Novozymes Strategic Analysis

Analysis

Executive Summary

 Novozymes, coined in the year 2000, is the world’s leading company in industrial biotechnology, specifically for industrial enzyme production. Its main products are industrial enzymes, microorganisms, and biopolymers or biopharmaceutical ingredients. With over 6000 patents, it is clear that Novozymes has taken the world by storm and the situation inbound to remain that way for the near future. Novozymes has established itself in over 138 countries, contributing to an estimated 46% market share in the global arena. Boasting over 700 products, coupled with the solutions and innovations that Novozymes has shown since its inception, not many would argue with the fact that Novozymes is destined for greater. One is only left to imagine the magnitude of milestones it can achieve both shortly as well as in the unforeseeable future. Despite the huge amount of strengths that Novozymes has in its locker, it has also faced challenges in equal measure, with opportunities as well as weaknesses that are inherent within its systems also existing. Apparently, Novozymes saves on cost, which is a major strength, although the fact that chemicals are substituted for more organic raw materials makes a very good impression too in the sight of many. Novozymes claims that using it reduces the environmental impact of their production since the need to use raw materials reduces. An investigation into the validity of this statement was important to see if that is part of the reasons their customers prefer their products over other products, and which forms the purpose of this study. Detailed financial, both internal and external environmental analysis, political, legal,social, and technological analyses are also part of the paper. The aim being to establish Novozymes position in the world market and the process analyses its strategies in getting in touch with the world. Product Value, Rarity, Imitability, and company Organization analysis was helpful in determining Novozymes’ internal resources and capabilities, whereas Blue Ocean Analysis was used to analyze the gaps and opportunities that exist for Novozymes, besides Competitive advantages over its rivals. The paper also provides recommendations on what Novozymes may get involved in to widen its market quicker as well as ideas on how best to make good use of its resources.

 

 Introduction: Background

 According to Novozymes (2015), Novozymes started as Novo. The history of Novozymes dates back to 1920, when Banting and Best, two scientists discovered how to extract insulin from animals. The insulin would then be used to treat diabetes or rather augment the health status of the diabetics. In 1947, Svend Frederiksen found out a way of extracting insulin and enzymes at the same time, from the same animal. The discovery was perceived a major milestone as it would then provide a base for industrial enzyme production. In 1974, Novo was for the first time listed on Copenhagen Stock Exchange, and then in 1981, it became the first Scandinavian Company to make an appearance in the New York Stock Exchange. In that same year, Novo became the first company to provide an environmental report. The period that followed the appearances in the Stock Exchanges saw Novo escalate to unimaginable heights. In the 80s, Novo supplied 60% of the world’s total detergent enzymes consumed. Ultimately, in 1999 Novo published its first social report, thereby cementing its position as one of the first to implement the triple bottom-line that advocates for some provision of financial, environmental, as well as social aspects of development (Novozymes 2015).

 The Millennium came with the splitting of Novo into three companies – Novozymes emerged as one of them. In the same year, Novozymes sold its first products online on the Novozymes’ new website. Since then, Novozymes has gone on to become one of the most accomplished companies in the world when it comes to biotechnology and development. It produces enzymes of all kinds – and having grown from an insulin extraction company to a generator of fat-splitting enzymes, enzymes for cold and soft water, enzymes for bleaching denim in the textile industry, and to enzymes that can dissolve greasy stains (Novozymes 2015). Consequently, the paper would help to highlight how far Novozymes has come, concerning both the regional and global markets. Also, a closer scrutiny has been taken in analyzing the position that Novozymes have established in its 15-year period of existence and the influence they have in the biomedical field while conducting its strategy analysis. The analysis is based on the problem of penetration into some of the world’s conservative markets such as Central Africa, Asia’s middle-class nations as well as some parts of South America (Solomon et al. 2014, p.65)

 Snieška (2015, p.34) argues that the international business world is quite different regarding dynamism and speed of change, and that is part of the purpose of carrying out this study. Globalization has been a huge challenge for most companies as various continents, regions and countries have particular and specific motivational factors. With multicultural environments and variant dispositions, the global market is one whose unpredictability keeps growing each penetration into them. And while it is true that Novozymes has performed fairly well in the sense of fostering diversity in its staff-base, there is sure room for improvement. The fundamental principles on which Novozymes operate aims at impacting positively the marginalized world. The projection is that it may be only a matter of time before Novozymes penetrates these markets. Additionally, the paper also provides strategies for Novozymes to attain effectively its peak (Dunning 2014, p. 23).

