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 - – banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, cloud computing is disrupting traditional business models,
increasing household debt because of falling income levels, increasing energy prices, 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.
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.
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.
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 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.
Cross disciplinary teams
– Horizontal connected teams at the Tsmc Semiconductor are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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.
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.
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.
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.
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.
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 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.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tsmc Semiconductor can use these opportunities to build new business models that can help the communities that Tsmc Semiconductor operates in. Secondly it can use opportunities from government spending in Global Business sector.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tsmc Semiconductor can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
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 .
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 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 .
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.
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.
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.
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.
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.
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.
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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