Building Resilient Value Chains in Multinational Corporations: The Case of Novo Nordisk's Global Production Setup

Abstract

Global market uncertainties present significant challenges for organizations to navigate, necessitating the establishment of resilience strategies to mitigate negative impacts. Value chain resilience is a growing research area and is crucial for industry practitioners to receive guidance on market disruptions. Therefore, this thesis investigates how Novo Nordisk seeks to create a resilient value chain that ensures production continuity and identifies areas of improvement.
This paper aims to contribute with new research to broaden value chain resilience literature by exploring Novo Nordisk’s resilience strategies and developing a new Integrated Resilience Framework for value chain resilience assessment. This framework is a comprehensive diagnostic tool for analyzing value chain resilience in organizations and identifies strengths and weaknesses that one can strategically address. We formulated this framework by the works of Porter’s (1985) value chain theory and value chain configuration (1986), Linkov et al.’s (2020) value chain resilience literature, and Kano et al. (2022) GVC governance literature.
This research is grounded in a single case study of Novo Nordisk, providing a detailed understanding of their organization. It adopts a pragmatic research philosophy, prioritizing the practical application of knowledge. The research employs abduction, a method of reasoning, to comprehensively examine theories and phenomena related to Novo Nordisk. The thesis relies on a rigorous qualitative analysis of relevant empirical data to uncover insights of Novo Nordisk’s value chain resilience strategies.
The findings from the Integrated Resilience Framework in our analysis show that Novo Nordisk’s efforts to create a resilient value chain entails several strategies. These include geographical diversification, vertical intergration, and proactive measures prioritizing long-term objectives aimed at mitigating risks and ensuring production continuity. The inability to produce the desired quantities of their GLP-1 products has resulted in shifting their investment endeavors from R&D to production capacity. Thus, Novo Nordisk has focused on diversifying its value chain across multiple locations and having core API operations situated in two locations. Apart from diversifying its value chain, they seek value chain resilience through vertical integration of key suppliers in the fill and finish part of production. The findings also found that Novo Nordisk is proactively investing in future-proofing its organization. This includes acquiring suppliers, expanding existing API and fill and finish sites, and converting its production sites into multi-product facilities. Moreover, the insights derived from the Integrated Resilience Framework offer actionable recommendations for Novo Nordisk to further enhance its value chain resilience. Finally, industry practitioners and scholars stand to benefit from the research findings, contributing to the ongoing development of the value chain resilience literature.