Free Paper Sample: Corporate Strategy in the Example of Stockmann's Company

Published: 2022-08-22
Free Paper Sample: Corporate Strategy in the Example of Stockmann's Company
Type of paper:  Case study
Categories:  Strategic management
Pages: 7
Wordcount: 1804 words
16 min read

Question 1: "Strategy Is the Long-Term Direction of an Organisation"

A strategy is considered a tool that administrators have to guide them in making decisions in the face of rapid and competitive changes. It is considered as a management game planning, pointing out the best way to reinforce the position of the organization in the market and help them make the best decisions with more possibility of success, thus achieving the desired objectives, capturing the best opportunities for growth, promote the defense of future performance against external threats following the mission, in other words, is a direction for the organization (Agha, Alrubaiee, & Jamhour, 2011). Corporate strategy is the most appropriate action or path to be executed in order to achieve, preferably in a differentiated way, the objectives, challenges, and established goals, in the best positioning of the company before its environment (Branislav, 2014). It is important to establish alternative strategies to facilitate changes in paths or actions according to needs.

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A strategy, when it is not due to a short-term liquidation of the firm, is aimed at a set of long-term goals in which economic and non-economic goals are mixed. The long-term profit objectives are, in general, those that drag the others (Ebiringa, 2011). Almost every enterprise proposes these types of objectives, but few aim at a higher target than that which allows one to see the current prognosis. The other goals, in part, fill the gap between the current prognosis and the long-term goal (Eniola, 2014). Strategic planning is the determining tool, the starting point of the organization and its function is to anticipate what the organization should do and what objectives should be achieved, define the strategies that will help implement the objectives and also the survival of the organization. Organization (Tell, 2010). The purpose of planning is to take decisive action to achieve attitudes towards your plan, increasing the likelihood that in the future the organization will be in the right place at the right time, offering a vision of the future, regardless of the size of the company.

There is no ready-made model for strategic planning, so in designing it, a company has to tailor it according to the characteristics of the organization and with some flexibility to re-adapt new strategies, if necessary, during the development and implementation of the practice (Makanga & Paul, 2017). The purpose of Planning is to define how the organization will apply its resources as a means to achieve the proposed objectives, with an overview and in the long term, emphasizing that its elaboration is the responsibility of the highest level of the organization (Majama & Magang, 2017). Strategic planning is a tool that will help decision-makers to avoid possible mistakes, establishing the direction to be followed, always seeking the interaction of external factors that cannot be controlled (Dudu & Agwu, 2014). At the strategic level, planning sees the organization as a whole, while tactical planning involves the parts of a company and the operational planning takes care of the implementation, taking care of the parts to make the administrative process fit.

In a context like the current, turbulent and globalized, competition has put us increasingly in a fierce market where managing without a business plan or formalized planning is almost impossible (Agwu, 2014). Managers seek to focus more on sales and production since planning is a mental process that requires time and privacy, but on the other hand, it is essential for achieving the goals. Planning can be defined as the determining function that anticipates what the organization should do and what goals are to be achieved, an activity for the continuity of the company (Amurle, Gakure, & Waititu, 2013). It is known that planning plays a key role in ensuring that the company survives because it is exactly the function that will serve as the basis for the others and is drawn up in the long run (Ahmed & Mukhongo, 2017). Looking at the planning with an organizational look, one can see that this function encompasses the company from the highest level that is called strategic planning, passing through the middle level, known as tactical planning and, finally, arriving at the factory floor, planning operational.

Many managers do not like to waste time planning, and due to disregard, many companies end up closing after opening and forgetting that planning is an ongoing process within the company. Organizations are increasingly seeking to adapt to constant environmental changes and uncertainties (Abosede, Obasan, & Alese, 2016). For this reason, planning represents a necessary and indispensable tool for an organization to prevent uncertainties through administrative techniques and processes that allow planning of its future, the elaboration of objectives, strategies, methods, and actions. In this sense, strategic planning means the starting point in the strategic management of organizations regardless of their size and type (Kraja & Osmani, 2013). From the strategic planning process, the organization will identify the opportunities and threats in a globalized and competitive market like the current one. Issues such as reduced economic growth, globalization, government regulation, inflation, scarce resources, high oil costs, and international protectionism should alert organizations to the use and improvement of planning (Mutemi, Maina, & Wanyoike, 2014). It is noticed that although many companies are already using the methodology of strategic planning, there are still doubts about what really comes to be and how it should be formulated.

