Key Processes DSM Needs to Offer within Its System
DSM stands for Dutch state mines that was established in 1902 as a state owned corporation. The corporation evolved from being a petrochemicals business to a product chemical Business dealing with products related to health, nutrition and materials. In the 1990s, DSM operated a conventional planning process that was cyclical, and each cycle could go as long as ten years. This method of planning bred a culture of unaccountability and lack of attention to results. The company recognized the need to re-evaluate its operations and key success factors. DSM needs to provide planning as the first stage in performance management process. The step entails defining of the performance management process that takes the form of defining the job itself, highlighting objectives of the organization both short and long term, as well as identification of key metrics for how the objectives will be evaluated. Organizational goals have to be SMART, specific, measurable, attainable, relevant and time-bound (HCM, 3).
DSM needs to identify the environmental and market analysis, identify the qualifiers, differentiators and formulate the indicators that will be used or benchmarking. One of the key processes that DSM needs to provide within its system is the local for local players. This step entails staking efforts to identify and classify customers whether local, regional or international. For instance, the Chinese market was considered as an international market with promising returns due to the growth potential and the high population (INSEAD, 2). DSM could also categorize the European market as a regional market and make high quality products with the objective of creating a loyal base of customers. That is in line with the fact the DSM had shifted its attention from the local market to international markets such Indonesia, yet these markets did not turn to be jewels that they were thought to be.
Such differentiators can help DSM to make products that meet the specific needs of a given market segment. For instance, selling to merchants will attract a different pricing that is preferably low priced products since they prefer low-priced commodities since they are in business. Another key success factor that DSM needs to look at is the continuity of sales. Merchant players are in business to make profits. Thus, they are not like the individual or one day customers, thus DSM can be assured of security of sales (INSEAD, 2).
Three Drivers and How DSM has Aligned Its Business Strategies
In examining the principal method in which DSM management has allied its business policies to performance measurement, this paper is going to examine three main drivers. DSM uses unit cost of production, the volume of production, as well as the sales volume as the drivers to performance management. DSM has realized that the imperative way to remain competitive is to align its strategy to measures of performance. In regards to cost, DSM adopted the capacity to produce strategy as the first driver of the unit production cost. DSM uses activities such as departmental capacity and assessment of departmental tasks to determine how the unit costs may be scaled down (INSEAD, 2).
The second driver is the volume of production. The company has realized that there is need to focus on the new technology to support its mass production. The global demand for DSM products sometimes mounts so much that the firm is always under pressure to meet the massive global demand for its products. To ensure that the production volume is aligned to strategy, DSM determines the amount of products that can be produced per unit time. As technology continued to evolve, DSM realized the need to refocus its production volume to the emerging technologies (INSEAD, 2).
The third driver is the sales volume whereby DSM adopted various strategies to increase its sales. The use of merchant players came in handy whereby the firm decided to sell products through merchants rather than selling directly to customers in the global market. DSM learnt that it was taking long to understand the market dynamics while selling products in the international markets (INSEAD, 2). To get away from this challenge, DSM had to pass this responsibility to merchant players while it had the time to concentrate on production.
Critique Or Defense of DSM’s Competitive Advantage
Smither and London (1) highlight six main assessment points to evaluate a company’s competitive advantage. The three assessment points are performance management training, individual precursors, and individual and departmental evaluation. While DSM had a large workforce that was regarded as deriving competitive advantage over other firms, it proved to be a burden when it came to measuring performance management, training and evaluation. Managing a large workforce requires substantial resources when it comes to training and evaluating performance. The workforce took advantage of the cyclical nature of the company operations where it took more than two years to measure performance (INSEAD, 2). Employees hid behind such long cycles and inefficiency and a culture of unaccountability reigned supreme. Also, the workforce was supervised centrally, meaning that the HR department was all over, being in training, compensation, employee welfare, strategy formulation, employee discipline among others. These seemed counterintuitive and there was no choice except to decentralize such operations. Due to the centrality nature of HR at DSM, it was difficult to assess individual precursors. It was challenging to influence employees to change at the organization since finding common ground was an uphill task. Finally, it was difficult to carry out individual and departmental evaluation. There were many departments at DSM since it was a global company, but conducting individual and departmental evaluation was intricate.
In conclusion, DSM did a great job of improving its competitive advantage using the three assessment points. The identification of individual precursors is important in gathering a baseline of an employee’s performance so that training needs can be identified (HCM, 3). It was commendable for DSM to gather the preliminary information to establish the organization’s present status, and what needed to be done to accomplish the company’s new objectives.
Secondly, it was commendable for DSM for creating a new strategic approach in nine months and the new strategies were implemented in different stages. The strategies improved a culture of accountability since the company introduced an incentive-based compensation system. However, DSM needs to look further into its various metrics and make clear the consequences of non-compliance with the BSDs and SVCs, given that the company has a negative history of mediocre performance. At DSM, unaccountability is tolerated, and the culture may be carried down to its partners such as the contracting parties.
