Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
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 - – cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, there is backlash against globalization, increasing commodity prices, increasing transportation and logistics costs,
supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, 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 -
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.
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.
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.
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.
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.
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.
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.
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.
Sustainable margins compare to other players in Global Business industry
– Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy firm has clearly differentiated products in the market place. This has enabled Tsmc Semiconductor to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Tsmc Semiconductor to invest into research and development (R&D) and innovation.
High brand equity
– Tsmc Semiconductor has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tsmc Semiconductor to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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 -
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.
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.
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.
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.
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.
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.
Need for greater diversity
– Tsmc 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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 Tsmc Semiconductor has relatively successful track record of launching new products.
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.
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 Tsmc Semiconductor supply chain. Even after few cautionary changes mentioned in the HBR case study - Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tsmc Semiconductor vulnerable to further global disruptions in South East Asia.
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 -
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tsmc Semiconductor is facing challenges because of the dominance of functional experts in the organization. Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy 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.
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.
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.
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.
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.
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.
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.
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.
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.
Leveraging digital technologies
– Tsmc 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.
Better consumer reach
– The expansion of the 5G network will help Tsmc Semiconductor to increase its market reach. Tsmc Semiconductor will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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 -
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.
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.
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.
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 .
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.
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.
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.
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.
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.
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.
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 .
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.
Feel free to connect with us if you need business research.
You can download Excel Template of Case Study Solution & Analysis of Taiwan Semiconductor Manufacturing Company Limited: A Global Company's China Strategy