Union Semiconductor Equipment (36200) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Union Semiconductor Equipment (South Korea)

Based on various researches at Oak Spring University , Union Semiconductor Equipment is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, technology disruption, increasing commodity prices, etc

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Introduction to SWOT Analysis of Union Semiconductor Equipment

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Union Semiconductor Equipment can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Union Semiconductor Equipment, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Union Semiconductor Equipment 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Union Semiconductor Equipment can be done for the following purposes –
1. Strategic planning of Union Semiconductor Equipment
2. Improving business portfolio management of Union Semiconductor Equipment
3. Assessing feasibility of the new initiative in South Korea
4. Making a Semiconductors sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Union Semiconductor Equipment

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Strengths of Union Semiconductor Equipment | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Union Semiconductor Equipment are -

Successful track record of launching new products

– Union Semiconductor Equipment has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Union Semiconductor Equipment 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.

Analytics focus

– Union Semiconductor Equipment 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 Semiconductors industry. The technology infrastructure of South Korea is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.

Training and development

– Union Semiconductor Equipment has one of the best training and development program in Technology industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

Highly skilled collaborators

– Union Semiconductor Equipment has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Semiconductors industry. Secondly the value chain collaborators of Union Semiconductor Equipment have helped the firm to develop new products and bring them quickly to the marketplace.

Ability to lead change in Semiconductors

– Union Semiconductor Equipment is one of the leading players in the Semiconductors industry in South Korea. Over the years it has not only transformed the business landscape in the Semiconductors industry in South Korea but also across the existing markets. The ability to lead change has enabled Union Semiconductor Equipment in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

High switching costs

– The high switching costs that Union Semiconductor Equipment has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.

Organizational Resilience of Union Semiconductor Equipment

– The covid-19 pandemic has put organizational resilience at the centre of everthing Union Semiconductor Equipment does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Digital Transformation in Semiconductors industry

- digital transformation varies from industry to industry. For Union Semiconductor Equipment digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Union Semiconductor Equipment 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.

Operational resilience

– The operational resilience strategy of Union Semiconductor Equipment comprises – understanding the underlying the factors in the Semiconductors 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.

Ability to recruit top talent

– Union Semiconductor Equipment is one of the leading players in the Semiconductors industry in South Korea. It is in a position to attract the best talent available in South Korea. The firm has a robust talent identification program that helps in identifying the brightest.

Sustainable margins compare to other players in Semiconductors industry

– Union Semiconductor Equipment has clearly differentiated products in the market place. This has enabled Union Semiconductor Equipment to fetch slight price premium compare to the competitors in the Semiconductors industry. The sustainable margins have also helped Union Semiconductor Equipment to invest into research and development (R&D) and innovation.

Effective Research and Development (R&D)

– Union Semiconductor Equipment has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Union Semiconductor Equipment staying ahead in the Semiconductors industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

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Weaknesses of Union Semiconductor Equipment | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Union Semiconductor Equipment are -

Need for greater diversity

– Union Semiconductor Equipment 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.

Aligning sales with marketing

– From the outside it seems that Union Semiconductor Equipment needs to have more collaboration between its sales team and marketing team. Sales professionals in the Semiconductors industry have deep experience in developing customer relationships. Marketing department at Union Semiconductor Equipment can leverage the sales team experience to cultivate customer relationships as Union Semiconductor Equipment is planning to shift buying processes online.

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 Union Semiconductor Equipment supply chain. Even after few cautionary changes, Union Semiconductor Equipment is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Union Semiconductor Equipment vulnerable to further global disruptions in South East Asia.

No frontier risks strategy

– From the 10K / annual statement of Union Semiconductor Equipment, it seems that company is thinking out the frontier risks that can impact Semiconductors industry. 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.

High operating costs

– Compare to the competitors, Union Semiconductor Equipment has high operating costs in the Semiconductors industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Union Semiconductor Equipment lucrative customers.

Products dominated business model

– Even though Union Semiconductor Equipment has some of the most successful models in the Semiconductors industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Union Semiconductor Equipment should strive to include more intangible value offerings along with its core products and services.