DSM stands for Dutch state mines that was established in 1902 as a state owned corporation. The corporation evolved from being a petrochemicals business to a product chemical Business dealing with products related to health, nutrition and materials. In the 1990s, DSM operated a conventional planning process that was cyclical, and each cycle could go as long as ten years. This method of planning bred a culture of unaccountability and lack of attention to results. The company recognized the need to re-evaluate its operations and key success factors. DSM needs to provide planning as the first stage in performance management process. The step entails defining of the performance management process that takes the form of defining the job itself, highlighting objectives of the organization both short and long term, as well as identification of key metrics for how the objectives will be evaluated. Organizational goals have to be SMART, specific, measurable, attainable, relevant and time-bound (HCM, 3).
DSM needs to identify the environmental and market analysis, identify the qualifiers, differentiators and formulate the indicators that will be used or benchmarking. One of the key processes that DSM needs to provide within its system is the local for local players. This step entails staking efforts to identify and classify customers whether local, regional or international. For instance, the Chinese market was considered as an international market with promising returns due to the growth potential and the high population (INSEAD, 2). DSM could also categorize the European market as a regional market and make high quality products with the objective of creating a loyal base of customers. That is in line with the fact the DSM had shifted its attention from the local market to international markets such Indonesia, yet these markets did not turn to be jewels that they were thought to be.
Such differentiators can help DSM to make products that meet the specific needs of a given market segment. For instance, selling to merchants will attract a different pricing that is preferably low priced products since they prefer low-priced commodities since they are in business. Another key success factor that DSM needs to look at is the continuity of sales. Merchant players are in business to make profits. Thus, they are not like the individual or one day customers, thus DSM can be assured of security of sales (INSEAD, 2).
Three Drivers and How DSM has Aligned Its Business Strategies
In examining the principal method in which DSM management has allied its business policies to performance measurement, this paper is going to examine three main drivers. DSM uses unit cost of production, the volume of production, as well as the sales volume as the drivers to performance management. DSM has realized that the imperative way to remain competitive is to align its strategy to measures of performance. In regards to cost, DSM adopted the capacity to produce strategy as the first driver of the unit production cost. DSM uses activities such as departmental capacity and assessment of departmental tasks to determine how the unit costs may be scaled down (INSEAD, 2).
The second driver is the volume of production. The company has realized that there is need to focus on the new technology to support its mass production. The global demand for DSM products sometimes mounts so much that the firm is always under pressure to meet the massive global demand for its products. To ensure that the production volume is aligned to strategy, DSM determines the amount of products that can be produced per unit time. As technology continued to evolve, DSM realized the need to refocus its production volume to the emerging technologies (INSEAD, 2).
The third driver is the sales volume whereby DSM adopted various strategies to increase its sales. The use of merchant players came in handy whereby the firm decided to sell products through merchants rather than selling directly to customers in the global market. DSM learnt that it was taking long to understand the market dynamics while selling products in the international markets (INSEAD, 2). To get away from this challenge, DSM had to pass this responsibility to merchant players while it had the time to concentrate on production.
Critique Or Defense of DSM’s Competitive Advantage
Smither and London (1) highlight six main assessment points to evaluate a company’s competitive advantage. The three assessment points are performance management training, individual precursors, and individual and departmental evaluation. While DSM had a large workforce that was regarded as deriving competitive advantage over other firms, it proved to be a burden when it came to measuring performance management, training and evaluation. Managing a large workforce requires substantial resources when it comes to training and evaluating performance. The workforce took advantage of the cyclical nature of the company operations where it took more than two years to measure performance (INSEAD, 2). Employees hid behind such long cycles and inefficiency and a culture of unaccountability reigned supreme. Also, the workforce was supervised centrally, meaning that the HR department was all over, being in training, compensation, employee welfare, strategy formulation, employee discipline among others. These seemed counterintuitive and there was no choice except to decentralize such operations. Due to the centrality nature of HR at DSM, it was difficult to assess individual precursors. It was challenging to influence employees to change at the organization since finding common ground was an uphill task. Finally, it was difficult to carry out individual and departmental evaluation. There were many departments at DSM since it was a global company, but conducting individual and departmental evaluation was intricate.
In conclusion, DSM did a great job of improving its competitive advantage using the three assessment points. The identification of individual precursors is important in gathering a baseline of an employee’s performance so that training needs can be identified (HCM, 3). It was commendable for DSM to gather the preliminary information to establish the organization’s present status, and what needed to be done to accomplish the company’s new objectives.
Secondly, it was commendable for DSM for creating a new strategic approach in nine months and the new strategies were implemented in different stages. The strategies improved a culture of accountability since the company introduced an incentive-based compensation system. However, DSM needs to look further into its various metrics and make clear the consequences of non-compliance with the BSDs and SVCs, given that the company has a negative history of mediocre performance. At DSM, unaccountability is tolerated, and the culture may be carried down to its partners such as the contracting parties.
