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 - – increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, wage bills are increasing, technology disruption, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy,
there is increasing trade war between United States & China, increasing transportation and logistics costs, 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 -
Strong track record of project management
– Tsmc Semiconductor is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
Diverse revenue streams
– Tsmc Semiconductor is present in almost all the verticals within the industry. This has provided firm in Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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.
Effective Research and Development (R&D)
– Tsmc Semiconductor has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Superior customer experience
– The customer experience strategy of Tsmc Semiconductor in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
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.
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.
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.
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 -
Lack of clear differentiation of Tsmc Semiconductor products
– To increase the profitability and margins on the products, Tsmc Semiconductor needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy HBR case study mentions - Tsmc Semiconductor 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 cash cycle compare to competitors
Tsmc Semiconductor has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Workers concerns about automation
– As automation is fast increasing in the segment, Tsmc Semiconductor 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.
Products dominated business model
– Even though Tsmc Semiconductor has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy should strive to include more intangible value offerings along with its core products and services.
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.
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.
Skills based hiring
– The stress on hiring functional specialists at Tsmc Semiconductor has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
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.
Increasing silos among functional specialists
– The organizational structure of Tsmc Semiconductor is dominated by functional specialists. It is not different from other players in the Global Business segment. Tsmc Semiconductor needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tsmc Semiconductor to focus more on services rather than just following the product oriented approach.
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.
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 -
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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tsmc Semiconductor 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 Tsmc Semiconductor to hire the very best people irrespective of their geographical location.
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.
Buying journey improvements
– Tsmc Semiconductor can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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.
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.
Building a culture of innovation
– managers at Tsmc Semiconductor 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 Global Business segment.
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.
Loyalty marketing
– Tsmc Semiconductor 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.
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.
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.
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.
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 -
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.
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 .
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.
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. Tsmc Semiconductor needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tsmc Semiconductor 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 Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy .
Consumer confidence and its impact on Tsmc Semiconductor 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.
Stagnating economy with rate increase
– Tsmc Semiconductor 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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tsmc Semiconductor 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 Tsmc Semiconductor in the Global Business sector and impact the bottomline of the organization.
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.
Regulatory challenges
– Tsmc Semiconductor 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 Global Business industry regulations.
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.
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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