 Problem Statement

 Novozymes continues to remain committed to assuring health for all who are immune-compromised as a result of lifestyle diseases. Their efforts are through the development of enzymes that aid the progress of the patients or fortify the health of those who are not ill. Every kind of growth brings with it an equal measure of challenges. Over the years, Novozymes’ problems have grown from the financial challenges that small and medium-sized businesses usually face to the most advanced problems such as Knowledge creation and sharing as well as relationship building to ensure sustainability. In fact, most of its challenges are no longer related to gaining a competitive advantage over its rivals, although this is also fundamental. However, the challenges faced by Novozymes are those that it encounteres when in the pursuit of sustainability as well as the reliability of its products. The main challenge that Novozymes can be said to have faced and is still facing is intrusion or penetration into the world where there organizational goals of affordability with an environmental conservation best suit (Carroll and Buchholtz 2014, p. 36).

 While it can it can get presumed that the 138 Novozymes branches is a huge number for a country, in fact, it is more than half, and therefore, one would not be mistaken to claim that Novozymes are doing rather well. In fact, only a look at Novozymes’ strategic plan for the next 10 year period until 2025 would reveal that the company is not doing as well as they would have loved or planned. Novozymes intends to reach every country in the world by that year that is not easy but achievable. For them to ensure their penetration into all the markets there needs to be a change of organizational culture as well as an enforcement of the other values. Conversely, through proper analysis of the contributory factors that affect the Novozymes business, a deduction can get derived from both internal and external factors. The total summation of these contributory factors can provide a vital spectrum through which the potential pitfalls and strengths are evaluated to help in decision making as to what is best for Novozymes to thrive. Alternatively, possible strategies that could be employed by Novozymes to curb all their sustainability-related challenges are identified and implimented after consultations with the relevant stakeholders. Most importantly, the paper aims to find solid reasons for detailed strategic analysis which could result in the identification of inherent problems as well as providing a clear picture of what the company primarily needs to do to actualize the visions that it had laid down. At the end of it all, it must be clear if the problem exists, while establishing the cause of the problem and also a possible strategy that can be used to overcome the problem or challenges (Carroll and Buchholtz 2014, p.4).

 Position and Context

 Novozymes is the world’s leading company in industrial biotechnology, specifically for industrial enzyme production. Its main products are industrial enzymes, microorganisms, and biopolymers. With over 6000 patents, it is clear that Novozymes has taken the world by storm and the situation inbound to remain that way for the foreseeable future. Novozymes has established itself in over 138 countries, that is, for sure more than half the globe, contributing to an estimated 46% market share in the global arena. Boasting over 700 products, coupled with the solutions that are significant, and innovations that excite which Novozymes has shown since its inception, not many would argue with the fact that Novozymes is destined for greater (Novozymes 2015).

 The Novo Foundation has impacted most communities around Novozymes and the world at large with various charity projects that continue to make Novozymes a competitive force. Precisely, The Novo Foundation was created in 1951 with an objective to support the social, humanitarian ammenities and most importantly to advance the scientific practices of the company. This foundation has gone a long way in establishing Novozymes in the local and global platform especially with the Corporate Social Responsibility that it symbolizes in the eyes of many of its consumers. The prevailing fact that Novozyme is a Scandinavian company gives it a sense of neutrality towards Europe and America or Australia. There is also some worldwide fascination about anything from Scandinavia, which makes Novozymes’ origin or primary location to be quite intriguing(Dunning 2014, p. 23).

 60% of Cancer cases in the US can be attributed to some lifestyle behaviour. The most common lifestyle habit that people possess without knowing is their eating habits. The number one food-related contributors to health problems are fats and sugars, which are increasingly becoming a problem in the developing and developed parts of the world. Increasingly, through sensitization by public health agencies, societies are quickly seeking alternative options that could counter or better still replace the now common health defects resulting from high sugar and fat intake. The demand for natural food production has increased in the past five years. Recent statistics postulates that 20% of the world’s population preferred natural food while unprocessed plant foods and their products accounted for a 10% increase in 2014 compared to the consumption in 2010. If the trend continues, by 2050, half of the world population will be feeding on natural, unprocessed plant products (De Brentani 1991, p.34). Novozymes also has a goal in this line that drives them to become the reliable producers of enzymes that reduce the effects of such irresponsible health behaviours.

 SWOT Analysis

 The SWOT analysis mainly involves looking at what helps make Novozymes thrieve. Subsequently, the strengths get evaluated to show the gaps that exist in the market that can then get exploited by Novozymes, which amounts to its opportunities; the challenges that face Novozymes, which if exist, become its weakness, and if they are external factors, they can then be said to be the threats. The SWOT analysis of Novozymes yielded the results as presented in Table 1. Efforts also need to be made to counter threats to the point of reducing the effects of the threats or eliminating the threats altogether. The SWOT analysis also identified Industrial Enzymes’ reliability regarding having possible side effects as a potential challenge. According to Carroll and Buchholtz (2014, p. 29), this is a challenge that should get eliminated to ensure sustainability of Novozymes in the long run. One major opportunity that was identified was in collaborating with other companies in developing products that cut across sectors. Such inter-sectorial collaborations result in more superior products than those of a single line of productivity.