Case Study Analysis: Strategic Management of FISS's European Expansion

This case study examines the strategic growth and development of FridolfIvarrsen Cleaning Services Ltd (FISS), starting as a small cleaning firm in Smaland and expanding into a large-scale European company. The analysis utilizes the classical and evolutionary perspectives of strategic management. The classical perspective highlights the evolution of FISS's HR policies and organizational structure, particularly after Linneyrd's leadership, emphasizing scientific management of employees and administrative restructuring. The study explores how FISS adapted to local market demands, improved employee productivity, and fostered a more flexible work environment. The evolutionary perspective is also applied to understand FISS's adaptation and changes over time. The case study explores how FISS navigated competition, expanded geographically, diversified its services, and adapted to various cultural contexts. It underscores the importance of market research, employee engagement, and strategic decision-making for sustainable business growth and competitive advantage. The paper analyzes the key reforms introduced by Linneyrd to improve employee productivity and ensure better organization within the company.

Running Head: STRATEGIC MANAGEMENT – CASE STUDY ANALYSIS
Strategic Management – Case Study Analysis
Name of the Student
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Author Note

1STRATEGIC MANAGEMENT – CASE STUDY ANALYSIS
Introduction
FridolfIvarssen established a small but prominent cleaning firm in Smaland in the
year of 1948. The main purpose behind creating such a firm was to provide cleaning services
for local industries, specifically the provision of cleaning hours during the night rather than
during the day. Approximately fifty people were running operations for the company by the
year of 1950, and the firm officially acquired the name of FridolfIvarrsen Cleaning Services
Ltd or FISS was it was commonly known. While the business was one that took of relatively
well for the company in the initial stages of its operations, it was realized on the part of
FridolfIvarsson that offering conventional cleaning services was not going to give the
company the competitive advantage that it needed to survive in the market over the long
term. Business was good though and since FridolfIvarsson was a member of the Rotary and
also visited the local church daily, he was able to add many customers to his client base. Yet
in order to make the company compete successfully with other firms of businesses providing
the same services, FridolfIvarsson came to realize that he would have to expand
geographically and also bring about some diversification in the cleaning services that he was
offering thus far, in order to add a considerable amount of uniqueness and appeal to his
enterprise. Competition was acute given the fact that many local companies had emerged in
the market that were offering cleaning services, in the period post the Second World War. To
this end, a number of countries were surveyed in North Europe for possible expansion to,
such as Germany, The Netherlands and certain destinations within the country of Sweden
itself such as Gothenburg and Malmo. Ultimately expansion took place to Bremen in West
Germany, with subsidiary outlets being opened in The Netherlands, in Gothenburg and the
company later shifting its headquarters to Malmo in Sweden. This paper analyzes the growth
and development of FISS from a small company offering cleaning services in Smaland to a

2STRATEGIC MANAGEMENT – CASE STUDY ANALYSIS
large scale company that specialized not only cleaning services but also in hygiene care
facilities, with a prominent presence in Europe. The analysis of the company’s strategic
growth is carried out using the classical perspective of strategic management and the
evolutionary perspective of strategic management.
1. Analysis using the Classical Perspective
1.1. General Analysis
The classical perspective on strategic management is mainly comprised of two
important divisions. The first is the scientific management of employees and the second is
the administrative structuring of work, in a way that organizational wellbeing is ensured
(Johnson et al. 2011). The scientific management of employees is an approach that focuses on
enhancing the productivity of employees. It aims at making use of techniques and tools and
the imparting of skills that can help employees to perform their best for an organization. The
classical perspective is an approach that can definitely be applied to the manner in which
FISS operated in the European continent, after starting out as a small cleaning service in
Smaland, but only to the later stage of the company’s growth and development and not in the
initial stages in its operations. At the start, after successfully offering industrial cleaning
services in Smaland, Fridolfvarssen, the owner of FISS had the intention of expanding the
firm geographically and also intended on diversifying the services, so that it could gain a
competitive advantage, not only in Sweden but also internationally, and thus be able to take
advantage of the economic boom that was occurring all over Europe. However, upon
expansion to Europe, notably to destinations such as Germany and The Netherlands, it was
found on the part of the owner of the company that the locals preferred the services that were
offered by the established cleaning services rather than what was made available by FISS.

