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Organization Analysis of

Cypress Semiconductors
MANAGING ORGANIZATION: GROUP 2
ANKIT SINGH RAJPUT
B ABHISHEK IYER
JAYESH BHANSALI
SANDEEP N
SWATI GARG

Organization analysis of Cypress Semiconductors


Project Report Skeleton Structure
Introduction:
(External Research / About Cypress)
Company? (Geography as well)
What is the industry?
Who are the customers?
Who are the competitors?
Project Objective
Analysis of Structural Dimensions
Formalization - High
Specialization - Medium
Hierarchy of Authority - Low (Flat organization)
Centralization - High
Organizational Chart Hybrid structure
Analysis of Contingency Factors
Size Evolution/Growth Coordination (Red tape crisis)
Environment Complex - unstable
Culture Symbols, stories and myths (Rodgers stories)
Technology Impact of IT (Memo CSF)
Goals and Strategy
Recent developments
Merger with Spansion Qualitative Analysis
Conclusions
Questionnaire
References

Introduction
Cypress Semiconductor Corporation (Cypress) is an US based semiconductor firm engaged in providing a
range of interface solutions, mixed-signal and programmable solutions to global markets. Headquartered
in San Jose, California and interface solutions, the company operates in the US, Europe, and Asia Pacific.
Cypress employs a sum of 7000 employees across the globe.
Primarily, the company is involved in designing, production, sales and marketing of mixed signal and
programmable solutions which includes PSoC (programmable system-on-chip) devices, general-purpose
programmable clocks, memories and universal serial bus (USB) controllers. Additionally, Cypress offers
wired and wireless connectivity technologies employed to enhance connectivity and performance in
multimedia handsets.
Cypress business operations includes four divisions:
1) Memory products
Design and manufacture of range of products such as nonvolatile RAMs (nv RAMs), SRAM (Static
random-access memory) products, F-RAMs (Ferroelectric random-access memory), programmable
clocks, first-in, first-out memories (FIFO) which are predominantly employed for data storage and
retrieval facility in wireless infrastructure and handsets, computation, automotive systems, to name a few.
2) Data communications
Focus on Wireless, USB peripheral controllers and USB controllers. It also provides module
solutions such as Ovation and Optical Navigation Sensors (ONS) and track pads. Wireless USB is
integrated in presenter tools, consumer electronics (MP3 Players), keyboards, mouse, wireless headsets,
gamepads and remote controllers. USB controller is used in gamepads, cameras, printers, bar code
scanners, point of sale devices, industrial equipment, handheld devices etc.
Track pads include cursor control and other solutions; ranging from feature-rich multi-touch solutions to
two-finger gesture and low power. Remote controls, e-book readers, tablet PCs, wired and wireless mouse,
smart phones, and other industrial applications are ONS applications.

3) Programmable systems
Design and development of module based and end product based solutions. The former is
applicable for track pads and automotive products. While the latter is applicable for Cap sense devices like
sliders or buttons and PSoC products like household appliances, laptops and MP3 players.
4) Emerging technologies
Handles businesses outside the company's core competencies which includes majority owned
subsidies, development stage activities and certain corporate expenses. For instance, the subsidiaries like
companys AgigA Tech provides non-volatile memory solutions such as AGIGARAM.
The following companies are the major competitors of Cypress Semiconductor Corporation

Integrated Device Technology Inc.

Microchip technologies
Samsung Electronics

Xilinx

Linear Technology Corporation

Silicon Laboratories Inc.

Altera Corporation

Texas Instruments Incorporated

Lattice Semiconductor Corporation

Analog Devices, Inc.

Semiconductor Market Trend and Analysis


The growth and developmental trend of semiconductor industry has been influenced by several factors.
Also, the industry growth cycle replicated the growth cycle of global economic cycles. The drastic decline
of the industry during internet bubble burst in 2001 and financial crisis of 2008-09 are notable
illustrations. The present CARG is estimated to be at $ 347.9 bn and a fluctuation is expected in the
upcoming years.

