Royal DSM: From Continuous Transformation to Organic Growth SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Royal DSM: From Continuous Transformation to Organic Growth
Royal DSM CEO Feike Sijbesma was pondering the challenges of shifting DSM's global organization from the constant transformations of the past 100 years to creating organic growth. When Sijbesma took the helm as CEO in 2007, he further pushed and completed the company's final moves away from commodity chemicals and toward more sustainable businesses whereby DSM could create value with differentiated offerings. Sijbesma emphasized innovation and moving into "sunrise" businesses that would fuel future growth by playing a positive role in the broader society. Sijbesma asked himself, did DSM's current portfolio in life sciences and materials sciences provide sufficient growth opportunities to sustain consistent and superior performance? Would DSM's 21,000 employees worldwide embrace the DSM Strategy 2018: "Driving profitable growth through science-based sustainable solutions," anchored via the Lead & Grow support and development program for key managers of the company? Should DSM continue making moves in mergers and acquisitions (M&A) to complement organic growth, or could its growth goals be achieved by focusing on organic growth for now, followed later by M&A activities again? What new markets should it look to in order to ensure sustainable growth? Sijbesma felt that after a decade of transformations (divestments and acquisitions), it would be healthy for the company to focus fully on organic growth for several years. During that period the company had already indicated it would divest three of its major holdings in joint venture (JV) companies, which would generate the financial capacity for M&A activities again in later years. In the meantime, Sijbesma wanted the company to prove it could grow organically as well.
Authors :: William W. George, Carin-Isabel Knoop, Amram Migdal
Swot Analysis of "Royal DSM: From Continuous Transformation to Organic Growth" written by William W. George, Carin-Isabel Knoop, Amram Migdal includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sijbesma Dsm facing as an external strategic factors. Some of the topics covered in Royal DSM: From Continuous Transformation to Organic Growth case study are - Strategic Management Strategies, Business history, Design, Ethics, Financial management, Financial markets, Globalization, Growth strategy, Health, Leadership development, Leadership transitions, Organizational structure, Reorganization, Social responsibility and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Royal DSM: From Continuous Transformation to Organic Growth casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, there is backlash against globalization, increasing energy prices, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google,
customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Royal DSM: From Continuous Transformation to Organic Growth
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Royal DSM: From Continuous Transformation to Organic Growth case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sijbesma Dsm, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sijbesma Dsm 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 Royal DSM: From Continuous Transformation to Organic Growth can be done for the following purposes –
1. Strategic planning using facts provided in Royal DSM: From Continuous Transformation to Organic Growth case study
2. Improving business portfolio management of Sijbesma Dsm
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sijbesma Dsm
Strengths Royal DSM: From Continuous Transformation to Organic Growth | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sijbesma Dsm in Royal DSM: From Continuous Transformation to Organic Growth Harvard Business Review case study are -
Learning organization
- Sijbesma Dsm 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 Sijbesma Dsm is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Royal DSM: From Continuous Transformation to Organic Growth Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Sijbesma Dsm
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sijbesma Dsm does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Sijbesma Dsm digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sijbesma Dsm 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.
Low bargaining power of suppliers
– Suppliers of Sijbesma Dsm in the sector have low bargaining power. Royal DSM: From Continuous Transformation to Organic Growth has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sijbesma Dsm to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Strategy & Execution industry
– Royal DSM: From Continuous Transformation to Organic Growth firm has clearly differentiated products in the market place. This has enabled Sijbesma Dsm to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Sijbesma Dsm to invest into research and development (R&D) and innovation.
Innovation driven organization
– Sijbesma Dsm is one of the most innovative firm in sector. Manager in Royal DSM: From Continuous Transformation to Organic Growth 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
– Sijbesma Dsm is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Sijbesma Dsm is one of the leading recruiters in the industry. Managers in the Royal DSM: From Continuous Transformation to Organic Growth are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Sijbesma Dsm has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Royal DSM: From Continuous Transformation to Organic Growth - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Sijbesma Dsm has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sijbesma Dsm 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.
