

•Radar systems•Missile guidance and control systems•Infrared surveillance systems

Hewlett Packard- Business Lines

Computer Products

•Factory automation•Engineering workstations•Data terminals•Personal computers•calculators

Electronic test and measurement

systems

•Minicomputers•Personal computers•Scientific Instruments•Calculators

Softwares, Systems and Peripherals

•PDAs•Servers•Networking services•Enterprise softwares

Business level strategy

Cost Leadership Differentiation

Functional Strategies: Texas Instruments

•High volume low price

•Rapid growth

•Standard products

marketing

•Economies of scale

•Vertical integration

•Learning curve

Manufacturing

•Process and product

•Cost driven

•Design to cost

R&D

•Aggressive

•Full utilization of debt

•No slack

Financial

•Competetive personnel

•Individual incentives

•layoffs

Human Resources

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Functional Strategies: Hewlett-Packard• High value-high price• Controlled growth• Custom features

Marketing

• Limited vertical integration• Small attractive locationsManufacturing

• Product only• Quality driven• Design to performanceR&D• Conservative• No or low debt• Margin of safetyFinancial• Cooperative• Company wide group incentives• No layoffs

Human Resources

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Why this difference??

Approaches to Strategic Planning

2 Main Approaches

Portfolio based Content Approach

•Rational and analytical•Portfolio positioning is the key•CEO is the strategist•unique business and functional strategies•changes are competitor and opportunity driven

Value based incremental

Approach•Logical and incremental•Management beliefs are the key•CEO sets the values•Generic business and functional strategies•Changes based on practicality and acceptability to the organization

Eg. Texas Instruments Eg. Hewlett-Packard

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Product life cycle

Early entry and market leader Create new markets and harvest

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Costs and prices

Continuous cost reduction and price penetration

Price skimming

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Product/Process Matrix

Capital intensive and cost effective production Lean production and customization

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Positioning and Resource movement

Invest in ‘question marks’ build in ‘stars’ and harvest in ‘cash cows’ Identify and create ‘stars’

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Management control systems

Performance evaluation

systems

Incentive compensation systems

Strategic planning systems

Reporting systems

Budgeting systems

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Strategic planning systems

Texas Instruments

•Top down approach•External:Competitive status•Internal: Organizational innovativeness •Top management as strategists.

Hewlett -Packard

•Bottom up approach•External: Technical superiority•Internal: Organizational Health•People Involvement

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Strategic planning systems

Texas Instruments

•Pricing strategy: Market-Penetration• Resource Allocation: towards manufacturing

Hewlett -Packard

•Pricing strategy: Market- Skimming•Resource Allocation: towards marketing and R&D

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Budgeting systems•Manufacturing•Engineering in products and processes•Cost reduction management•Cost savings

Texas Instrumen

ts

•New product development•Marketing•Research and Development

Hewlett -Packard

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Reporting Systems•Integrated divisions•Control and coordination among divisions•Corporate level staff

Texas Instruments

•Autonomous divisions•Authority to the divisions w.r.t resource usage•Division level staff

Hewlett -Packard

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Performance Measurement and incentive compensation Systems

Texas Instruments

• Based on cost reduction achievement• Marketing: Based on amount of sales and profit

Hewlett -Packard

• Based on the inventiveness of every component• Marketing: based on amount of sales and profit

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Performance Measurement and incentive compensation Systems

Texas Instruments

• Individual evaluation• Internally competitive• Incentives :

• Bonuses on achieving a certain of sales target or cost reduction target

Hewlett -Packard

• Team evaluation• Internally cooperative• Incentives:

• A portion of the resultant sales from the ideas generated and implemented

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Thank you