3STRATEGIC MANAGEMENT – CASE STUDY ANALYSIS
What FISS had failed to do was to live up to the expectations of the local customers in
Germany. It had not researched into the markets of The Netherlands and Germany properly,
and in the case of Germany, it was later found out by the FISS Management, that in spite of
offering quality services at the most competitive of prices, what the company had been failing
to do was provide services that were in keeping with German standards of cleanliness. The
company had not researched into what German concepts of cleanliness entailed as a result of
which they were not able to cater to German requirements in the desired manner.
After restructuring sales strategy and company objectives and goals by a considerable
degree in the new countries of expansion, FISS was finally able to meet its business goals. In
Germany particularly, that is, in the states of Bremen and Lower Saxony as well as in the
province of Schleswig-Holstein, sales performances improved drastically after FISS marketed
its industrial cleaning services along the lines of German standards of cleanliness. Quality is
something that FISS had always ensured in the rendition of its services. What it had not
managed to do was to market or offer services that were in keeping with what the German
customers were wanting specifically.
However, it was only in the later stage of its growth and development, that is, the time
when FridolfVarssen handed over the charge of his company to his son in law, Linneyrd, that
the manner in which operations were conducted can be analyzed in accordance with the
classical approach. Prior to Fridolfvarssen’s son in law taking over, the HR policy of the
company was weak and in tatters, with most HR activities being centrally monitored and
controlled. As such, those in the management who were running operations in the company’s
overseas offices in Germany and The Netherlands were not able to execute HR policies that
were in keeping with the requirements of the locals who were employed at these business
outlets. The needs of local employees were greatly ignored by the central HR administration
which was in Sweden, as a result of which there was a high employee turnover, and regular

4STRATEGIC MANAGEMENT – CASE STUDY ANALYSIS
conflicts with authorities. The productivity of employees suffered by a considerable extent
and the organizational management of the company was on the decline, with dissatisfaction
prevailing greatly within the ranks. Major changes were initiated by FridolfVarssen’s son in
law to improve and re-organize HR policies, most of which were designed to enhance and
improve the performance of the employees and also ensure better administration within the
organization. It was realized on the part of FridolfVarssen’s son in law that isolating
employees is not something that was going to work in favor of the company at any point of
time, and that reforms were necessary if the company was to get its productivity back once
again.
Some of the well known reforms that were introduced by FridolfVarssen’s son in law
Linneyrd in order to improve productivity of employees and ensure better organization
within the company, in keeping with the classical perspective of strategic management,
were giving the national subsidiaries of the company the freedom to formulate their own IHR
policies (Daft and Marcic 2016). The branch offices of the company that were operating in
Germany and in The Netherlands, now had the scope to design HR policies that would take
cognizance of the requirements, the desires and the needs of the locals who were employed to
various positions within these branch offices. Consequently, policies were designed on the
part of these HR professionals that would satisfy the local employees and which would give
them the incentive that they needed in order to do their optimum for the organization. The
employees no longer felt isolated by the management of the company and instead now got the
motivation that they needed to work better to meet the company’s goals and objectives. At
the headquarters of the company which was based in Malmo, at the time that Linneyrd took
over, the HR department was transformed into a global HR department. HR representatives
from The Netherlands and Germany were incorporated into this global HR department,
making sure in the process that the employees working not only in Sweden but also in other

