What key organizational challenges did the DSM face with the “Vision 2005” initiative?
Applegate, Watson, and Vartz (2007) contend that one of the major challenges that Royal DSM faced in its vision to expand was upgrading its Information and Communication Technology (ICT) to meet the demand for growth. The company needed to standardize its infrastructure and change the way it managed its ICT. The other challenge that Royal DSM faced was a dilemma regarding which way to expand. On the one hand, the company had the option of expanding as a Petrochemicals Company.
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On the other hand, it could also pursue the line of life sciences company and performance materials business. Another issue that could have curtailed the company’s expansion was the period needed to complete an acquisition and start realizing profits. To achieve its growth strategy through acquisitions, the company hired Jo Van den Hanenberg as its CIO, and he was charged with the responsibility of removing the acquired company from its parent and integrating it into DSM.
According to Applegate and colleagues (2007), to resolve the dilemma, the company decided to expand in those sectors where it had a strong presence. The company had to divest its petrochemical business and build its already acquired life sciences and performance sectors and acquire more businesses to ensure its business remained at the same level. From a management change point of view, I would suggest that the company centralize its operations to lower the cost of infrastructure and also reduce the possibilities of discrepancies in operations.
DSM pursued an aggressive strategy of divestiture and acquisition. How did the firm leverage IT to achieve its strategic objectives?
Applegate and colleagues (2007) argue that DSM pursued an aggressive strategy of divestiture and acquisition. The firm was able to leverage IT to achieve its strategic objectives; the firm had to acquire a new kind of IT. The new IT system had to overcome the challenges brought about by the aggressive growth strategy and also aid in innovativeness. The major challenges were brought by the acquisition of businesses that each had different infrastructures.
So that its ICT could support the growth strategy, the new CIO developed an ICT strategy focused on three concepts; global standardization of infrastructure and enterprise models, a service delivery-oriented ICT organization, and an ICT governed by the business. About global standardization, this entailed the establishment of a new company whose ICT infrastructure was quite robust. The company had to focus on a few reliable suppliers for this.
The second part involved setting up a service delivery-oriented ICT organization. The other strategy which involved making the company an ICT governed entity concentrated on building the business using IT and the business, being driven by IT. The company pursued strategies to enable it to divest, and easily and efficiently acquire new businesses, and to ease and unify communication throughout the company. To reduce risks of infrastructure change, manage resistance to change, and increase efficiency, program support was enhanced by opening an office for this whose function was to integrate all components of the system to ease the move from the ICT infrastructure in use to the DSM system
What business benefits did DSM expect to result from ICT in support of “Vision 2010”?
The benefits that DSM expected from ICT in supporting vision 2010 include; market-driven growth and innovation, Increased global presence in emerging markets, and to support this plan, the CIO built a virtual organization fully supported by IT (Applegate et al., 2007). The company has also achieved operational excellence by adopting business processes standardization.
The company also hopes to achieve value creation by achieving aggressive financial goals. ICT will help in this by among other things increasing efficiency and thus cutting down costs and adding value to almost all the components of the business.
The company was successful in aligning business, and IT since its acquisition of other companies has been evaluated with ICT systems. The acquisition of Roche Vitamin was a success, with the profits increasing, and any resistance to change is well countered. The acquisition took place fast, and no delay could have caused a loss in business. Also, the expansion was coupled with acceptance of the new business system enabled by the support systems that enabled collaboration and also eased communication with staff and customers.