TEXAS INSTRUMENTS: COST OF QUALITY Harvard Case Solution & Analysis


Texas Instrument’s Materials & Controls (M&C) Group, a manufacturer of clad and solid gold alloys for the jewelry industry, was founded in 1916. The company has earned the confidence of its customers by providing excellent quality products and exceptional customer care services.

The company has been facing competition over the time period and as the time passes the competition has increased at an increasing rate. According to TI, the only way to compete strongly is to reduce the cost of the operations and to improve the quality of the products. The management of the company has imposed a serious focus on the quality control of the company, because according to them the quality control is the major reason or factor of the company’s success or failure in the short run as well as in the long run of the company.

The company has introduced a new strategy named as “Quality Control Thrust”. In this strategy the company has developed quality control system in order to analyze and record the costs. The system is developed in such a way that it records the cost in a book called Quality blue book, the system records the cost that arose due to poor quality of the products.

The company records the cost of quality compromise in the financial terms. The company has successfully implemented this system but the system is unable to lower down the costs of the quality.


The case depicts a new concept of analyzing and identifying the costs of the company. The company has been going through serious issue of rising costs which have been resulting in lower profitability of the company. The top management is making its back breaking efforts to identify the cost consumption areas or the reason behind such rise in cost.

The top management of the company has developed a unique cost identifying system. The system is designed in such a way that it identifies the cost incurred or that would probably incur due to low quality of output. This system also guides and assists the top management of the company in optimal allocation of resources. Moreover, the system is designed in such a way that that it provides the complete breakup of the cost incurred with respect to the sources and areas of incurrence of cost.

This helps the company in several ways to improve the performance and overall efficiency of the company. Since, the system identifies cost of poor quality, the management can easily trace the reason of rising costs as well as get aware of the cost of poor quality which helps the management to improve their quality in order to lower their costs.

The top management of the company can identify the unnecessary costs that incur during the operations of the company and could eliminate those costs. Moreover, it also actively measures the quality of the output of the company, therefore the company can also focus on the specific operations due to which the quality of the products are compromised. This will help the company to improve those operations to ensure 100% cost effectiveness which will subsequently result in overall profitability of the company.


The Texas Instrument’s Materials & Controls (M&C) Group, is well renowned company. The company has been performing very well in its operations in the early phases of its business life cycle. The company has been involved in different businesses, such as business of microprocessors , semiconductors, oil, jewelry, and other alloy stationeries.

In the business of manufacturing of alloy for the jewelry industry, the company has been facing the serious issue of  rising cost. This has affected the operations of the company as this has caused a serious decline in the profitability of the company.


 This has also decreased the potential of the company to attract the prospective investors of the company. This has also caused the company a decline in the quality of the products of the company which has also affected negatively on the reputation of the company as the customers are looking for the best quality products in the industry, hence, resulting in decrease in the customer base of the company and subsequently decreasing the profitability of the company...................

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