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, increasing government debt because of Covid-19 spendings, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion,
increasing commodity prices, increasing energy prices, 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 -
Operational resilience
– The operational resilience strategy in the Royal DSM: From Continuous Transformation to Organic Growth Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
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.
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.
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.
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.
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.
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.
High brand equity
– Sijbesma Dsm has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sijbesma Dsm to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
Analytics focus
– Sijbesma Dsm 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 William W. George, Carin-Isabel Knoop, Amram Migdal 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.
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.
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 -
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.
Increasing silos among functional specialists
– The organizational structure of Sijbesma Dsm is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Sijbesma Dsm needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sijbesma Dsm to focus more on services rather than just following the product oriented approach.
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.
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.
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.
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 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.
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.
Capital Spending Reduction
– Even during the low interest decade, Sijbesma Dsm has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
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.
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.
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 -
Learning at scale
– Online learning technologies has now opened space for Sijbesma Dsm 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sijbesma Dsm can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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.
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.
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.
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.
Developing new processes and practices
– Sijbesma Dsm can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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.
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.
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.
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.
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.
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 -
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.
Stagnating economy with rate increase
– Sijbesma Dsm 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.
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.
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.
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.
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.
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. Sijbesma Dsm needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Royal DSM: From Continuous Transformation to Organic Growth, Sijbesma Dsm may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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 Sijbesma Dsm.
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.
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.