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 government debt because of Covid-19 spendings, geopolitical disruptions, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, wage bills are increasing,
there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, 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 -
Strong track record of project management
– Novozymes Fermentable is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Novozymes Fermentable has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Novozymes Fermentable 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 Novozymes: Establishing the Cellulosic Ethanol Value Chain - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Learning organization
- Novozymes Fermentable 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 Fermentable is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Novozymes: Establishing the Cellulosic Ethanol Value Chain Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Novozymes Fermentable digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Novozymes Fermentable 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
– Novozymes Fermentable has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Novozymes Fermentable to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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.
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.
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 -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Novozymes Fermentable is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Novozymes: Establishing the Cellulosic Ethanol Value Chain can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Willy Shih, Sen Chai suggests that, Novozymes Fermentable 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.
Aligning sales with marketing
– It come across in the case study Novozymes: Establishing the Cellulosic Ethanol Value Chain 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 Novozymes: Establishing the Cellulosic Ethanol Value Chain can leverage the sales team experience to cultivate customer relationships as Novozymes Fermentable is planning to shift buying processes online.
Need for greater diversity
– Novozymes Fermentable has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High 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 Novozymes Fermentable supply chain. Even after few cautionary changes mentioned in the HBR case study - Novozymes: Establishing the Cellulosic Ethanol Value Chain, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Novozymes Fermentable vulnerable to further global disruptions in South East Asia.
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.
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.
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.
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.
Slow to strategic competitive environment developments
– As Novozymes: Establishing the Cellulosic Ethanol Value Chain HBR case study mentions - Novozymes Fermentable 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.
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 -
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.
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.
Loyalty marketing
– Novozymes Fermentable 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.
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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Novozymes Fermentable to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Novozymes Fermentable to hire the very best people irrespective of their geographical location.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Novozymes Fermentable can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Novozymes Fermentable 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 Technology & Operations segment.
Creating value in data economy
– The success of analytics program of Novozymes Fermentable has opened avenues for new revenue streams for the organization in the industry. This can help Novozymes Fermentable to build a more holistic ecosystem as suggested in the Novozymes: Establishing the Cellulosic Ethanol Value Chain case study. Novozymes Fermentable can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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.
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 -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
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.
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.
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.
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.
Shortening product life cycle
– it is one of the major threat that Novozymes Fermentable is facing in Technology & Operations 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.
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 .
Stagnating economy with rate increase
– Novozymes Fermentable 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
– 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.
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.
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 Novozymes Fermentable business can come under increasing regulations regarding data privacy, data security, etc.
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.