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countries where FISS ran its operations were well represented at the organizational level.
Such employees were given a voice within the organization, and that too at the company’s
headquarters in the form of the HR representatives from their countries who now formed a
part of the global HR team at Malmo (Kerr et al. 2015).
The classical approach towards strategic management is one that is hugely significant
when it comes to analyzing the later operations of FISS, as run by Linneyrd. This is because
the scientific management of employees forms a key feature of the classical approach, and
this is something that was made sure of by Linneyrd. All of the personnel working for FISS
were provided with new forms of training or coaching in novel forms of industrial cleaning.
Employees were given training in business management, in ergonomics, in new cleaning
techniques and also in the matter of hygiene. As a result of being at the receiving end of such
training the employees of FISS became far more qualified and competent than they had been
before. They acquired all the skills and the techniques that were needed not only to do their
jobs better but also to do their work in a way that they were able to cater to a more global
clientele. Since Linneyrd had spent a considerable amount of time working in the US, he was
familiar with global working standards, and as such, made it a point to incorporate such
standards when training the employees of the firm in cleaning techniques (Kerr et al. 2015).
Plenty of freedom and autonomy is also something that was allowed at the different
branch offices of the company in The Netherlands and in Germany. Employees were
accorded a greater amount of flexibility in the manner in which they did their work and this
in turn gave them the pressure free environment that they needed in order to be able to
perform to the best of their ability. It is a fact well known that employees do not perform well
if they are placed under duress. Prior to Linneyrd taking over, that is, in the decade of the
1970’s and 1980’s, FISS had turned into somewhat of a slave company. It was extracting
services from its employees without looking into their wellbeing in any given way.

6STRATEGIC MANAGEMENT – CASE STUDY ANALYSIS
Employees were being made to work relentlessly, under pressure, with HR policies being
designed and implemented from the central office, and with little or no freedom being given
to workers to perform operations in the manner that they desired. As a result, FISS began to
lose employees very heavily. Employee turnover was high and as such productivity levels
within the organization were low. Through this administrative re-structuring, something that
also forms a key component of the classical management approach, the company was able to
look into the needs and the requirements of its employees better and in the bargain, higher
productivity and lower employee turnover was ensured. Linneyrd even made it a point to
engage with the employees at the organization on a one to one basis to find out if there were
any difficulties that were facing at the organization and if there was anything that could be
done to address the issues and the problems that the employees were facing. Autonomous
teams, made up of as many as ten people, were formed, to discover and implement how
duties and operations could be divided better among the workers (Johnson et al. 2011).
As a result of the scientific management of workers, and administrative re-structuring
undertaken by Linneyrd, the employees of FISS felt far more appreciated than they had been
in the past, and employee turnover is something that improved considerably. Employees felt
worthy enough to do their best for the organization and not as isolated as they had prior to
Linneyrd taking over, thus proving that the classical theory of strategic management holds
enough significance and value with reference to this particular case (Johnson et al. 2011).
1.2. Pestel Analysis
Political – The kingdom of Sweden enjoyed considerable political stability during the period
of the First World War and the Second World War by virtue of the fact that it did not
participate in either of these two wars. Sweden was a peaceful place and maintained complete
political neutrality in the late 1940’s and early 1950’s, hence there was no political turbulence

7STRATEGIC MANAGEMENT – CASE STUDY ANALYSIS
that the country suffered from when FISS was being set up as a business. The countries that
FISS chose to expand to, that is Germany, and The Netherlands were war torn, politically
unstable after the fall of the Nazi Party and the defeat of the Axis powers and needed foreign
investment and business for the purpose of restoration (Ikenberry 2019).
Economic - Sweden is a country that was not affected by either the First World War or the
Second World War. As a result of this, in the period of the late 1940’s and the early 1950’s,
that is the time when FISS began its operations under the leadership of FridolfVarssen, the
economy of the nation was relatively stable. The time was perfect for a Swedish company to
expand operations to countries like Germany and The Netherlands, which were war torn, and
where the cost of labor and production in general was likely to be at an all time low
(Ikenberry 2019).
Social – The social fabric of Sweden was mostly comprised of prosperous people with
several businesses thriving here. Enterprises in Sweden could afford the industrial cleaning
services that were being offered by FISS, while the countries of expansion, Germany and The
Netherlands were also industrial nations that were looking to rebuild and where industrial
cleaning facilities offered by FISS at competitive prices were welcomed (Ikenberry 2019).
Technological – Sweden was a prosperous and technologically developed country at the time
of the 1950’s with many sophisticated machinery being in place for running business
operations. Germany, and The Netherlands which were countries of expansion for FISS, were
also industrially advanced, having been leading proponents of the Industrial Revolution in
Europe and served as ideal destinations for manufacturing works, such as the rendition of
industrial cleaning services (Ikenberry 2019).
Environmental – The cold climate of Sweden and a similarly cold climate in the countries of
expansion, that is Germany and The Netherlands provided the comfortable working

