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The Value of Long‐Term Commitment

Kenneth M. Davidson (Attorney with the Federal Trade Commission in Washington, D.C.)

Journal of Business Strategy

ISSN: 0275-6668

Article publication date: 1 April 1992

Abstract

In the 1950s, the founders of Texas Instruments adopted a daring business strategy; they committed to developing pocket calculators and then selling them for less than their production costs. Texas Instruments expected the low price to create a mass market for calculators and gambled that its production costs would fall quickly as the company gained experience producing calculators in greater numbers. The founders shared their expectations with employees and made them the key to finding cost saving techniques. Management rewarded employees for their individual contributions and for the successes of the company. As sales grew, employees found ways to continually decrease production costs and earn increasingly dramatic profits. In fulfilling the commitments of its founders and its employees, Texas Instruments became one of the great American business success stories of the 1960s.

Citation

Davidson, K.M. (1992), "The Value of Long‐Term Commitment", Journal of Business Strategy, Vol. 13 No. 4, pp. 52-55. https://doi.org/10.1108/eb039507

Publisher

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MCB UP Ltd

Copyright © 1992, MCB UP Limited