Silicon Valley of the East: Creating Taiwan's Semiconductor Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Silicon Valley of the East: Creating Taiwan's Semiconductor Industry
A thriving semiconductor industry has been created in Taiwan over the course of the past two decades by the use of advanced organizational techniques of technology leverage and accelerated technology diffusion. By the mid-1990s, the industry had reached a level of output that placed it behind only the United States, Japan, and Korea. Almost all of Taiwan's semiconductor industry is located in the Hsinchu Science-Based Industry Park, which was created in emulation of California's Stanford Research Park, but with more direct government involvement. This article explores the extent to which this emergent Silicon Valley in Taiwan shares the "industrial ecology" that has powered innovation in California and examines the extent to which the Taiwan industry suffers from weaknesses attributed to its rapid creation through technology leverage.
Swot Analysis of "Silicon Valley of the East: Creating Taiwan's Semiconductor Industry" written by John A. Mathews includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Taiwan Semiconductor facing as an external strategic factors. Some of the topics covered in Silicon Valley of the East: Creating Taiwan's Semiconductor Industry case study are - Strategic Management Strategies, Globalization, Research & development and Global Business.
Some of the macro environment factors that can be used to understand the Silicon Valley of the East: Creating Taiwan's Semiconductor Industry casestudy better are - – digital marketing is dominated by two big players Facebook and Google, increasing energy prices, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, geopolitical disruptions, supply chains are disrupted by pandemic ,
wage bills are increasing, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Silicon Valley of the East: Creating Taiwan's Semiconductor Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Silicon Valley of the East: Creating 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 Taiwan Semiconductor, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Taiwan 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 Silicon Valley of the East: Creating Taiwan's Semiconductor Industry can be done for the following purposes –
1. Strategic planning using facts provided in Silicon Valley of the East: Creating Taiwan's Semiconductor Industry case study
2. Improving business portfolio management of Taiwan 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 Taiwan Semiconductor
Strengths Silicon Valley of the East: Creating Taiwan's Semiconductor Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Taiwan Semiconductor in Silicon Valley of the East: Creating Taiwan's Semiconductor Industry Harvard Business Review case study are -
Diverse revenue streams
– Taiwan Semiconductor is present in almost all the verticals within the industry. This has provided firm in Silicon Valley of the East: Creating 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.
High brand equity
– Taiwan Semiconductor has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Taiwan Semiconductor to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Taiwan 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 Taiwan Semiconductor is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Silicon Valley of the East: Creating Taiwan's Semiconductor Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Taiwan Semiconductor in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Silicon Valley of the East: Creating 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.
Effective Research and Development (R&D)
– Taiwan 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 Silicon Valley of the East: Creating Taiwan's Semiconductor Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Global Business field
– Taiwan 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 Taiwan Semiconductor in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Taiwan 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 John A. Mathews 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.
Low bargaining power of suppliers
– Suppliers of Taiwan Semiconductor in the sector have low bargaining power. Silicon Valley of the East: Creating Taiwan's Semiconductor Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Taiwan Semiconductor to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Taiwan 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.
Organizational Resilience of Taiwan Semiconductor
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Taiwan Semiconductor does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Taiwan Semiconductor is one of the leading recruiters in the industry. Managers in the Silicon Valley of the East: Creating Taiwan's Semiconductor Industry 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 Silicon Valley of the East: Creating Taiwan's Semiconductor Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Silicon Valley of the East: Creating Taiwan's Semiconductor Industry are -
Workers concerns about automation
– As automation is fast increasing in the segment, Taiwan 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.
Lack of clear differentiation of Taiwan Semiconductor products
– To increase the profitability and margins on the products, Taiwan Semiconductor needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Taiwan Semiconductor 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.
Products dominated business model
– Even though Taiwan 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 - Silicon Valley of the East: Creating Taiwan's Semiconductor Industry should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Silicon Valley of the East: Creating 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 Taiwan Semiconductor 's lucrative customers.
Slow to strategic competitive environment developments
– As Silicon Valley of the East: Creating Taiwan's Semiconductor Industry HBR case study mentions - Taiwan 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Silicon Valley of the East: Creating Taiwan's Semiconductor Industry, in the dynamic environment Taiwan Semiconductor has struggled to respond to the nimble upstart competition. Taiwan Semiconductor has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Taiwan Semiconductor is dominated by functional specialists. It is not different from other players in the Global Business segment. Taiwan Semiconductor needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Taiwan Semiconductor to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Silicon Valley of the East: Creating Taiwan's Semiconductor Industry 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 Taiwan Semiconductor has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Taiwan Semiconductor 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 cash cycle compare to competitors
Taiwan 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.
Opportunities Silicon Valley of the East: Creating 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 Silicon Valley of the East: Creating Taiwan's Semiconductor Industry are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Taiwan Semiconductor can use these opportunities to build new business models that can help the communities that Taiwan Semiconductor operates in. Secondly it can use opportunities from government spending in Global Business sector.
Buying journey improvements
– Taiwan Semiconductor can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Silicon Valley of the East: Creating Taiwan's Semiconductor Industry 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
– Taiwan 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.
Loyalty marketing
– Taiwan 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.
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. Taiwan Semiconductor can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Taiwan 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 Silicon Valley of the East: Creating Taiwan's Semiconductor Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Taiwan Semiconductor to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Taiwan 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.
Leveraging digital technologies
– Taiwan Semiconductor 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Taiwan 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.
Creating value in data economy
– The success of analytics program of Taiwan Semiconductor has opened avenues for new revenue streams for the organization in the industry. This can help Taiwan Semiconductor to build a more holistic ecosystem as suggested in the Silicon Valley of the East: Creating Taiwan's Semiconductor Industry case study. Taiwan Semiconductor can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Taiwan Semiconductor is facing challenges because of the dominance of functional experts in the organization. Silicon Valley of the East: Creating 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.
Building a culture of innovation
– managers at Taiwan 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Taiwan 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, Silicon Valley of the East: Creating Taiwan's Semiconductor Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Silicon Valley of the East: Creating 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 Silicon Valley of the East: Creating Taiwan's Semiconductor Industry are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Taiwan Semiconductor with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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
– Taiwan 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 Taiwan 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.
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.
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. Taiwan Semiconductor 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. Taiwan Semiconductor needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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 Taiwan 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 Taiwan Semiconductor is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Taiwan 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. Taiwan Semiconductor can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Technology acceleration in Forth Industrial Revolution
– Taiwan Semiconductor has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Taiwan 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.
Stagnating economy with rate increase
– Taiwan 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.
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. Taiwan Semiconductor can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Silicon Valley of the East: Creating 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 Silicon Valley of the East: Creating 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 Silicon Valley of the East: Creating 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 Silicon Valley of the East: Creating 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 Silicon Valley of the East: Creating 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 Taiwan Semiconductor needs to make to build a sustainable competitive advantage.
