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 - – wage bills are increasing, challanges to central banks by blockchain based private currencies, geopolitical disruptions, technology disruption, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, increasing energy prices,
increasing household debt because of falling income levels, 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 -
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.
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.
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.
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.
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.
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.
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.
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.
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 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.
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 -
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.
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.
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.
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.
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.
Skills based hiring
– The stress on hiring functional specialists at Sijbesma Dsm has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sijbesma Dsm in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution 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 Sijbesma Dsm in the consumer business. Now Sijbesma Dsm can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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 .
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.
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.
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.
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.
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.
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.
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.
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.
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 .
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.
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.