Novo Nordisk: A Commitment to Sustainability SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Novo Nordisk: A Commitment to Sustainability
The case describes the early commitment of a European pharmaceutical company, Novo Nordisk, to integrated reporting. Novo Nordisk is one of the pioneers of integrated reporting and it emerged out of its commitment to a "Triple Bottom Line approach to managing the company." The case describes the company's "Blueprint for Change Programme" designed to facilitate stakeholder engagement and communicate how the company delivered value to business and society. The case also provides an investor perspective on the company's integrated reporting efforts and its plans for how to improve it in the future.
Swot Analysis of "Novo Nordisk: A Commitment to Sustainability" written by Robert G. Eccles, Michael P. Krzus includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nordisk Novo facing as an external strategic factors. Some of the topics covered in Novo Nordisk: A Commitment to Sustainability case study are - Strategic Management Strategies, Corporate governance, Strategic planning, Sustainability and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Novo Nordisk: A Commitment to Sustainability casestudy better are - – increasing household debt because of falling income levels, there is backlash against globalization, geopolitical disruptions, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, technology disruption,
cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Novo Nordisk: A Commitment to Sustainability
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Novo Nordisk: A Commitment to Sustainability case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nordisk Novo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nordisk Novo 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 Novo Nordisk: A Commitment to Sustainability can be done for the following purposes –
1. Strategic planning using facts provided in Novo Nordisk: A Commitment to Sustainability case study
2. Improving business portfolio management of Nordisk Novo
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Nordisk Novo
Strengths Novo Nordisk: A Commitment to Sustainability | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nordisk Novo in Novo Nordisk: A Commitment to Sustainability Harvard Business Review case study are -
Highly skilled collaborators
– Nordisk Novo 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 Novo Nordisk: A Commitment to Sustainability HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Nordisk Novo 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 Robert G. Eccles, Michael P. Krzus 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.
High switching costs
– The high switching costs that Nordisk Novo 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.
Cross disciplinary teams
– Horizontal connected teams at the Nordisk Novo 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.
Successful track record of launching new products
– Nordisk Novo has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nordisk Novo 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.
Low bargaining power of suppliers
– Suppliers of Nordisk Novo in the sector have low bargaining power. Novo Nordisk: A Commitment to Sustainability has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nordisk Novo to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Nordisk Novo 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 Nordisk Novo is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Novo Nordisk: A Commitment to Sustainability Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Nordisk Novo is one of the leading recruiters in the industry. Managers in the Novo Nordisk: A Commitment to Sustainability are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Nordisk Novo in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Nordisk Novo is one of the most innovative firm in sector. Manager in Novo Nordisk: A Commitment to Sustainability Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Nordisk Novo is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Finance & Accounting industry
– Novo Nordisk: A Commitment to Sustainability firm has clearly differentiated products in the market place. This has enabled Nordisk Novo to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Nordisk Novo to invest into research and development (R&D) and innovation.
Weaknesses Novo Nordisk: A Commitment to Sustainability | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Novo Nordisk: A Commitment to Sustainability are -
Low market penetration in new markets
– Outside its home market of Nordisk Novo, firm in the HBR case study Novo Nordisk: A Commitment to Sustainability needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Nordisk Novo 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 - Novo Nordisk: A Commitment to Sustainability should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Novo Nordisk: A Commitment to Sustainability 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 Nordisk Novo has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Novo Nordisk: A Commitment to Sustainability, it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Novo Nordisk: A Commitment to Sustainability, in the dynamic environment Nordisk Novo has struggled to respond to the nimble upstart competition. Nordisk Novo has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Nordisk Novo has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Nordisk Novo even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Nordisk Novo has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Workers concerns about automation
– As automation is fast increasing in the segment, Nordisk Novo needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Increasing silos among functional specialists
– The organizational structure of Nordisk Novo is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Nordisk Novo needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nordisk Novo to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Nordisk Novo 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 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 Nordisk Novo supply chain. Even after few cautionary changes mentioned in the HBR case study - Novo Nordisk: A Commitment to Sustainability, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nordisk Novo vulnerable to further global disruptions in South East Asia.
Opportunities Novo Nordisk: A Commitment to Sustainability | 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 Novo Nordisk: A Commitment to Sustainability are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nordisk Novo 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 Nordisk Novo to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Nordisk Novo 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 Novo Nordisk: A Commitment to Sustainability - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nordisk Novo to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Nordisk Novo 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Nordisk Novo to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Creating value in data economy
– The success of analytics program of Nordisk Novo has opened avenues for new revenue streams for the organization in the industry. This can help Nordisk Novo to build a more holistic ecosystem as suggested in the Novo Nordisk: A Commitment to Sustainability case study. Nordisk Novo can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Nordisk Novo 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. Nordisk Novo 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.
Better consumer reach
– The expansion of the 5G network will help Nordisk Novo to increase its market reach. Nordisk Novo will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Nordisk Novo can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Nordisk Novo 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Nordisk Novo can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Nordisk Novo in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Nordisk Novo in the consumer business. Now Nordisk Novo can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nordisk Novo can use these opportunities to build new business models that can help the communities that Nordisk Novo operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Threats Novo Nordisk: A Commitment to Sustainability External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Novo Nordisk: A Commitment to Sustainability are -
Shortening product life cycle
– it is one of the major threat that Nordisk Novo is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Nordisk Novo with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Nordisk Novo 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. Nordisk Novo can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Nordisk Novo.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Nordisk Novo can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Nordisk Novo 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.
Stagnating economy with rate increase
– Nordisk Novo 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Nordisk Novo in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology acceleration in Forth Industrial Revolution
– Nordisk Novo has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Nordisk Novo needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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. Nordisk Novo needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nordisk Novo 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 Novo Nordisk: A Commitment to Sustainability .
Consumer confidence and its impact on Nordisk Novo 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.
Weighted SWOT Analysis of Novo Nordisk: A Commitment to Sustainability 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 Novo Nordisk: A Commitment to Sustainability 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 Novo Nordisk: A Commitment to Sustainability 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 Novo Nordisk: A Commitment to Sustainability 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 Novo Nordisk: A Commitment to Sustainability 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 Nordisk Novo needs to make to build a sustainable competitive advantage.
