Project and program management Dialog Semiconductor PLC
Dialog Semiconductor PLC is into the development of integrated circuits for different OEMs (Original Equipment Manufacturers) who involve in the production of mobile phones, laptops, other electronic and technology-based automotive products.
The paper analyzed the external and internal environment of the company. Moreover, the competitive position of the company was also assessed using Bowman’s strategy clock.
The external analysis helped in understanding that the company might face the challenge from the Macro factors, specifically from political changes. The political factor guides other major aspects such as economic and legal. Therefore, the company has to be prepared for likely policy changes. The company has been recommended to stay informed of any improvement in the policy improvements.
The internal analysis helped identify the strengths the company has which can be used to stay competitive in the market. There are some weaknesses which is required to be managed to ensure that the company stays ahead of the competition. The two major suggestions are that the company should constantly invest in research and development of products as it operates in the highly volatile technological market, and the second is the reduction of dependency on the OEMs.
Dialog Semiconductor PLC is based out of United Kingdom. The company manufactures semiconductor dependent systems. The current headquarter of the company is in Reading. The headquarter looks after the national and international sales, research and development, and activities related to marketing (Dialog Semiconductor, 2016). The company is in existence for more than three decades and thriving under the leadership of Richard Beyer (who is the chairman of the company) and Jalal Bagherli (who is the chief executive officer of the company).
The products manufactured by the company are Application Specific Standard Product and Application Specific Integrated Circuit. The integrated circuit-based products are utilized by various electronic products available in the market that look for circuitry solutions. The electronic products that utilize the product developed by Dialog Semiconductor are smartphones, computers, the Internet of Things, and various other smart home appliances.
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There are various key stakeholders of the company connected directly or indirectly with the company. Mentioned below are some of these key stakeholders:
Government: The presence of the company in the United Kingdom allows the people living in the country to get appreciable employability, thus supporting one of the goals of the company which is maintaining and improving the employment status of the country. Moreover, the dedication of the company towards the environment is another support aspect to the government (Elkington, 1994).
Employees: The employees working for the organization depend on it for their livelihood. The decisions made by the company impact the way employees act or react to their job and performance. Employees are the internal support mechanism for the existence of the company.
Customers: The customers of the company are those who are into the sale, purchase, and manufacturing of the products that require integrated circuits. Some of the leading manufacturers are in the field of portable device digital cordless, automotive and industrial equipment.
Suppliers: Their cost-effective raw materials are the reason Dialog Semiconductor PLC is surviving appreciably in the tough economic situations. The suppliers have an appreciable relationship with the company and due to the trust factor and the stream of business they get from the company, they prefer to continue it for long.
Shareholders: The shareholders are those individuals and entities who have invested in this company in the expectation of some return on their investment (Neesham and Freeman, 2016). The company has stood very well on its expectation in the toughest of the times such as the 2008 turmoil or the 2000 economic challenges (Franklin, 2016). It can be expected that the company will also be able to move ahead in the current challenge of Brexit and provide the appreciable returns to these shareholders in the days to come. The shareholders have provided have invested in the company which is reinvested in the appropriate functions and entities for the company growth.
Society: As the company cannot operate in isolation with the society, therefore there is interdependency between the company and the society at large. The company recently involved in few socially responsible activities which are expected to improve the environment along with the reputation of the company.
Importance of Stakeholders
The stakeholders that have been mentioned above are important for the sustainable existence of the company. These stakeholders provide the right opportunity for the company to grow and cater to the customers. The three stakeholders can be identified as the most important element for the growth of the company in the coming days, and they are the suppliers, employees, and customers. The suppliers provide cost-effective material for the development of the right kind of products (Nudurupati et al, 2015). The employees mold those raw materials to form products that are in demand in the market. The innovative effort and hard work of the employees have resulted in the production of the products that have kept the company operates in the highly dynamic technological market. The third and most important stakeholders are the customers who purchase the intermediary products developed by the company to use in their own products being manufactured for the final consumers. Therefore, collectively it can be stated that these stakeholders are the real reason why the company is thriving ahead.
Organization External and Internal Analysis
The external and internal analysis of Dialog Semiconductor PLC has been conducted in this section. The analysis is important as it will help in understanding the environment the company is currently operating and the opportunities that are available for the company to grow further (Grant, 2016). There are multiple factors internal to the organization or external to it that guides the management in taking decisions that can help the company operate effectively.
The analysis of the internal factors helps the company understand the strength of the resources it has and the decisions it can take based on the core competencies while improving upon the weaknesses. The external analysis allows the company to understand the factors that are external to the organization and impact the operation of the company in some way or the other. There are three kinds of analyses that have been conducted in this section for Dialog Semiconductor PLC, namely, PESTLE, Porter’s five forces, and SWOT.
