FIRMENICH: A PASSION FOR SMELL AND TASTE SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of FIRMENICH: A PASSION FOR SMELL AND TASTE
GENEVA, SWITZERLAND. At the end-of-year company presentation in December 2010; Patrick Firmenich (fourth generation); CEO of Firmenich International; was pleased to review another successful year. The 115-year-old; Geneva-based flavor and fragrances company had posted record sales; regained its growth leadership position after the worst recession in recent history and received unique industry accolades by winning two of the most prestigious perfumery awards. These confirmed Firmenich's exceptional creativity and sustainable commercial success. It was also a moment of reflection for Marie-Christine Jaeger-Firmenich (third generation); who was going into her ninth year as the "Firmenich Family Steward." When she took over the role; she had expected to step into a well-oiled family governance machine. But things did not quite go as planned. Family members rapidly came to her with multiple requests and new ideas on how to change the rules and decision-making processes in the family's governance system. Her main goal was to preserve the family unity over time while modernizing and updating its governance to face up to the new industrial challenges the family business would encounter in the future. By the summer of 2011; another threat was looming. With the sovereign debt crisis; the Swiss franc took on a renewed status as a refuge currency and skyrocketed in value against the dollar and the euro. While the group was operationally very global; it still had a strong manufacturing base in Switzerland and a strong Swiss franc exposure. How would this affect its future competitiveness? What could be done to control the future impact of foreign exchange fluctuations? Learning objectives: Managing growth; family business governance; technological leadership; competitive strategies.
Swot Analysis of "FIRMENICH: A PASSION FOR SMELL AND TASTE" written by Benoit Leleux, Anne Catrin Glemser includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Firmenich Family facing as an external strategic factors. Some of the topics covered in FIRMENICH: A PASSION FOR SMELL AND TASTE case study are - Strategic Management Strategies, Innovation, Leadership, Technology and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the FIRMENICH: A PASSION FOR SMELL AND TASTE casestudy better are - – there is backlash against globalization, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies,
wage bills are increasing, geopolitical disruptions, etc
Introduction to SWOT Analysis of FIRMENICH: A PASSION FOR SMELL AND TASTE
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in FIRMENICH: A PASSION FOR SMELL AND TASTE case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Firmenich Family, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Firmenich Family 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 FIRMENICH: A PASSION FOR SMELL AND TASTE can be done for the following purposes –
1. Strategic planning using facts provided in FIRMENICH: A PASSION FOR SMELL AND TASTE case study
2. Improving business portfolio management of Firmenich Family
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Firmenich Family
Strengths FIRMENICH: A PASSION FOR SMELL AND TASTE | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Firmenich Family in FIRMENICH: A PASSION FOR SMELL AND TASTE Harvard Business Review case study are -
High switching costs
– The high switching costs that Firmenich Family 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.
Diverse revenue streams
– Firmenich Family is present in almost all the verticals within the industry. This has provided firm in FIRMENICH: A PASSION FOR SMELL AND TASTE 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.
Organizational Resilience of Firmenich Family
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Firmenich Family does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Firmenich Family is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Firmenich Family in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Firmenich Family has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Firmenich Family 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
- Firmenich Family 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 Firmenich Family is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in FIRMENICH: A PASSION FOR SMELL AND TASTE Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Firmenich Family has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Firmenich Family to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Firmenich Family digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Firmenich Family 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.
Innovation driven organization
– Firmenich Family is one of the most innovative firm in sector. Manager in FIRMENICH: A PASSION FOR SMELL AND TASTE Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Firmenich Family 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 FIRMENICH: A PASSION FOR SMELL AND TASTE 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 Leadership & Managing People industry
– FIRMENICH: A PASSION FOR SMELL AND TASTE firm has clearly differentiated products in the market place. This has enabled Firmenich Family to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Firmenich Family to invest into research and development (R&D) and innovation.
Weaknesses FIRMENICH: A PASSION FOR SMELL AND TASTE | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of FIRMENICH: A PASSION FOR SMELL AND TASTE are -
No frontier risks strategy
– After analyzing the HBR case study FIRMENICH: A PASSION FOR SMELL AND TASTE, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Products dominated business model
– Even though Firmenich Family 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 - FIRMENICH: A PASSION FOR SMELL AND TASTE should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study FIRMENICH: A PASSION FOR SMELL AND TASTE 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 Firmenich Family 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the FIRMENICH: A PASSION FOR SMELL AND TASTE 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 Firmenich Family has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study FIRMENICH: A PASSION FOR SMELL AND TASTE, in the dynamic environment Firmenich Family has struggled to respond to the nimble upstart competition. Firmenich Family has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Firmenich Family supply chain. Even after few cautionary changes mentioned in the HBR case study - FIRMENICH: A PASSION FOR SMELL AND TASTE, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Firmenich Family vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study FIRMENICH: A PASSION FOR SMELL AND TASTE, it seems that the employees of Firmenich Family 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, Firmenich Family 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. Firmenich Family 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.
Slow to strategic competitive environment developments
– As FIRMENICH: A PASSION FOR SMELL AND TASTE HBR case study mentions - Firmenich Family 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 Firmenich Family products
– To increase the profitability and margins on the products, Firmenich Family needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Firmenich Family 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.
Opportunities FIRMENICH: A PASSION FOR SMELL AND TASTE | 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 FIRMENICH: A PASSION FOR SMELL AND TASTE are -
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. Firmenich Family can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Firmenich Family 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Firmenich Family 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, FIRMENICH: A PASSION FOR SMELL AND TASTE, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Firmenich Family can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Firmenich Family 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Firmenich Family in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Firmenich Family can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Firmenich Family 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 Firmenich Family to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Firmenich Family 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. Firmenich Family 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Firmenich Family can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Firmenich Family to increase its market reach. Firmenich Family 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.
Using analytics as competitive advantage
– Firmenich Family 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 FIRMENICH: A PASSION FOR SMELL AND TASTE - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Firmenich Family to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Firmenich Family can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats FIRMENICH: A PASSION FOR SMELL AND TASTE External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study FIRMENICH: A PASSION FOR SMELL AND TASTE are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Firmenich Family with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Firmenich Family in the Leadership & Managing People industry. The Leadership & Managing People 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 Firmenich Family business can come under increasing regulations regarding data privacy, data security, etc.
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. Firmenich Family needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Firmenich Family 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 FIRMENICH: A PASSION FOR SMELL AND TASTE .
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.
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. Firmenich Family 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.
Environmental challenges
– Firmenich Family 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. Firmenich Family can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Increasing wage structure of Firmenich Family
– 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 Firmenich Family.
Regulatory challenges
– Firmenich Family 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 Leadership & Managing People industry regulations.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Firmenich Family can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Firmenich Family 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 FIRMENICH: A PASSION FOR SMELL AND TASTE 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 FIRMENICH: A PASSION FOR SMELL AND TASTE 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 FIRMENICH: A PASSION FOR SMELL AND TASTE 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 FIRMENICH: A PASSION FOR SMELL AND TASTE 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 FIRMENICH: A PASSION FOR SMELL AND TASTE 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 Firmenich Family needs to make to build a sustainable competitive advantage.