Strategic planning in its elaboration has three operational dimensions: the design, the elaboration, and the implementation. The design includes the methodological structure of the process, as well as the professional that will assist in the elaboration, being able to be a consultant or an executive of the company (Oyedijo, 2012). The elaboration needs to identify the opportunities and threats of the environment, assess the strengths and weaknesses and their ability to take advantage of opportunities, spell out the objectives and goals to be achieved and also develop ways to implement the strategies (Tiemo, 2012). While the implementation will involve organizational issues, information, budgeting, incentive systems, training and leadership necessary to develop the process and put it into practice. Therefore, it is worth mentioning that there is no ready model, a universal methodology because companies are different in size, types of operations, organizational form, philosophy, and style in managing (Aremu & Adeyemi, 2011). The methodology should be adapted to the internal and external realities of the companies when they are initiated.

Strategies open different options for corporate growth, such as internationalization or globalization, business diversification or vertical integration along the value chain. It also gives the possibility of choosing different ways to grow, through mergers or acquisitions, strategic alliances or internal development, also known as "organic growth" (Vitkauskaite, 2017). It also responds to the need to ensure that the corporate center adds value to the business group of the corporation. This added value generates the corporate advantage, that is, the additional advantage that constitutes forming a group of companies instead of each competing independently in their respective sectors. Strategic planning allows an organization to become more effective in the way that they conduct their business, usually, companies create a strategic plan to essentially plan the entire processes of the company which would enable them to optimize the steps, cash requirement, material, and resources planning and allow the company to reduce wastage (Osotimehin, Jedege, Akinlabi, & Olajide, 2012). Strategic planning allows a management to essentially create an organization which works in an optimized manner. Not only is that productive for the organization, in the long run, it also allows them to achieve short-term goals that create profit for the organization and also allow them to manage the resources and the day to day functions of the organization better (Adeyemi, Isaac, & Olufemi, 2017). Strategic planning is the part of a company which the management employs which essentially allow them to be able to create a blueprint, supported by evidence and forecasts which create a roadmap for the company to follow. Strategic planning involves all the processes of the company and also takes into account other factors such as project time, schedule, manufacturing etc. This is why all the organizations should engage in strategic planning.

Question 2: Contrast Stockmann's Russia Strategy with What You Understand to Be Their Corporate Strategy, Making Use of the Concepts in Question 1.

Stockmann was the first foreign distribution group to open stores in Russia after the fall of the USSR. The emerging local middle class went to the Stockmann stores to buy products unthinkable to acquire a few years earlier. The Finnish company, which is listed on the Helsinki stock exchange, signed a franchise agreement with Inditex to open Zara stores in Finland and Russia. In fact, in 2003 the first store of Zara (1800 m2) in Moscow located in the "Mega Shopping Mall" belonged to Stockmann. Stockmann was a ten-year-old long-term leaseholder from the Moscow center of Smolenski Passazh. Then the area's prices exploded, and the landlord considered that the signed contract would no longer apply. Of course, Stockmann was holding hands on his very cheap contract and eventually, the landlord reacted drastically, removed the signs from the walls and plugged electricity off the entire property. The department store's cold and frozen food went wrong, and the company did, of course, have a massive loss with each passing day. Stockmann had to leave Smolensky Passage, the most profitable one of his most profitable units.

Stockmann suffered two main problems in Russia. The first mishap was that the Finns had to sell seven ZARA youth fashion stores, which they had been planning to develop as a franchise until 2010. Inditex (the owner of the ZARA brand) was unsatisfied with its chain's growth rates and bought back the franchise from Stockmann for 41.5 million euro. The Spanish company had thought it would be very challenging to work in Russia, but after being provided high sales by Stockmann, they decided to promote ZARA stores on their own. The second relative mishap was that their tenancy in Smolensky Passazh expired and the owner of the premises, unwilling to extend the lease at old rates, demanded a nearly fourfold price increase. Stockmann answered with an angry refusal, and then the crisis came. The biggest success in St. Petersburg was achieved by the Supersiva chain. Supersiva supermarket opened at the Kosmopolis Shopping Center in 2005. Like Stockmann, Supersiva was not in a hurry, acting carefully and extremely slowly. The chain has its main competitive advantage in the original range of Finnish and foreign products that are not presented anywhere else in St. Petersburg. Another approach to the Saint Petersburg market was demonstrated by Prisma, a chain of hypermarkets. It opened two stores right away in 2008: a superstore in the city center and a hypermarket (outside the city limits). Regarding Stockmann, the Finnish retailer chose to rely on Russian suppliers, making it less attractive to most consumers. Indeed, Prisma is not in a price- competitive position with hypermarket chains, and the Finns definitely lacked the original offerings to guarantee a stable customer flow.

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