Key Processes that DSM Needs to Provide
Based on the stages from performance management process, DSM Melamine will need to provide a number of key processes in its system in order to link its key success factors successfully. The first stage will be the process called ‘Local for local’ players (Cockins, 2009).
In this process, DSM will make an effort to ensure that its local customers, especially in Europe are given high quality products that would meet their expectations. The rationale for this process is to win the customers’ loyalty. The local for local players shifts the attention of this firm from the international focus to local focus.
By producing local for the locals, there will be an extra attention on the local needs, making it easy to produce custom-made products. The products will be very specific in the needs they should address. The second process will be the merchant players. Unlike in the first process that focused on the regional market, this process focuses on the global market (Bloemho, 2004).
DSM Melamine is in the global market and it has the responsibility of defending its international operations. In this process, the focus will be on the low cost and security of sales. When operating globally, the low cost will be justified when DSM will be coordinating with merchants that help in breaking the bulk. These merchants prefer low-priced products because they also need to make profits.
Their success is based on how fairly-priced the products of DSM are in the market. The success of DSM relies on how successful these merchants are in their operations. When the merchants are successful, it will be expected that DSM will also be successful. This will lead to the security of sales. When the merchants realize that they get more profits by selling products of DSM than for any other firm, then they will become regular clients of DSM, thereby securing its sales.
Business Strategies to Performance Measurement
In order to determine the manner in which DSM Melamine has aligned its business strategies to performance measures, it will be necessary to identify the main value drivers. In this paper, the three main drivers that will be used include unit production cost, production volume, and sales volume.
This firm has realized that the best way of remaining competitive is to align its strategies to the performance measures. Using the first driver of the unit production cost, DSM has introduced CTP (Capacity to Produce) strategy. In this strategy, the firm uses specific measurements to determine the capacity of various departments or systems in addressing various tasks in order to determine how the cost can be scaled down per unit item.
Using the second driver of production volume, DSM has been focusing on the new technology to support its mass production. The firm is always under pressure to meet the massive global demands for its products. The performance measurement in this case is the amount of products that can come out of the manufacturing plants per unit time (Waal, 2013).
To align its strategies to this performance measure, the management realized that it had to refocus on the emerging technologies as the best solution to this problem. Using the third measure of sales volume, the firm has been redefining its marketing and supply chain strategies. In an effort to increase its sales, this firm has considered using merchants instead of selling its products directly in the global market.
The aim of this measure is to increase sales. The management realized that it was taking too long to learn about the market forces and sell its own products in the international markets. Passing this responsibility to large merchants made it possible for this firm to focus only on the production and transportation of the products. This alliance with the merchants increased the sales of this firm.
Critique of DSM’s Competitive Advantage
In order to conduct a critique of DSM’s competitive advantage, it will be necessary to use assessment points discussed by Smither and London (2009). It is necessary to critique DSM’s competitive advantage using three assessment points. The first point is performance management training evaluation.
Although the large size of DSM’s workforce may be considered a competitive advantage over other firms, it also has challenges when it comes to the performance management, training and evaluation. To manage a large workforce will require more resources. The same challenge is also witnessed when it comes to training and evaluating their performance within the firm.
The second assessment point is the individual precursors (time 1). DSM may experience challenges in influencing its employees to be receptive to change. The large number of employees at this firm makes the workplace highly diversified. This means that finding a common ground in such an environment is very challenging. The third assessment point is the individual and departmental evaluation.
DSM has many departments that have enabled it to manage the global needs. However, it would require more resources, in terms of finances, human resource, and time, to conduct a successful evaluation of the individual and departmental performance. The management will need to develop a strategy that will help eliminate these challenges.
Bloemho, M. (2004). Strategy and Performance Management at DSM. INSEAD 1(5165), 1-30.
Cockins, G. (2009). Performance Management: Integrating Strategy Execution, Methodologies, Risks, and Analytics. Ney Jersey: Wiley.
Smither, J. & London, M. (2009). Performance Management: Putting Research into action. New Jersey: Wiley & Sons.
Waal, A. (2013). Strategic performance management: A managerial and behavioural approach. New York: Cengage.