Case Study Description of Novozymes: Cracking the Emerging Markets Code
In 2011, the management of Novozymes, the industrial enzymes leader, reflected on the viability of their positioning in the fast growing, yet increasingly competitive Chinese market. Novozymes, a technological innovation pioneer, was prominent in China's premium enzyme markets, but felt pressure from local low-cost rivals in volume-driven, commoditized segments. How should Novozymes relate to local competitors? By competing on technological innovation only in high-margin verticals? Or through a separate subsidiary with a new low-cost business model for commoditized verticals?
Swot Analysis of "Novozymes: Cracking the Emerging Markets Code" written by Krishna G. Palepu, Karol Misztal includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Novozymes Commoditized facing as an external strategic factors. Some of the topics covered in Novozymes: Cracking the Emerging Markets Code case study are - Strategic Management Strategies, Emerging markets, Growth strategy, Marketing, Sales and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Novozymes: Cracking the Emerging Markets Code casestudy better are - – increasing government debt because of Covid-19 spendings, increasing commodity prices, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%,
increasing energy prices, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Novozymes: Cracking the Emerging Markets Code
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Novozymes: Cracking the Emerging Markets Code case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Novozymes Commoditized, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Novozymes Commoditized 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 Novozymes: Cracking the Emerging Markets Code can be done for the following purposes –
1. Strategic planning using facts provided in Novozymes: Cracking the Emerging Markets Code case study
2. Improving business portfolio management of Novozymes Commoditized
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 Novozymes Commoditized
Strengths Novozymes: Cracking the Emerging Markets Code | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Novozymes Commoditized in Novozymes: Cracking the Emerging Markets Code Harvard Business Review case study are -
Ability to lead change in Strategy & Execution field
– Novozymes Commoditized 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 Novozymes Commoditized in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Novozymes Commoditized 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.
Strong track record of project management
– Novozymes Commoditized is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Strategy & Execution industry
– Novozymes: Cracking the Emerging Markets Code firm has clearly differentiated products in the market place. This has enabled Novozymes Commoditized to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Novozymes Commoditized to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Novozymes Commoditized in the sector have low bargaining power. Novozymes: Cracking the Emerging Markets Code has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Novozymes Commoditized to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Novozymes Commoditized 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 Novozymes Commoditized is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Novozymes: Cracking the Emerging Markets Code Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Novozymes Commoditized 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 Novozymes: Cracking the Emerging Markets Code HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Novozymes Commoditized
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Novozymes Commoditized does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Novozymes Commoditized 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.
Diverse revenue streams
– Novozymes Commoditized is present in almost all the verticals within the industry. This has provided firm in Novozymes: Cracking the Emerging Markets Code case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Training and development
– Novozymes Commoditized has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Novozymes: Cracking the Emerging Markets Code 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Novozymes Commoditized digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Novozymes Commoditized 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.
Weaknesses Novozymes: Cracking the Emerging Markets Code | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Novozymes: Cracking the Emerging Markets Code are -
High bargaining power of channel partners
– Because of the regulatory requirements, Krishna G. Palepu, Karol Misztal suggests that, Novozymes Commoditized 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 star products
– The top 2 products and services of the firm as mentioned in the Novozymes: Cracking the Emerging Markets Code 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 Novozymes Commoditized has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Novozymes Commoditized is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Novozymes: Cracking the Emerging Markets Code can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Novozymes Commoditized 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.
Slow to strategic competitive environment developments
– As Novozymes: Cracking the Emerging Markets Code HBR case study mentions - Novozymes Commoditized takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Lack of clear differentiation of Novozymes Commoditized products
– To increase the profitability and margins on the products, Novozymes Commoditized needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Novozymes Commoditized is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Novozymes Commoditized needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Novozymes Commoditized 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 Novozymes: Cracking the Emerging Markets Code, in the dynamic environment Novozymes Commoditized has struggled to respond to the nimble upstart competition. Novozymes Commoditized has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study Novozymes: Cracking the Emerging Markets Code, 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.
Capital Spending Reduction
– Even during the low interest decade, Novozymes Commoditized 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Novozymes: Cracking the Emerging Markets Code, is just above the industry average. Novozymes Commoditized 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.
Opportunities Novozymes: Cracking the Emerging Markets Code | 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 Novozymes: Cracking the Emerging Markets Code are -
Manufacturing automation
– Novozymes Commoditized 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.
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 Novozymes Commoditized 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Novozymes Commoditized can use these opportunities to build new business models that can help the communities that Novozymes Commoditized operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Better consumer reach
– The expansion of the 5G network will help Novozymes Commoditized to increase its market reach. Novozymes Commoditized 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 Novozymes Commoditized can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Novozymes Commoditized is facing challenges because of the dominance of functional experts in the organization. Novozymes: Cracking the Emerging Markets Code 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.
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 Novozymes Commoditized in the consumer business. Now Novozymes Commoditized can target international markets with far fewer capital restrictions requirements than the existing system.
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. Novozymes Commoditized can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Novozymes Commoditized has opened avenues for new revenue streams for the organization in the industry. This can help Novozymes Commoditized to build a more holistic ecosystem as suggested in the Novozymes: Cracking the Emerging Markets Code case study. Novozymes Commoditized 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
– Novozymes Commoditized 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.
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. Novozymes Commoditized 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. Novozymes Commoditized 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 Novozymes Commoditized 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.
Building a culture of innovation
– managers at Novozymes Commoditized 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.
Threats Novozymes: Cracking the Emerging Markets Code External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Novozymes: Cracking the Emerging Markets Code are -
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Novozymes Commoditized 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 Novozymes Commoditized 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.
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 Novozymes Commoditized in the Strategy & Execution sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Novozymes Commoditized 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.
Increasing wage structure of Novozymes Commoditized
– 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 Novozymes Commoditized.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Novozymes Commoditized 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 Novozymes: Cracking the Emerging Markets Code .
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. Novozymes Commoditized needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Environmental challenges
– Novozymes Commoditized 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. Novozymes Commoditized can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Novozymes Commoditized 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 Novozymes Commoditized is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Novozymes Commoditized 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Novozymes: Cracking the Emerging Markets Code, Novozymes Commoditized 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 .
Weighted SWOT Analysis of Novozymes: Cracking the Emerging Markets Code 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 Novozymes: Cracking the Emerging Markets Code 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 Novozymes: Cracking the Emerging Markets Code 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 Novozymes: Cracking the Emerging Markets Code 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 Novozymes: Cracking the Emerging Markets Code 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 Novozymes Commoditized needs to make to build a sustainable competitive advantage.