Ability to lead change in Strategy & Execution field
– Sijbesma Dsm is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Sijbesma Dsm in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Sijbesma Dsm in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Royal DSM: From Continuous Transformation to Organic Growth | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Royal DSM: From Continuous Transformation to Organic Growth are -
Slow decision making process
– As mentioned earlier in the report, Sijbesma Dsm 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. Sijbesma Dsm 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Royal DSM: From Continuous Transformation to Organic Growth, it seems that the employees of Sijbesma Dsm don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study Royal DSM: From Continuous Transformation to Organic Growth that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Royal DSM: From Continuous Transformation to Organic Growth can leverage the sales team experience to cultivate customer relationships as Sijbesma Dsm is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Royal DSM: From Continuous Transformation to Organic Growth has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Sijbesma Dsm 's lucrative customers.
Products dominated business model
– Even though Sijbesma Dsm 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 - Royal DSM: From Continuous Transformation to Organic Growth should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Sijbesma Dsm, firm in the HBR case study Royal DSM: From Continuous Transformation to Organic Growth needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Sijbesma Dsm products
– To increase the profitability and margins on the products, Sijbesma Dsm needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners
– Because of the regulatory requirements, William W. George, Carin-Isabel Knoop, Amram Migdal suggests that, Sijbesma Dsm is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Royal DSM: From Continuous Transformation to Organic Growth, in the dynamic environment Sijbesma Dsm has struggled to respond to the nimble upstart competition. Sijbesma Dsm has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Sijbesma Dsm 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Sijbesma Dsm 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.
Opportunities Royal DSM: From Continuous Transformation to Organic Growth | 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 Royal DSM: From Continuous Transformation to Organic Growth are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sijbesma Dsm can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Sijbesma Dsm can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sijbesma Dsm can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Royal DSM: From Continuous Transformation to Organic Growth, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Sijbesma Dsm 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 Strategy & Execution segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sijbesma Dsm is facing challenges because of the dominance of functional experts in the organization. Royal DSM: From Continuous Transformation to Organic Growth case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help Sijbesma Dsm to increase its market reach. Sijbesma Dsm 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sijbesma Dsm 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. Sijbesma Dsm 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.
Manufacturing automation
– Sijbesma Dsm can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sijbesma Dsm 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 Sijbesma Dsm to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sijbesma Dsm can use these opportunities to build new business models that can help the communities that Sijbesma Dsm operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Creating value in data economy
– The success of analytics program of Sijbesma Dsm has opened avenues for new revenue streams for the organization in the industry. This can help Sijbesma Dsm to build a more holistic ecosystem as suggested in the Royal DSM: From Continuous Transformation to Organic Growth case study. Sijbesma Dsm can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Sijbesma Dsm 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 Sijbesma Dsm 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.
Threats Royal DSM: From Continuous Transformation to Organic Growth External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Royal DSM: From Continuous Transformation to Organic Growth are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sijbesma Dsm with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Sijbesma Dsm 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.
Increasing wage structure of Sijbesma Dsm
– 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 Sijbesma Dsm.
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.
Regulatory challenges
– Sijbesma Dsm 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 Strategy & Execution industry regulations.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sijbesma Dsm can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Sijbesma Dsm 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. Sijbesma Dsm can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
High dependence on third party suppliers
– Sijbesma Dsm 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.
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 Sijbesma Dsm in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sijbesma Dsm 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 Royal DSM: From Continuous Transformation to Organic Growth .
Shortening product life cycle
– it is one of the major threat that Sijbesma Dsm is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Sijbesma Dsm 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.
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 Sijbesma Dsm business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Royal DSM: From Continuous Transformation to Organic Growth 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 Royal DSM: From Continuous Transformation to Organic Growth 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 Royal DSM: From Continuous Transformation to Organic Growth 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 Royal DSM: From Continuous Transformation to Organic Growth 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 Royal DSM: From Continuous Transformation to Organic Growth 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 Sijbesma Dsm needs to make to build a sustainable competitive advantage.
