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 increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, increasing commodity prices,
technology disruption, increasing energy prices, 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 -
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.
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.
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.
Analytics focus
– Firmenich Family 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 Benoit Leleux, Anne Catrin Glemser 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.
Cross disciplinary teams
– Horizontal connected teams at the Firmenich Family 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
– 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.
Ability to recruit top talent
– Firmenich Family is one of the leading recruiters in the industry. Managers in the FIRMENICH: A PASSION FOR SMELL AND TASTE are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Operational resilience
– The operational resilience strategy in the FIRMENICH: A PASSION FOR SMELL AND TASTE 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.
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.
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.
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.
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 -
Workers concerns about automation
– As automation is fast increasing in the segment, Firmenich Family 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.
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.
Increasing silos among functional specialists
– The organizational structure of Firmenich Family is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Firmenich Family needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Firmenich Family to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Firmenich Family has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High bargaining power of channel partners
– Because of the regulatory requirements, Benoit Leleux, Anne Catrin Glemser suggests that, Firmenich Family 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Firmenich Family is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study FIRMENICH: A PASSION FOR SMELL AND TASTE can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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.
Low market penetration in new markets
– Outside its home market of Firmenich Family, firm in the HBR case study FIRMENICH: A PASSION FOR SMELL AND TASTE needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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.
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 -
Developing new processes and practices
– Firmenich Family can develop new processes and procedures in Leadership & Managing People 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.
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 Firmenich Family 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.
Buying journey improvements
– Firmenich Family can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. FIRMENICH: A PASSION FOR SMELL AND TASTE 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.
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.
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.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Firmenich Family can use these opportunities to build new business models that can help the communities that Firmenich Family operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
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.
Creating value in data economy
– The success of analytics program of Firmenich Family has opened avenues for new revenue streams for the organization in the industry. This can help Firmenich Family to build a more holistic ecosystem as suggested in the FIRMENICH: A PASSION FOR SMELL AND TASTE case study. Firmenich Family can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
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 Firmenich Family in the consumer business. Now Firmenich Family can target international markets with far fewer capital restrictions requirements than the existing system.
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 -
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 .
Stagnating economy with rate increase
– Firmenich Family 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.
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 Firmenich Family.
Technology acceleration in Forth Industrial Revolution
– Firmenich Family has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Firmenich Family needs to keep up with the evolution of technology in the Leadership & Managing People 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 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.
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.
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.
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 Firmenich Family with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study FIRMENICH: A PASSION FOR SMELL AND TASTE, Firmenich Family may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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.
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.
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.
