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 - – cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing transportation and logistics costs, there is backlash against globalization, 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 -
Cross disciplinary teams
– Horizontal connected teams at the Sijbesma Dsm 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.
Highly skilled collaborators
– Sijbesma Dsm 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 Royal DSM: From Continuous Transformation to Organic Growth HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
High switching costs
– The high switching costs that Sijbesma Dsm 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.
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.
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.
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.
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.
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.
Training and development
– Sijbesma Dsm has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Royal DSM: From Continuous Transformation to Organic Growth Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
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 -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Royal DSM: From Continuous Transformation to Organic Growth, is just above the industry average. Sijbesma Dsm needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Sijbesma Dsm has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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.
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 Sijbesma Dsm supply chain. Even after few cautionary changes mentioned in the HBR case study - Royal DSM: From Continuous Transformation to Organic Growth, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sijbesma Dsm vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Royal DSM: From Continuous Transformation to Organic Growth, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Royal DSM: From Continuous Transformation to Organic Growth 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 Sijbesma Dsm has relatively successful track record of launching new products.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sijbesma Dsm is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Royal DSM: From Continuous Transformation to Organic Growth can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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 cash cycle compare to competitors
Sijbesma Dsm 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.
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 -
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Sijbesma Dsm can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
Using analytics as competitive advantage
– Sijbesma Dsm 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 Royal DSM: From Continuous Transformation to Organic Growth - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sijbesma Dsm to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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 Sijbesma Dsm in the consumer business. Now Sijbesma Dsm can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
Buying journey improvements
– Sijbesma Dsm can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Royal DSM: From Continuous Transformation to Organic Growth suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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.
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.
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 -
Technology acceleration in Forth Industrial Revolution
– Sijbesma Dsm has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Sijbesma Dsm needs to keep up with the evolution of technology in the Strategy & Execution 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.
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 .
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.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sijbesma Dsm in the Strategy & Execution industry. The Strategy & Execution 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.
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.
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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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.
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.
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.
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.
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.
