Strategy and Performance Management at DSM

Published 01 Jan 2004
Reference 5165
Topic Strategy
Region Europe
Summary

The case describes the strategic planning process and performance management system implemented at DSM, a global chemical company. In particular, it describes how the company's Value Based Business Steering system is designed to create alignment between strategy formulation and execution through strategic value contracts. The case illustrates the performance management process in action at one of the business groups. It highlights managers' dilemma between continuing to pursue the current business strategy, which is in line with corporate strategy, versus responding to the financial pressures exerted by the new value-based management approach, which would require a radical change in strategy.

Teaching objectives

The case allows students to discuss the various elements of DSM's VBM-inspired strategy and performance management processes, and how they impact, one of the business groups' efforts to improve performance. The class can analyze the strengths and weaknesses of the company's approach to aligning its strategic planning and financial management processes by introducing strategic value contracts. Finally, the case shows how DSM distinguishes between performance indicators to monitor strategy implementation, and value drivers to measure economic value creation.

Keywords
  • Strategic Planning
  • STRATEGY DEVELOPMENT
  • PERFORMANCE MANAGEMENT PROCESS
  • PERFORMANCE CONTRACT
  • STRATEGY DIALOGUE
  • VALUE BASED MANAGEMENT
  • VBM
  • PERFORMANCE MEASUREMENT
  • VALUE DRIVER