There are six factors in the PESTLE Analysis, namely, political, economic, social, technological, legal, and environmental (Zalengera et al, 2014). These factors are external to the organization. It allows the company to get the macro view of the overall external environment in which it is operating. The political situation analysis helps in understanding the political situations of the country and indicates whether there is any likely change in the policies that may impact the operational capability of the company.
In a similar manner, the economic analysis helps understand the economic aspect of the country and indicates whether the economy is conducive enough for the functioning of the company. The growing economy generally brings an increased number of customers. The technological aspect guides about the technological recent in recent decades and expected future orientation of the same. The social aspect gives a glimpse of the changing orientation of the consumers regarding certain product categories which is helpful in making product-related decisions. The legal and environmental aspects help the company tread carefully in various countries in accordance with the existing rules and regulations.
The political situation of the country is not appreciable at the moment due to the move of the United Kingdom to exit the European Union. Though there can be less impact on the company as there is still two years for the completion of the exiting process of the United Kingdom from the European Union. However, the company has to well be prepared for any policy changes that can impact its operation. The country is expected to make efforts in maintaining the operational ability of the companies operating in the country as the exit from the European Union will likely increase the dependability of the government on them (Oliver, 2016). Therefore, considering this assumption, it can be stated that the company should expect more favorable policies in the days to come from the United Kingdom government.
The country came out of the recent 2008 economic challenge and is doing well. However, the current political changes might impact the economic aspects as well. The reason is that the external companies will stop seeing the United Kingdom as the launching ground for the markets in European Union which will deter their interest in this country’s economy (Cumming and Zahra, 2016). This might have a negative impact on the employment level and other economic aspects. Moreover, due to the fast movement of the smartphone market towards saturation might impact the sale. The cost of research and development has also increased which impacts the company’s ability to invest freely in further innovative activities.
The social aspect of the country in which the company is operating is open to technological advancements. They learn new technologies at appreciable rates and, therefore, provide enough opportunity for the company to come with innovative products. The use of the company’s products is mainly into the smartphones that are used by a large base of young, middle and old aged customers.
Technological advancements are rapid and one can witness regular growth in the technology every year. The fast changes in the technology market require companies to be more innovative to stay ahead of the market. The technology has reached every home and people are more online than offline. The technological advancements can be observed in the manufacturing processes and supply chain management. The advent of 3D technology can be a new area in which the company can venture with its integrated circuit capability. Supply chain management has become automated and transformed the retailing business.
The company can expect no legal challenges in operating in the company at present. The employment laws within the country require an appreciably work environment for the employees and pay scale which this company is already complying with. There are certain business laws such as merger rules, rules related to monopoly, regulations related to international trade, and consumer protection laws that need to be kept in consideration while operating in the country (Mason, 2014). Till now, the company has faced no major hurdle as per the compliance to these laws are concerned and expecting the exit of the United Kingdom from the European Union, more favorable laws can be expected to improve the economy.
There are three aspects that are under the scanner of the government concerning the environment, namely, managing the utilization of energy efficiently, proper disposal of the waste products, and involvement in the recycling activities. There are various energy audit and management rules and guidelines provided by the company that is expected to be followed by companies like Dialog. Moreover, the orientation of the company towards helping the environment that is conducive for living for everyone would be appreciated by the government.
Porter’s Five Forces
There are five factors in Porter’s five forces model, namely, supplier power, the threat of substitutes, buyer power, barriers to entry, and the degree of rivalry. These factors are used to understand the micro-environment in which the company is operating currently. The suppliers’ power identifies the level of control the suppliers of the company have which generally depends on the number of suppliers available for the same raw material (E Dobbs, 2014). The power of a buyer depends on the number of companies providing the same product and the number of buyers. The barriers of entry refer to the cost and effort required by a new company to venture into the business in which a particular company is operating. The availability of substitutes identifies whether there are products other than the category being discussed which can be used by the customer, for instance, a pen can be the substitute to pencil. The subsections ahead discuss the various forces that are in play for the Dialog Semiconductor in the market at the micro-level.
Bargaining Power of Suppliers
The bargaining power of suppliers is limited as there are limited numbers of companies that are into integrated circuit business. Moreover, there are few of them which provide a good price for the raw materials along with the right credit period. The company has rarely witnessed unnecessary negotiation as per the supplies are concerned. Therefore, it can be stated that the power of suppliers is low in the market and the company has the upper hand as per the supplies of raw materials are concerned.
Bargaining Power of Buyers
The bargaining power of buyers in the market is at the average level. The reason is that despite the presence of the limited number of integrated circuit manufacturers, all are efficiently active in the market and there is always the chance of client slipping to the competitors. Therefore, in such cases, it is imperative for the company to maintain good relations with the client and provide the right quality of products. Here it can be stated that the company does not have the upper hand in the market, nor it has lesser power. The right moves from the company can keep the business going appreciably well.