Interest costs

– Compare to the competition, Union Semiconductor Equipment 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.

High dependence on Union Semiconductor Equipment ‘s star products

– The top 2 products and services of Union Semiconductor Equipment still accounts for major business revenue. This dependence on star products in Semiconductors industry has resulted into insufficient focus on developing new products, even though Union Semiconductor Equipment has relatively successful track record of launching new products.

High cash cycle compare to competitors

Union Semiconductor Equipment has a high cash cycle compare to other players in the Semiconductors industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Capital Spending Reduction

– Even during the low interest decade, Union Semiconductor Equipment 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 Semiconductors industry using digital technology.

Compensation and incentives

– The revenue per employee of Union Semiconductor Equipment is just above the Semiconductors industry average. It 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.

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Union Semiconductor Equipment Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Union Semiconductor Equipment are -

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Union Semiconductor Equipment can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Use of Bitcoin and other crypto currencies for transactions in Semiconductors industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Union Semiconductor Equipment in the Semiconductors industry. Now Union Semiconductor Equipment can target international markets with far fewer capital restrictions requirements than the existing system.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Union Semiconductor Equipment in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Semiconductors industry, and it will provide faster access to the consumers.

Developing new processes and practices

– Union Semiconductor Equipment can develop new processes and procedures in Semiconductors 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.

Using analytics as competitive advantage

– Union Semiconductor Equipment has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Semiconductors sector. This continuous investment in analytics has enabled Union Semiconductor Equipment to build a competitive advantage using analytics. The analytics driven competitive advantage can help Union Semiconductor Equipment to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Union Semiconductor Equipment can use these opportunities to build new business models that can help the communities that Union Semiconductor Equipment operates in. Secondly it can use opportunities from government spending in Semiconductors sector.

Creating value in data economy

– The success of analytics program of Union Semiconductor Equipment has opened avenues for new revenue streams for the organization in Semiconductors industry. This can help Union Semiconductor Equipment to build a more holistic ecosystem for Union Semiconductor Equipment products in the Semiconductors industry by providing – 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, Union Semiconductor Equipment is facing challenges because of the dominance of functional experts in the organization. Union Semiconductor Equipment can utilize new technology in the field of Semiconductors industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Manufacturing automation

– Union Semiconductor Equipment can use the latest technology developments to improve its manufacturing and designing process in Semiconductors sector. 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 Union Semiconductor Equipment 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 Semiconductors industry.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Union Semiconductor Equipment 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 Union Semiconductor Equipment to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Union Semiconductor Equipment 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 Union Semiconductor Equipment to hire the very best people irrespective of their geographical location.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Semiconductors industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Union Semiconductor Equipment 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. Union Semiconductor Equipment 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.

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Threats Union Semiconductor Equipment External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Union Semiconductor Equipment 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 Union Semiconductor Equipment business can come under increasing regulations regarding data privacy, data security, etc.

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 Union Semiconductor Equipment in the Semiconductors sector and impact the bottomline of the organization.

Stagnating economy with rate increase

– Union Semiconductor Equipment 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 Semiconductors industry.

Regulatory challenges

– Union Semiconductor Equipment 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 Semiconductors industry regulations.

High dependence on third party suppliers

– Union Semiconductor Equipment 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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Union Semiconductor Equipment in Semiconductors industry. The Semiconductors 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.

Consumer confidence and its impact on Union Semiconductor Equipment 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 Semiconductors industry and other sectors.

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. Union Semiconductor Equipment 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.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Union Semiconductor Equipment 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 Union Semiconductor Equipment prominent markets.

Increasing wage structure of Union Semiconductor Equipment

– 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 Union Semiconductor Equipment.

Shortening product life cycle

– it is one of the major threat that Union Semiconductor Equipment is facing in Semiconductors sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Union Semiconductor Equipment may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Semiconductors sector.

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 Union Semiconductor Equipment.

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Weighted SWOT Analysis of Union Semiconductor Equipment Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Union Semiconductor Equipment 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 Union Semiconductor Equipment 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 Union Semiconductor Equipment 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 Union Semiconductor Equipment 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 Union Semiconductor Equipment needs to make to build a sustainable competitive advantage.

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