Novozymes: Establishing the Cellulosic Ethanol Value Chain SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Novozymes: Establishing the Cellulosic Ethanol Value Chain
To maximize their effectiveness, color cases should be printed in color.As the world's largest producer of industrial enzymes, Novozymes had invested heavily for many years to bio-engineer enzymes that could break down cellulose into fermentable sugar. In 2010, the company had launched what it thought would become a breakthrough product for the conversion of crop residues from corn into fermentable sugars for the production of motor fuels. But the problem was that the company only controlled one piece of the value chain. To succeed in this nascent sector, should the company insert itself into an existing ecosystem? If so, how much coordination effort would be required to integrate the many pieces, including equipment and yeast suppliers? Or should Novozymes build its own ecosystem? And if so, how much control should it retain at each level of the value chain? The case seeks to expose students to the challenges of putting together value chain participation strategies in a setting where they can also learn about industrial biotechnology, including some cutting edge methods in directed evolution.
Swot Analysis of "Novozymes: Establishing the Cellulosic Ethanol Value Chain" written by Willy Shih, Sen Chai includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Novozymes Fermentable facing as an external strategic factors. Some of the topics covered in Novozymes: Establishing the Cellulosic Ethanol Value Chain case study are - Strategic Management Strategies, Demographics, Design, Disruptive innovation, Entrepreneurship, Financial management, Government, Growth strategy, Intellectual property, Internet, Manufacturing, Marketing, Mergers & acquisitions, Product development, Strategy execution, Supply chain, Sustainability, Workspaces and Technology & Operations.
Some of the macro environment factors that can be used to understand the Novozymes: Establishing the Cellulosic Ethanol Value Chain casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, cloud computing is disrupting traditional business models, wage bills are increasing, supply chains are disrupted by pandemic , technology disruption, increasing commodity prices,
challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Novozymes: Establishing the Cellulosic Ethanol Value Chain
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Novozymes: Establishing the Cellulosic Ethanol Value Chain case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Novozymes Fermentable, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Novozymes Fermentable 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: Establishing the Cellulosic Ethanol Value Chain can be done for the following purposes –
1. Strategic planning using facts provided in Novozymes: Establishing the Cellulosic Ethanol Value Chain case study
2. Improving business portfolio management of Novozymes Fermentable
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Novozymes Fermentable
Strengths Novozymes: Establishing the Cellulosic Ethanol Value Chain | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Novozymes Fermentable in Novozymes: Establishing the Cellulosic Ethanol Value Chain Harvard Business Review case study are -
Innovation driven organization
– Novozymes Fermentable is one of the most innovative firm in sector. Manager in Novozymes: Establishing the Cellulosic Ethanol Value Chain 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 Novozymes Fermentable 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.
Successful track record of launching new products
– Novozymes Fermentable has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Novozymes Fermentable 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.
Low bargaining power of suppliers
– Suppliers of Novozymes Fermentable in the sector have low bargaining power. Novozymes: Establishing the Cellulosic Ethanol Value Chain has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Novozymes Fermentable to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Novozymes: Establishing the Cellulosic Ethanol Value Chain 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.
Analytics focus
– Novozymes Fermentable 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 Willy Shih, Sen Chai 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.
Diverse revenue streams
– Novozymes Fermentable is present in almost all the verticals within the industry. This has provided firm in Novozymes: Establishing the Cellulosic Ethanol Value Chain 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.
Superior customer experience
– The customer experience strategy of Novozymes Fermentable in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Novozymes Fermentable has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Novozymes: Establishing the Cellulosic Ethanol Value Chain 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 lead change in Technology & Operations field
– Novozymes Fermentable 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 Fermentable in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Novozymes Fermentable 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: Establishing the Cellulosic Ethanol Value Chain HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Technology & Operations industry
– Novozymes: Establishing the Cellulosic Ethanol Value Chain firm has clearly differentiated products in the market place. This has enabled Novozymes Fermentable to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Novozymes Fermentable to invest into research and development (R&D) and innovation.