The threat of New Entrants
The threat of new entrants is low in this market as there are various challenges such as cost, resources, and production of the right quality of products. Above all, attracting client is the major challenge in this market. The integrated circuit is the critical component of any device, therefore rarely any company would prefer to procure products from new manufacturer's negligible credibility in the market and sales history.
Availability of Substitutes
There are no substitutes for this product and the clients are bound to use this product for their device at present till some innovation comes along in this field which is less evident. The advancements in technology in the coming days might substitute the integrated circuit with something else. However, at present, there are no such things that can pose a threat to the company in the nearest future.
The competitive rivalry is strong in the market. The three major competitors of Dialog Semiconductor LLC are Texas Instrumentation Incorporation, STMicroelectronics SA, and Infineon Technologies AG. These three companies are the major deal baggers and pose a challenge to the company. Therefore, it is important that the company considers the right strategy to attract the client. Moreover, maintaining a strong relationship is the key to continued business.
The SWOT Analysis combines internal and external aspects together. It allows the company to understand the strengths it has with which it can conquer the market. The strengths can include various aspects such as core competencies, and others. The weakness helps the company understand the aspects that are required to be improved to stay ahead of the competition. These strengths and weaknesses are internal to the organization. The other two factors are external to the company, namely, opportunities and threats. The study of opportunities allows the company to understand the areas in which it can venture to grow further (Sevkli et al, 2012). The threats allow the company to understand the elements that can pose a threat to the growth of the company in the days to come. The sub-sections ahead discuss the four areas of the company in brief.
The company currently produces high quality integrated circuits that are preferred by the clients of all levels. The reach of the company is wide as it is present in various countries around the world. This allows it to procure supplies at cost-effective rates from the right suppliers around the world. The global presence increases the chances of increased access to raw materials. The company has employed a skilled workforce. The company is into fabless manufacturing which is a stronger aspect. It has a good relationship with the suppliers, clients, and companies to whom it outsources some of its activities. The company is earning good revenue which is one of the important strengths as it attracts more shareholders to it who can pour in more funds which can be used for various investment purposes.
The company has made limited investments in research and development activities. It can be considered as the weakness because as the company is in the technology industry which is fast-paced and requires successive innovational activities; the lesser investment can be fatal in the longer run. The company depends on the Original Equipment Manufacturer for the sale of its intermediary product. Moreover, as there are few OEMs in the market, it reduces the client number of the company. The less number of client increases the chance of dependency which is can be challenging for growth in the days to come.
There are several opportunities for the company in the market which can be considered for its growth. The demand for consumer and automotive electronics is constantly rising. There are companies that are investing in the various types of technologically advanced vehicles and consumer electronic products. These investments can allow the company the opportunity to cater to the new set of clients. There are a few emerging markets that are adopting technological innovation and can become a land of opportunity for the company. Countries such as India and others are developing fast. These countries are also orienting towards the adoption of the technologies at a fast pace. This allows the company to cater to such a market and reap the benefit.
There are some threats that should be under consideration for the company. The industry, in which the company is operating, has cyclical nature. Cyclical nature refers to the demand pattern of semiconductors or integrated circuits. One can witness a constant rise and fall of an integrated circuit which most of the time becomes challenging for the company to handle. The reason behind the cyclical nature is the dependency of the circuit manufacturers on OEM which in turn depends on the demand from the market for their electronic products.
The demand for various types of electronic items can be seen rising and falling due to various reasons whose impact traces back to the integrated circuit business. The cost of raw materials is also on the rise which directly impacts the cost of production of the integrated circuit. In such cases, there are risks of losing the client to the competitors. Technology has always been vulnerable to various market and technical risks which impacts the complete dependency on one type of technology (Li et al, 2015). This requires companies such as Dialog Semiconductor PLC to keep changing. These elements, in turn, increase the cost of production. The cost of assembling the parts is also on a constant rise due to increasing human resources and other resources.
The chart below briefly presents the four areas discussed above. This allows a bird’s eye view on all the aspects together.
Strategy Clock Analysis
Strategy Clock Analysis was developed by Bowman. The diagram below shows the various aspects of the various strategic alternatives that are considered by the companies in providing value to the customers (Metzger, 2014). At present, due to the competition in the market, the value of money is an important aspect for Dialog Semiconductor PLC. There are eight competitive positions that can be considered by the company in such a case. The various positions have been discussed in the following subsections and suitable ones have been identified for the company.
Eight Potential Competitive Position
There are eight competitive positions and all have been identified here as the direction in which the company prefers to move. The directions are given below:
If the company prefers to move west, that is, the decision to reduce the price, then it can be beneficial for the company. The reason behind this is, the semiconductor business is highly competitive and OEMs can switch even at the slightest hint of price issues. Though this strategy is short-lived, considering the cyclical nature of the semiconductor business, this can be a suitable competitive direction to consider.
