Case Study Description of Powerchip Semiconductor Corporation
To maximize their effectiveness, color cases should be printed in color.Powerchip Semiconductor Corporation has a horizontal firm structure in an industry that is predominantly organized vertically. While it has been successful in up markets, in the current down market its strategic rationale was being tested. As a capital intensive manufacturer of DRAMs that had to license its designs from abroad, was it able to compete with large vertically integrated firms who controlled the whole value chain? How did its approach compare to that of its partner Elpida? Can Powerchip and Elpida together make up a "virtual integrated device manufacturer?" The case examines some of the unique characteristics of the DRAM industry, in which manufacturers employ large scale to compete on cost in the production of standardized commodities.
Swot Analysis of "Powerchip Semiconductor Corporation" written by Willy Shih, Chen-Fu Chien includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Elpida Powerchip facing as an external strategic factors. Some of the topics covered in Powerchip Semiconductor Corporation case study are - Strategic Management Strategies, Joint ventures, Mergers & acquisitions, Organizational structure, Supply chain, Technology and Technology & Operations.
Some of the macro environment factors that can be used to understand the Powerchip Semiconductor Corporation casestudy better are - – cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, talent flight as more people leaving formal jobs, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies,
supply chains are disrupted by pandemic , increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Powerchip Semiconductor Corporation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Powerchip Semiconductor Corporation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Elpida Powerchip, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Elpida Powerchip 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 Powerchip Semiconductor Corporation can be done for the following purposes –
1. Strategic planning using facts provided in Powerchip Semiconductor Corporation case study
2. Improving business portfolio management of Elpida Powerchip
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 Elpida Powerchip
Strengths Powerchip Semiconductor Corporation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Elpida Powerchip in Powerchip Semiconductor Corporation Harvard Business Review case study are -
Ability to lead change in Technology & Operations field
– Elpida Powerchip 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 Elpida Powerchip in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Elpida Powerchip in the sector have low bargaining power. Powerchip Semiconductor Corporation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Elpida Powerchip to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Elpida Powerchip 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 Elpida Powerchip is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Powerchip Semiconductor Corporation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Elpida Powerchip has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Powerchip Semiconductor Corporation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Technology & Operations industry
– Powerchip Semiconductor Corporation firm has clearly differentiated products in the market place. This has enabled Elpida Powerchip to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Elpida Powerchip to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Elpida Powerchip has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Training and development
– Elpida Powerchip has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Powerchip Semiconductor Corporation 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.
Ability to recruit top talent
– Elpida Powerchip is one of the leading recruiters in the industry. Managers in the Powerchip Semiconductor Corporation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Elpida Powerchip are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Diverse revenue streams
– Elpida Powerchip is present in almost all the verticals within the industry. This has provided firm in Powerchip Semiconductor Corporation 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.
Successful track record of launching new products
– Elpida Powerchip has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Elpida Powerchip 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.
Operational resilience
– The operational resilience strategy in the Powerchip Semiconductor Corporation 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 Powerchip Semiconductor Corporation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Powerchip Semiconductor Corporation are -
Capital Spending Reduction
– Even during the low interest decade, Elpida Powerchip 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Willy Shih, Chen-Fu Chien suggests that, Elpida Powerchip is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Workers concerns about automation
– As automation is fast increasing in the segment, Elpida Powerchip 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.
Interest costs
– Compare to the competition, Elpida Powerchip 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.
Need for greater diversity
– Elpida Powerchip has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Increasing silos among functional specialists
– The organizational structure of Elpida Powerchip is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Elpida Powerchip needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Elpida Powerchip 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, Elpida Powerchip is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Powerchip Semiconductor Corporation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Powerchip Semiconductor Corporation, is just above the industry average. Elpida Powerchip needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Powerchip Semiconductor Corporation HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Elpida Powerchip has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Powerchip Semiconductor Corporation HBR case study mentions - Elpida Powerchip takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
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 Elpida Powerchip supply chain. Even after few cautionary changes mentioned in the HBR case study - Powerchip Semiconductor Corporation, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Elpida Powerchip vulnerable to further global disruptions in South East Asia.
Opportunities Powerchip Semiconductor Corporation | 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 Powerchip Semiconductor Corporation are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Elpida Powerchip can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Elpida Powerchip can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Low interest rates
– Even though inflation is raising its head in most developed economies, Elpida Powerchip 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.
Buying journey improvements
– Elpida Powerchip can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Powerchip Semiconductor Corporation suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Elpida Powerchip 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 Elpida Powerchip to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Elpida Powerchip 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Elpida Powerchip can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Elpida Powerchip 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.
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 Elpida Powerchip in the consumer business. Now Elpida Powerchip can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Elpida Powerchip can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Elpida Powerchip can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Elpida Powerchip 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 Powerchip Semiconductor Corporation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Elpida Powerchip to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Elpida Powerchip has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Elpida Powerchip can use these opportunities to build new business models that can help the communities that Elpida Powerchip operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Threats Powerchip Semiconductor Corporation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Powerchip Semiconductor Corporation are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Elpida Powerchip needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.
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. Elpida Powerchip 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.
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. Elpida Powerchip needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Elpida Powerchip 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.
Increasing wage structure of Elpida Powerchip
– 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 Elpida Powerchip.
High dependence on third party suppliers
– Elpida Powerchip 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 Elpida Powerchip 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.
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 Elpida Powerchip in the Technology & Operations sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Elpida Powerchip can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Shortening product life cycle
– it is one of the major threat that Elpida Powerchip is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Powerchip Semiconductor Corporation, Elpida Powerchip may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Weighted SWOT Analysis of Powerchip Semiconductor Corporation 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 Powerchip Semiconductor Corporation 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 Powerchip Semiconductor Corporation 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 Powerchip Semiconductor Corporation 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 Powerchip Semiconductor Corporation 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 Elpida Powerchip needs to make to build a sustainable competitive advantage.