Project Objective
The objective of this report is to see the applications of the concepts studied in the Managing
Organization class in a real organization. The purpose is to analyze Cypress semiconductors from an
organization standpoint. We intend to analyze the structural dimensions and contingency factors of
Cypress in detail, understand how the organizational structure is coping with the changing industry and
provide our views. We further analyze the recent development Merger with Spansion and provide a
qualitative summary of the case.
Analyzing Structural Dimensions
We analyzed the structural dimensions (internal characteristics) of Cypress Semiconductors. Adherence
to Rules is a core value at Cypress, organization has been kept relatively flat for smooth vertical
information flow, set job descriptions are present for various roles, and decision making is highly
centralized, with TJ Rodgers approval on every major decision.
Formalization Very High
Formalization in Cypress is very high. A specification system is maintained, wherein documents (related
to?) are stored and are accessible to everyone. One of the cultural values is Follow the spec or change
it. Employees at each level are expected to follow the guidelines strictly, any deviation would lead to
conflict with the senior leadership and is not appreciated.
Design teams are expected to strictly follow the IP development process which consists of 5 phases, each
phase having specific requirements and needs to be approved by the review boards. Non-adherence to the
specifications leads to shut down of the project. The key advantage of the system is high quality product
that Cypress boasts of in the industry. But one of the disadvantages is the inefficiency that comes with the
system, decisions keep piling up at the review board level, and innovation is hampered. Further
employees end up satisfying the checklist and loses the bigger picture in the product development.
Apart from the core processes, there are set guidelines for every activity (University tie ups,
vendor/supplier selection etc.) across functions like finance, Marketing, Sales, Legal and HR.

Specialization Medium (Confirm with Maam)


The specialization at the firm level is highly extensive, employees are expected to perform tasks specific
to the department (product design, marketing, legal etc.). But within a department, the specialization is
medium, and employee can work on different tasks. Deviation from job description occurs at the
department level, an employee hired for designing of a product, can be asked to work on different other
technical aspects associated with the design cycle. This ensures in-depth knowledge of an employee about
the product design, enhances his/her technical abilities.
Hierarchy of Authority - Low (Flat organization)
Cypress has a relatively flat hierarchy with 6 levels in the hierarchy, CEO being the head, Entry level
Engineer at the bottommost level. Due to flat hierarchy, the span of control is high, atleast 8 employees
report to a manager.
Cypress follows 8x6 span-of-control policy that is a widely used best practice almost everywhere.
They learned from the McKinsey Consulting Group in 2009 that Cypresss organization was narrow, deep
and ineffective. They have worked over the last three years on a high-level project to drive down the
number of extra managers in the corporation from 284 to 45.
One of the employees we spoke to explained us the thinking of TJ Rodgers, the CEO, behind the 8x6
policy - We still have formal organization charts, but the rule (which is really more of a guideline, since
there are exceptions) forces flatter charts with less managerial oversight and more employee freedom.
Centralization High
The decision making is highly centralized, with the top most hierarchy (senior leadership) deciding the
key strategies/ new products. Organization goals are driven down from the upper management and
followed by all employees. Every major decision needs the approval of TJ Rodgers, the CEO.
Innovation from employees are appreciated and rewarded, but employees have to present proper pitch for
their ideas, and get the proposals approved by the senior leadership. The proposal approval process is
lengthy, and time consuming, one of the major hurdle for innovation.
Organizational Structure Hybrid structure
Based on our understanding of organizations, we concluded that Cypress follows a hybrid organizational
structure to be more responsive to changing environment. The hybrid organization structure adopted by
Cypress is illustrated in the chart below. Three major product divisions MPD, DCD, PSD cater to
different markets, and have strategies and management styles specific to the needs of the product. DCD
follows a prospector strategy, whereas MPD is similar to defender (will be discussed in detail in the
strategy analysis).
Illustrations

Hybrid structure (TJ Rodgers and 1 level down)