The north position is about differentiation where it is required that the company differentiates itself in the market from the competitors. This can be also an important strategy for Dialog Semiconductors PLC as it can help in staying visible to the clients in the crowd. The company has to provide extra value to the clients than what is provided by the competitors. Till now, the company has been able to provide unique service to the clients and kept itself well-differentiated which should be continued effectively in the days ahead.
The east direction suggests increasing the price of the products and taking the risk in market penetration and benefit on price skimming. However, as per the Dialog Semiconductor PLC is concerned, it can be stated that the business in which it is active, an increment of price might scare the clients to another competitor. The company is not in the position to take a risk by increasing the prices. Therefore, this competitive position cannot be suggested for the company.
The strategy of losing market share is not a suggestible approach for Dialog Semiconductor PLC. The reason is that it will pull the company away from the value for money aspect. The customers of the semiconductor business are the Original Equipment Manufacturers who prefer quality more than price. Therefore, playing this card might be fatal for Dialog. The company has to provide a quality product at any cost to stay in the market. The company is not using this strategy at present and is also not suggested.
Moving South West
This direction suggests decreasing the price along with lowering the value being provided to the customers. The semiconductor customers will welcome the low price of the product, but they will rarely consider the low-value product as their entire products depend on the quality semiconductors. Dialog Semiconductor PLC is not pursuing this competitive position at present and is not suggested to consider this in the near future.
Moving North East
The northeast position is Focused Differentiation. The focused differentiation refers to the consideration of quality over any other thing. In this case, the company has improved the quality of the product to a new level and has to forget about the price reduction based on the market condition. The company is not using this strategy. The company is not suggested to use this strategy as the prices have always been the key player in the semiconductor business along with the quality.
Moving South East
This position advocates about the Monopoly pricing which is not practiced by the Dialog Semiconductor PLC at present. The company cannot use this strategy as it is not in the position to dictate the price of the product due to the presence of various providers of a semiconductor.
Moving North West
This position or direction advocates about the Hybrid model consideration, which is the combination of low price and product differentiation. Dialog Semiconductor PLC is currently pursuing this strategy and is suggested to continue with the same. The reason behind the consideration of the hybrid model is that it will help the company provide integrated circuits at a lower cost to the clients. Moreover, it will ensure that the company stays on the radar of the clients. The differentiation strategy helps the company represent itself uniquely than its competitors.
Competitive Positions in Practice
The movement Dialog Semiconductor PLC is currently using is low price, hybrid, and differentiation. The company should continue with the current strategies. The cost leadership is important in the semiconductor business as it ensures that the client sticks with the company (Dialog, 2014). The consideration of differentiation thorough product quality is another aspect to keep growing in the cut-throat semiconductor business.
Strategic Method Analysis
If the period from the company’s inception, that is the year 1986 and the year 2005, then it can be stated that the company observed a limited amount of growth. However, after the change of management within the organization after that period, the company discarded the legacy products that were being dragged unnecessarily with no profitability and adopted fresh product segments.
The period from the year 2005 to 2011 witnessed appreciable growth and the company was able to acquire Sitel which helped the company grow its brand in the wireless connectivity business. The company observed the growth of almost 45 percent from the year 2007 to present which became possible due to the increase in the knowledge and focus on adopting new products to cater to the new client base (Dialog, 2014). Moreover, the acquisition of the two companies boosted the growth of the company further.
The company still prefers considering the opportunities to acquire the right business to spread its wing. The two areas that the company is looking to improve by acquiring other business are an extension to the products and markets, and improvement in the current capabilities of the business.
It can be stated that the company has grown organically and the improvement in the management and leadership has changed the face of the organization. The future seems bright for the company, particularly, if it keeps its focus on diversification, developing the right kind of customer base, and bringing in businesses that provide appreciable growth opportunities.
Overall Analysis and Recommendation
The analysis of the various dimensions of the company suggests that the company is moving ahead appreciably well amid various challenges being posed from different angles. The external environment of the company is challenging particularly due to the ongoing exit process of the United Kingdom from the United Kingdom. Moreover, the competitors in the market constantly push the company to come up with counter strategies, specifically in terms of price and product differentiation.
Considering the weaknesses of the company and current challenges, it can be suggested that the company should make the investment in the research and development on a continuous basis. The annual report of the company reflects the orientation towards innovation which should be brought into practice also. One can clearly witness the limited number of innovative products from the company.
The company should also venture into activities that reduce its dependency on the Original Equipment Manufacturers. The reason is that the dependency on the limited number of revenue sources can pose a threat to sustainability. The company can look for the opportunities to enter into the technological product businesses that allow it the opportunity to directly cater to the end consumers. The company should continue its focus on the low price and product differentiation strategy as it would be the most preferred mode for the existence in the semi-conductor business.
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