Royal DSM: From continuous transformation to

organic growth

Group-10

Amit Sharma (CGT19002)

Maruti Nandan(CGT19012)
Ankul Anand (CGT19007)
 Describe the logic of DSM’s choice of methods and directions of growth

 Singapore Airlines (SIA), world 19th largest airlines, wants to enter Indian market with a strategic
partnership with Tata group with 49% and 51% share in the new entity.

 New Airlines to offer a full service airline to serve Indian aviation market.

 Tata Group already has a low cost airline JV working in India

 Tata’s venture with SIA would be 2nd Indian airlines for the Indian conglomerate and compete with
the new venture

 Indian Airlines industry is not profit making while SIA had never reported loss since it started
operating

 SIA’s dilemma : To Enter or not to Enter India ?

1. What can our company do better than any of its competitors in its current market?

 From 2001 to 2015,

2. What strategic assets do we need in order to succeed in the new market?

 From 2001 to 2015,

3. Can we catch up to or leapfrog competitors at their own game?

 From 2001 to 2015, Royal DSM divested 10 of its major businesses, including all its petrochemical
divisions. Most
4. Will diversification break up strategic assets that need to be kept together?

 From 2001 to 2015, Royal DSM divested 10 of its major businesses, including all its petrochemical
divisions. Most significant was the 2002 divestiture of DSM’s petrochemicals business to SABIC for
$ 2 billion
 “People knew DSM couldn’t become a strong bulk-chemical leader, so a sale of business, followed
by a transformation, was much better than risking a slow death” according to Sijbesma.
 Following the divestment, net sales fell by over $2 billion.
 Made over 25 acquisitions primarily in food, feed and nutritional ingredients and high performing
materials for almost $ 2 billion
 Also in 2006, DSM set up the DSM innovation center, fostering innovation across the company and
developing three new emerging business areas for the future: bio-based products, biomedical-
materials and solar/advanced surfaces.
 5. Will we be simply a player in the new market or will we emerge a winner?

 Made over 25 acquisitions primarily in food, feed and nutritional ingredients and high performing
materials for almost $ 2 billion
 6. What can our company learn by diversifying, and are we sufficiently organized to
learn it?
 By end of 2015, DSM was at the end of a decade-plus period of non-stop divestments, mergers,
and acquisitions as it evolved into a global life sciences and materials sciences companies.
 To shift DSM from transformation to growth, Sijbesma kicked off the Lead & Grow program via a
large global top management conference , which was later developed into a executive leadership
program in 2016.
 Change
DSM 2016-2018 Strategy

 Building profitable growth through science-

based sustainable solutions.
 Organic growth enhanced by Lead & Grow
program
 Targeting high single digit annual EBITDA
growth and high double-digit annual ROCE
growth
 Reducing company wide costs by €250-300
million
 Reducing working capital below 20% of sales.
 2/3rd of the capital expenditures – nutrition.
 1/3rd towards performance materials and
corporate investments.
Lead and Grow program

 Launched as executive
leadership program in 2016.
 Involved top 350 leaders.
 3 parts of Leadership
Model:
A. Insight: Need for ability to
Listen and Observe
B. Shape and connect: How
do we reach maximum
customers
C. Delivering Results:
Monitoring Annual and 3-
years growth goals.
Global Leadership

 Diverse Leadership: Mix of nationality

(Austrian, Franco-Swish- British, Dutch etc.)
& gender.
 Reflect changes in business portfolio and had
sense of innovation
 Global Presence: New Headquarters in
Shanghai, Switzerland and US in addition to
existing ones in Europe.
 Growth in China : By 2016, 8 branch offices,
40 affiliates and 26 manufacturing facilities.
 Challenges Ahead

 Shareholder needed to be kept satisfied with regular performance

 Sustaining/Enhancing new innovations

 Improvement in processes

 Intra sector Diversification

 Focusing on unmet needs of customers

End of presentation

13
Way forward

Royal DSM: From continuous transformation to Organic Growth

Organization and Culture

Royal DSM: From continuous transformation to Organic Growth