Divisional Structure (MPD, PSD, DCD)

Analysis of Contingency factors


Environment
The semiconductor market that Cypress works in is complex-unstable environment, i.e., high uncertainty
Complexity: There are many heterogeneous elements in the industry, ~15 competitors in the market.
Stability: The semiconductor industry is a highly unstable industry, the rate of change is very high due to
technological advancements.
Size
The company employees 7,000 people across 5 geographies and operates as a Multinational Organization
based out of San Jose, US. The current lifecycle stage of Cypress is Coordination, stock options and
company-wide profit sharing are used to motivate employees. Based on interaction with one of the
employees, we realize that the company is facing the Red-tape crisis, where procedures take precedence
over problem solving
Culture
Cultural values and beliefs are a strong guiding force at Cypress. The cultural values are drilled down in
the employee starting from the day of joining. New Hires have to attend an orientation session wherein
they are told about the stories related to T J Rodgers, the Founder & CEO. A popular story that has now
become a legend is how the CEO refused a high profile job offer from Intel, the industry leader, because
his name was spelt wrong in the offer letter.
A visible cultural artifact are the Core Values which are displayed on every floor of every office across all
geographical locations of Cypress.
Following are the core values:
1. Cypress is about winning

2.
3.
4.
5.

Cypress thrives on being the best in the industry, they only enter those markets where they have
the potential to become the market leaders.
Cypress people are only the best
The company considers the employees as their key asset, they are expected to be smart workers.
Politics within the organization is not tolerated.
We do what is right for Cypress
Cypress believes on maintaining high quality standards (zero defects), hence imbibes a culture
that promotes following the guidelines strictly.
We make our numbers
Goals in Cypress are set quantitatively, numbers define the processes and the outcomes, for eg.
20% profit, 100% on time delivery, 0% defects.
We make the worlds best semiconductor solutions
Cypress believes in providing end-to-end solutions to the customers and expects employees to
work towards maximizing customer satisfaction.

There was a 1 month global shutdown in June 2014 where Rodgers closed all the projects because a
particular specification was violated, demonstrating zero tolerance towards specification deviation.
Solidarity vs. Sociability Matrix: Mercenary
Technology
T J Rodgers adopted an IT Solution called the CSF Critical Success Factors as control system to
manage his organization. The CSF system ensures employees fill in SMART (Specific Measurable
Attainable Relevant and Time-bound) goals. The goals define what the employees do in a particular
quarter, the CSF system lets the management view the goals, track their progress and help employees who
appear to fall behind in their goals.
Knowledge management is codified MEMO System
A vast repository is maintained where in every employee from the lowest to the uppermost management
records the work that they have done. This fosters transparency within the company, and a smooth
knowledge transition when employees leave the firm.
Goals and Strategy
Mission Statement: We will transform Cypress from a traditional broad-line semiconductor company to
the leading supplier of programmable solutions in systems everywhere.
The goals of Cypress are very clear, rather being a product development company, they have started
focusing on providing end-to-end solutions to the customer (software and hardware). Technology being
the competitive advantage of the company, Cypress has acquired smaller technology companies and have
leveraged some these technologies to speed up their existing product development activities. A recent
merger with Spansion will be discussed in detail as part of this project work.
We also analyzed Cypress strategies using Porters framework and Miles Snows typology.
Cypress focusses on providing low cost solutions to a narrow customer base. They are also trying to
differentiate themselves by providing customizable solutions (not provided by competitors in the
industry).
Different divisions in Cypress have different strategies to accomplish the desired goals.

MPD (Memory Products Division): Cypress has 45% share in this market, its a declining market because
of rapid changes in the emerging technologies. So MPD follows a defender strategy where the target is
maximizing efficiency by placing strong cost-cutting measures.
DCD (Data Communication Division): Cypress aims to be a leader in this market where they have
ventured recently. DCD has prospector strategy where innovation is encouraged, and emphasis is on
building a strong research capability.