Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry
The government-led creation and incubation of the semiconductor industry in Taiwan is a striking success for advocates of strong industrial policy. It has led to the island nation's domination of the global "foundry" business in which firms like Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC) manufacture the designs of "fabless" design companies. The two have a combined global market share of close to 70% of this global business segment. This success was all the more striking because when the initiative began, the country had few of the large scale firms that could support the R&D and scale necessary to enter such sophisticated capital intensive industries. There were no firms with the deep technological roots or the skill base to even begin. Yet government planners recognized the challenges of upgrading the nation's technology base and formulated a strategy that entailed the creation of "pilot agencies" that would serve as vehicles to bridge between sources of leading edge technology (predominantly sourced from overseas) and the commercialization to be carried out by local firms.
Swot Analysis of "Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry" written by Willy Shih, Jyun-Cheng Wang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Semiconductor Striking facing as an external strategic factors. Some of the topics covered in Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry case study are - Strategic Management Strategies, Competition, Economic development, Government, Technology and Technology & Operations.
Some of the macro environment factors that can be used to understand the Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry casestudy better are - – increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption,
there is increasing trade war between United States & China, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Semiconductor Striking, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Semiconductor Striking operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry can be done for the following purposes –
1. Strategic planning using facts provided in Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry case study
2. Improving business portfolio management of Semiconductor Striking
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Semiconductor Striking
Strengths Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Semiconductor Striking in Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry Harvard Business Review case study are -
Successful track record of launching new products
– Semiconductor Striking has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Semiconductor Striking has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High brand equity
– Semiconductor Striking has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Semiconductor Striking to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Semiconductor Striking digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Semiconductor Striking has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Technology & Operations field
– Semiconductor Striking is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Semiconductor Striking in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Semiconductor Striking is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Willy Shih, Jyun-Cheng Wang can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Sustainable margins compare to other players in Technology & Operations industry
– Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry firm has clearly differentiated products in the market place. This has enabled Semiconductor Striking to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Semiconductor Striking to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Semiconductor Striking is present in almost all the verticals within the industry. This has provided firm in Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Training and development
– Semiconductor Striking has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Semiconductor Striking in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Semiconductor Striking is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Semiconductor Striking is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Semiconductor Striking
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Semiconductor Striking does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Weaknesses Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry are -
Interest costs
– Compare to the competition, Semiconductor Striking has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– It come across in the case study Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry can leverage the sales team experience to cultivate customer relationships as Semiconductor Striking is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Semiconductor Striking has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Semiconductor Striking even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Semiconductor Striking supply chain. Even after few cautionary changes mentioned in the HBR case study - Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Semiconductor Striking vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Semiconductor Striking needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry, it seems that the employees of Semiconductor Striking don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High operating costs
– Compare to the competitors, firm in the HBR case study Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Semiconductor Striking 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Semiconductor Striking is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Semiconductor Striking needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Semiconductor Striking to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Semiconductor Striking is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Semiconductor Striking has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Lack of clear differentiation of Semiconductor Striking products
– To increase the profitability and margins on the products, Semiconductor Striking needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Semiconductor Striking in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Semiconductor Striking to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Semiconductor Striking to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Semiconductor Striking can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Better consumer reach
– The expansion of the 5G network will help Semiconductor Striking to increase its market reach. Semiconductor Striking will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Semiconductor Striking in the consumer business. Now Semiconductor Striking can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Semiconductor Striking has opened avenues for new revenue streams for the organization in the industry. This can help Semiconductor Striking to build a more holistic ecosystem as suggested in the Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry case study. Semiconductor Striking can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Semiconductor Striking to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Semiconductor Striking can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Semiconductor Striking can use these opportunities to build new business models that can help the communities that Semiconductor Striking operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Using analytics as competitive advantage
– Semiconductor Striking has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Semiconductor Striking to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Semiconductor Striking can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Technology & Operations segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Semiconductor Striking is facing challenges because of the dominance of functional experts in the organization. Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Leveraging digital technologies
– Semiconductor Striking can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry are -
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Semiconductor Striking can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Semiconductor Striking is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Semiconductor Striking has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Semiconductor Striking needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Semiconductor Striking in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Semiconductor Striking needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Semiconductor Striking with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Semiconductor Striking in the Technology & Operations sector and impact the bottomline of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Semiconductor Striking will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Semiconductor Striking can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Semiconductor Striking business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Semiconductor Striking high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Consumer confidence and its impact on Semiconductor Striking demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing wage structure of Semiconductor Striking
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Semiconductor Striking.
Weighted SWOT Analysis of Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Upgrading the Economy: Industrial Policy and Taiwan's Semiconductor Industry is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Semiconductor Striking needs to make to build a sustainable competitive advantage.