Weaknesses Novozymes: Establishing the Cellulosic Ethanol Value Chain | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Novozymes: Establishing the Cellulosic Ethanol Value Chain are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Novozymes: Establishing the Cellulosic Ethanol Value Chain, it seems that the employees of Novozymes Fermentable 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.
Products dominated business model
– Even though Novozymes Fermentable has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Novozymes: Establishing the Cellulosic Ethanol Value Chain should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Novozymes: Establishing the Cellulosic Ethanol Value Chain 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 Fermentable has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Novozymes Fermentable 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Novozymes: Establishing the Cellulosic Ethanol Value Chain, in the dynamic environment Novozymes Fermentable has struggled to respond to the nimble upstart competition. Novozymes Fermentable 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, Novozymes Fermentable 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.
Skills based hiring
– The stress on hiring functional specialists at Novozymes Fermentable 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.
Increasing silos among functional specialists
– The organizational structure of Novozymes Fermentable is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Novozymes Fermentable needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Novozymes Fermentable to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Novozymes Fermentable 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.
No frontier risks strategy
– After analyzing the HBR case study Novozymes: Establishing the Cellulosic Ethanol Value Chain, it seems that company is thinking about the frontier risks that can impact Technology & Operations 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.
Low market penetration in new markets
– Outside its home market of Novozymes Fermentable, firm in the HBR case study Novozymes: Establishing the Cellulosic Ethanol Value Chain needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Novozymes: Establishing the Cellulosic Ethanol Value Chain | 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: Establishing the Cellulosic Ethanol Value Chain are -
Using analytics as competitive advantage
– Novozymes Fermentable 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 Novozymes: Establishing the Cellulosic Ethanol Value Chain - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Novozymes Fermentable 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, Novozymes Fermentable 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, Novozymes: Establishing the Cellulosic Ethanol Value Chain, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Novozymes Fermentable 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 Novozymes Fermentable 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Novozymes Fermentable 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 Fermentable 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.
Buying journey improvements
– Novozymes Fermentable can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Novozymes: Establishing the Cellulosic Ethanol Value Chain 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Novozymes Fermentable 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.
Developing new processes and practices
– Novozymes Fermentable can develop new processes and procedures in Technology & Operations 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.
Better consumer reach
– The expansion of the 5G network will help Novozymes Fermentable to increase its market reach. Novozymes Fermentable 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.
Learning at scale
– Online learning technologies has now opened space for Novozymes Fermentable 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.
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 Fermentable can use these opportunities to build new business models that can help the communities that Novozymes Fermentable operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
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 Fermentable in the consumer business. Now Novozymes Fermentable can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Novozymes Fermentable in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Threats Novozymes: Establishing the Cellulosic Ethanol Value Chain External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Novozymes: Establishing the Cellulosic Ethanol Value Chain are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Novozymes Fermentable with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Novozymes Fermentable.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Novozymes Fermentable can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Novozymes Fermentable has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Novozymes Fermentable needs to keep up with the evolution of technology in the Technology & Operations 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.
Regulatory challenges
– Novozymes Fermentable 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 Technology & Operations industry regulations.
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. Novozymes Fermentable 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.
Increasing wage structure of Novozymes Fermentable
– 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 Fermentable.
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.
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: Establishing the Cellulosic Ethanol Value Chain, Novozymes Fermentable may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
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 Fermentable needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Novozymes Fermentable in the Technology & Operations industry. The Technology & Operations 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.
Environmental challenges
– Novozymes Fermentable 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 Fermentable can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
High dependence on third party suppliers
– Novozymes Fermentable 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.
Weighted SWOT Analysis of Novozymes: Establishing the Cellulosic Ethanol Value Chain 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: Establishing the Cellulosic Ethanol Value Chain 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: Establishing the Cellulosic Ethanol Value Chain 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: Establishing the Cellulosic Ethanol Value Chain 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: Establishing the Cellulosic Ethanol Value Chain 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 Fermentable needs to make to build a sustainable competitive advantage.