Case Study Description of Royal DSM: Fighting Hidden Hunger
In 2007 Royal DSM, a leading life science and materials company, entered a partnership with the World Food Programme (WFP) to combat hidden hunger around the world by providing micronutrient solutions. The case investigates the unexpectedly large impact the partnership had on DSM and on the global nutrition discussion, and discusses the benefits and challenges of scaling up the Nutrition Improvement Program-a key component of DSM's human nutrition and health division-beyond the WFP partnership, despite the need to build significant additional capabilities and its somewhat lower margins.
Authors :: Rebecca Henderson, Noah Fisher, Mary Shelman
Swot Analysis of "Royal DSM: Fighting Hidden Hunger" written by Rebecca Henderson, Noah Fisher, Mary Shelman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Dsm Nutrition facing as an external strategic factors. Some of the topics covered in Royal DSM: Fighting Hidden Hunger case study are - Strategic Management Strategies, Globalization, Government, Health, Joint ventures and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Royal DSM: Fighting Hidden Hunger casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, central banks are concerned over increasing inflation, increasing commodity prices,
increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Royal DSM: Fighting Hidden Hunger
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Royal DSM: Fighting Hidden Hunger case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dsm Nutrition, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dsm Nutrition 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 Royal DSM: Fighting Hidden Hunger can be done for the following purposes –
1. Strategic planning using facts provided in Royal DSM: Fighting Hidden Hunger case study
2. Improving business portfolio management of Dsm Nutrition
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 Dsm Nutrition
Strengths Royal DSM: Fighting Hidden Hunger | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dsm Nutrition in Royal DSM: Fighting Hidden Hunger Harvard Business Review case study are -
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Dsm Nutrition digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Dsm Nutrition 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 switching costs
– The high switching costs that Dsm Nutrition 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
– Dsm Nutrition is present in almost all the verticals within the industry. This has provided firm in Royal DSM: Fighting Hidden Hunger 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.
Ability to lead change in Leadership & Managing People field
– Dsm Nutrition 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 Dsm Nutrition in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Dsm Nutrition has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Dsm Nutrition to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Dsm Nutrition 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 Dsm Nutrition is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Royal DSM: Fighting Hidden Hunger Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Dsm Nutrition is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Dsm Nutrition
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Dsm Nutrition does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the Royal DSM: Fighting Hidden Hunger 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.
Highly skilled collaborators
– Dsm Nutrition 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 Royal DSM: Fighting Hidden Hunger HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Dsm Nutrition has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dsm Nutrition 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
– Dsm Nutrition is one of the leading recruiters in the industry. Managers in the Royal DSM: Fighting Hidden Hunger are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Royal DSM: Fighting Hidden Hunger | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Royal DSM: Fighting Hidden Hunger are -
Increasing silos among functional specialists
– The organizational structure of Dsm Nutrition is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Dsm Nutrition needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Dsm Nutrition to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Dsm Nutrition 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 - Royal DSM: Fighting Hidden Hunger should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Dsm Nutrition 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. Dsm Nutrition 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 Royal DSM: Fighting Hidden Hunger HBR case study mentions - Dsm Nutrition 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Royal DSM: Fighting Hidden Hunger, in the dynamic environment Dsm Nutrition has struggled to respond to the nimble upstart competition. Dsm Nutrition has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Royal DSM: Fighting Hidden Hunger, is just above the industry average. Dsm Nutrition needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Aligning sales with marketing
– It come across in the case study Royal DSM: Fighting Hidden Hunger 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 Royal DSM: Fighting Hidden Hunger can leverage the sales team experience to cultivate customer relationships as Dsm Nutrition is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Dsm Nutrition, firm in the HBR case study Royal DSM: Fighting Hidden Hunger needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Royal DSM: Fighting Hidden Hunger, 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Royal DSM: Fighting Hidden Hunger, it seems that the employees of Dsm Nutrition 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Rebecca Henderson, Noah Fisher, Mary Shelman suggests that, Dsm Nutrition 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.
Opportunities Royal DSM: Fighting Hidden Hunger | 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 Royal DSM: Fighting Hidden Hunger are -
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. Dsm Nutrition 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. Dsm Nutrition 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Dsm Nutrition can use these opportunities to build new business models that can help the communities that Dsm Nutrition operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Manufacturing automation
– Dsm Nutrition 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.
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 Dsm Nutrition 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.
Developing new processes and practices
– Dsm Nutrition 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Dsm Nutrition 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.
Creating value in data economy
– The success of analytics program of Dsm Nutrition has opened avenues for new revenue streams for the organization in the industry. This can help Dsm Nutrition to build a more holistic ecosystem as suggested in the Royal DSM: Fighting Hidden Hunger case study. Dsm Nutrition can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Dsm Nutrition can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Dsm Nutrition can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Royal DSM: Fighting Hidden Hunger 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.
Building a culture of innovation
– managers at Dsm Nutrition 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 Leadership & Managing People segment.
Learning at scale
– Online learning technologies has now opened space for Dsm Nutrition 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Dsm Nutrition 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 Dsm Nutrition to hire the very best people irrespective of their geographical location.
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. Dsm Nutrition can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Royal DSM: Fighting Hidden Hunger External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Royal DSM: Fighting Hidden Hunger are -
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 Dsm Nutrition business can come under increasing regulations regarding data privacy, data security, etc.
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. Dsm Nutrition 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Dsm Nutrition with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Dsm Nutrition 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.
Consumer confidence and its impact on Dsm Nutrition demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Dsm Nutrition in the Leadership & Managing People sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Dsm Nutrition has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Dsm Nutrition 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.
High dependence on third party suppliers
– Dsm Nutrition 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.
Environmental challenges
– Dsm Nutrition 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. Dsm Nutrition can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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.
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 Dsm Nutrition.
Stagnating economy with rate increase
– Dsm Nutrition 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Dsm Nutrition 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 Royal DSM: Fighting Hidden Hunger .
Weighted SWOT Analysis of Royal DSM: Fighting Hidden Hunger 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 Royal DSM: Fighting Hidden Hunger 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 Royal DSM: Fighting Hidden Hunger 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 Royal DSM: Fighting Hidden Hunger 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 Royal DSM: Fighting Hidden Hunger 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 Dsm Nutrition needs to make to build a sustainable competitive advantage.