Case: Texas

1. Who held the power in the relationship Texas Instrument had with its distributors?

In the case of Texas Instruments' relationship with its distributors, the balance of power can be
more complex, especially when considering the global pricing dynamics in the semiconductor
industry. While TI, as the manufacturer, held a significant amount of power due to its control over
production and supply, the global pricing dynamics added additional factors that influenced the
power dynamics in the relationship.

In the semiconductor industry, pricing is influenced by various factors such as supply and demand,
market conditions, competition, and the overall economic environment. Semiconductor
manufacturers like TI often have a complex pricing structure that considers these factors and aims
to maximize profitability while remaining competitive.

In this context, distributors can also hold a certain level of power in the relationship. Distributors
act as an essential link between the manufacturer and the end customers, leveraging their market
knowledge, customer relationships, and distribution networks to promote and sell TI's products.
They often have insights into local market conditions and customer demands, which can influence
pricing decisions and demand forecasting.

Additionally, distributors often have multiple options when it comes to sourcing products. While TI
may be a leading manufacturer, distributors may also have relationships with other semiconductor
companies. This gives distributors some leverage in negotiations and may allow them to seek
better pricing terms or incentives from TI.

Therefore, while TI held significant power as the manufacturer and supplier, distributors also held
some power in the relationship, especially in terms of influencing pricing decisions based on their
market knowledge and alternative sourcing options. The power dynamic can vary depending on
factors such as the distributor's market share, TI's product differentiation, competition, and the
overall industry landscape.

2. What was the source of the negotiating strength each party would bring to the
meeting?

Texas Instruments (TI) and its distributors bring different sources of negotiating strength to the
meeting. TI's strength lies in its product differentiation, supply control, and market dominance, as
distributors value access to TI's specialized products, its ability to control production and supply,
and its market share and dominance in the semiconductor industry. On the other hand,
distributors have negotiating strength through their market knowledge, distribution networks, and
access to alternative suppliers. Their in-depth understanding of local markets, established
distribution channels, and relationships with customers allow them to provide valuable insights to
TI and expand market access. Furthermore, their ability to work with multiple semiconductor
manufacturers gives them leverage to consider different sourcing options and potentially
negotiate better terms. The balance of power between TI and distributors is influenced by factors
such as market share, product offerings, and the competitive landscape.
 3. What position should the Semiconductor Group take with its distributors regarding
global pricing?

In the case of Texas Instruments' global pricing in the semiconductor industry, the Semiconductor
Group should adopt a strategic position with its distributors. This includes conducting market and
cost analyses, assessing competitive positioning, fostering transparent distributor relationships,
implementing value-based pricing, allowing pricing flexibility, prioritizing long-term relationships,
and conducting regular pricing reviews. By considering these factors, the group can ensure a
mutually beneficial and sustainable relationship with distributors, maintain profitability, remain
competitive, align pricing with value, accommodate different market conditions, enhance
distributor partnerships, and optimize pricing strategies. This strategic approach aims to drive
growth and success in the semiconductor market while maintaining strong distributor
relationships.

4. What organizational implications would such a decision imply?

Implementing a strategic decision on global pricing in the semiconductor industry, such as the case
of Texas Instruments, has several organizational implications. These include cross-functional
collaboration, dedicated pricing teams, clear pricing policies and guidelines, training for pricing
capabilities, IT support for pricing analysis, establishing performance metrics, change
management, and fostering a culture of continuous improvement.

Members:

Sigrid Burgos

Giannina Zunino