Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy
After fifty-five years in the semiconductor industry, Morris Chang, founder and Chairman of Taiwan Semiconductor Manufacturing Company (TSMC), was seeing a change. After four decades of regular double-digit growth the industry was still growing-but now at a much slower pace. In 2004, TSMC entered the China market, the world's second largest for semiconductors, by building a fabrication plant in Shanghai. Was China the market opportunity which TSMC could bet on for expansion, or should its strategy be to focus on new product development and innovation?
Authors :: Michael Shih-ta Chen, William C. Kirby, Keith Wong
Swot Analysis of "Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy" written by Michael Shih-ta Chen, William C. Kirby, Keith Wong includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tsmc Semiconductor facing as an external strategic factors. Some of the topics covered in Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy case study are - Strategic Management Strategies, Global strategy, Globalization, Policy and Global Business.
Some of the macro environment factors that can be used to understand the Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy casestudy better are - – talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing energy prices, supply chains are disrupted by pandemic , increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings,
digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, etc
Introduction to SWOT Analysis of Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tsmc Semiconductor, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tsmc Semiconductor 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 Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy case study
2. Improving business portfolio management of Tsmc Semiconductor
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Tsmc Semiconductor
Strengths Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tsmc Semiconductor in Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy Harvard Business Review case study are -
Successful track record of launching new products
– Tsmc Semiconductor has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tsmc Semiconductor 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.
Innovation driven organization
– Tsmc Semiconductor is one of the most innovative firm in sector. Manager in Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Tsmc Semiconductor
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tsmc Semiconductor does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Tsmc Semiconductor has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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.
Highly skilled collaborators
– Tsmc Semiconductor 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 Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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.
Low bargaining power of suppliers
– Suppliers of Tsmc Semiconductor in the sector have low bargaining power. Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tsmc Semiconductor to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Tsmc Semiconductor 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 Michael Shih-ta Chen, William C. Kirby, Keith Wong 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Tsmc Semiconductor digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tsmc Semiconductor 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 recruit top talent
– Tsmc Semiconductor is one of the leading recruiters in the industry. Managers in the Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Tsmc Semiconductor 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 Tsmc Semiconductor is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Global Business field
– Tsmc Semiconductor 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 Tsmc Semiconductor in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy are -
High operating costs
– Compare to the competitors, firm in the HBR case study Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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 Tsmc Semiconductor 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Tsmc Semiconductor, firm in the HBR case study Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Tsmc Semiconductor 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. Tsmc Semiconductor 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tsmc Semiconductor is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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 Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy can leverage the sales team experience to cultivate customer relationships as Tsmc Semiconductor is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy, it seems that the employees of Tsmc Semiconductor 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy, in the dynamic environment Tsmc Semiconductor has struggled to respond to the nimble upstart competition. Tsmc Semiconductor has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael Shih-ta Chen, William C. Kirby, Keith Wong suggests that, Tsmc Semiconductor 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy, is just above the industry average. Tsmc Semiconductor 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.
No frontier risks strategy
– After analyzing the HBR case study Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy, it seems that company is thinking about the frontier risks that can impact Global Business strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Interest costs
– Compare to the competition, Tsmc Semiconductor 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.
Opportunities Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy | 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 Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tsmc Semiconductor can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Tsmc Semiconductor in the consumer business. Now Tsmc Semiconductor can target international markets with far fewer capital restrictions requirements than the existing system.
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 Tsmc Semiconductor 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.
Learning at scale
– Online learning technologies has now opened space for Tsmc Semiconductor to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Tsmc Semiconductor can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tsmc Semiconductor 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.
Developing new processes and practices
– Tsmc Semiconductor can develop new processes and procedures in Global Business 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. Tsmc Semiconductor can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Tsmc Semiconductor can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Tsmc Semiconductor 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. Tsmc Semiconductor 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.
Using analytics as competitive advantage
– Tsmc Semiconductor 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 Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tsmc Semiconductor to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Tsmc Semiconductor has opened avenues for new revenue streams for the organization in the industry. This can help Tsmc Semiconductor to build a more holistic ecosystem as suggested in the Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy case study. Tsmc Semiconductor can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tsmc Semiconductor in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Threats Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy, Tsmc Semiconductor may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
High dependence on third party suppliers
– Tsmc Semiconductor 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.
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 Tsmc Semiconductor business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Tsmc Semiconductor.
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.
Environmental challenges
– Tsmc Semiconductor needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Tsmc Semiconductor can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Tsmc Semiconductor can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Tsmc Semiconductor has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Tsmc Semiconductor needs to keep up with the evolution of technology in the Global Business 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tsmc Semiconductor in the Global Business industry. The Global Business 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 Tsmc Semiconductor
– 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 Tsmc Semiconductor.
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 Tsmc Semiconductor in the Global Business sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Tsmc Semiconductor is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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 Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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 Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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 Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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 Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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 Tsmc Semiconductor needs to make to build a sustainable competitive advantage.
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