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conditions that were needed in order to run an enterprise in industrial cleaning, like FISS
(Ikenberry 2019).
Legal - The laws in Sweden and in Germany and The Netherlands during the late 1940’s and
the early 1950’s were friendly towards immigrant labor services. Both Germany and The
Netherlands were in desperate need of foreign labor to lift economy of these nations once
again, while the legal framework of Sweden included labor friendly law, characterized by
decent working hours and good pay, to encourage and enhance industrial activity in the
country (Ikenberry 2019).
1.3. Porters 5 Forces Analysis
Competitive Rivalry – Competitive rivalry was high for FISS in Sweden, which is why the
owner Fridolfvarssen wanted to expand to other destinations like Germany and The
Netherlands where competition was low. Here too, he found to his dismay that competition
was high, with rival businesses in Germany especially being favored over his business, in
spite of the fact that FISS was offering quality services at competitive prices (Porter 2008).
Supplier Power – Supplier power for FISS in both Sweden, as well Germany and The
Netherlands, was low given the fact that there were many businesses offering similar services
in these countries and consequently many suppliers to cater to business demands (Porter
2008).
Bargaining Power of Buyers – The bargaining power of buyers was high in Sweden and in
Germany and The Netherlands, given that there were many businesses offering industrial
cleaning services in the country (Porter 2008).
Threat of Substitution – The threat of substitution for FISS was real in Sweden as well in
Germany, given that there were numerous businesses offering the same service in these

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countries, many of who had the loyalty of their customers. It took FISS plenty of
diversification strategies and researching on the German market in particular to understand
what the Germans wanted and root out any substitution or replacement of their industrial
cleaning services (Porter 2008).
Threat of New Entry – The threat of new entry was high in Sweden, as well as in Germany
and The Netherlands, and later on in the USA and Japan when the company was expanded to
these destinations given that industrial cleaning services are in high demand in all of these
nations (Porter 2008).
2. Analysis using the Evolutionary Perspective
2.1. Porter’s Generic Competitive Strategies
2.1.1. Cost Leadership
FISS decided to expand its operations to countries like The Netherlands and Germany
due to the fact that the cost of production over here was likely to be at an all time low in the
period following the Second World War. In Sweden, where the business originated,
competition was getting stiff and the production costs were not likely to be as low as in
Germany and The Netherlands, given that the latter two nations were torn apart by the war
and the former Sweden, was both a politically and economically stable country at this point
of time (Bertozzi et al. 2017)
2.1.2. Differentiation
FISS decided to stand out in the market and make its products unique from those of
the others by offering services at competitive prices, training employees in business
administration and in ergonomic techniques of industrial cleaning services. It wanted to make
its employees as skilled as possible when it came to rendition of services and wanted to

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enable its employees to offer services that had a different character from similar services that
were being offered by other industrial cleaning companies in Sweden and in Germany and
The Netherlands. Efforts were also made to provide employees with flexibility and introduce
good HR policies so that employees acquired the motivation to produce services far more
efficiently than the average time period in which industrial cleaning services are usually
offered (Bertozzi et al. 2019).
2.1.3. Focus
The focus of the company, FISS was cost advantage in order to attract customers.
FISS made its industrial cleaning services at the lowest possible prices in order to gain
headway in the market and compete successfully with its rivals in the business. It was with
this intention that the company expanded to countries like The Netherlands and Germany
from Sweden, primarily because the cost of labor and production here would be low,
facilitating the business in turn to offer industrial cleaning services at affordable prices. It was
the belief of the owner of the company that the provision of high quality industrial services,
at cost effective prices would attract large numbers of customers to the business in a quick
time frame, in the countries that it was expanding to. However, upon operating in Germany
for a few months, the company found that the provision of cost effective services was not
enough as the German customers continued to rely on established industrial cleaning service
providers instead of FISS, even though such companies charged a much higher price for their
work. This did not mean that the quality of the services being provided by FISS was inferior
but the fact that the FISS management did not take enough time to research into the German
market. Once this was done, it was found out that German standards of cleaning and
industrial cleaning at that tend to differ greatly from the industrial cleaning standards that the
company was accustomed to in Sweden. Immediately, the FISS management proceeded to re-
structure its sales strategy and offer its industrial cleaning services in a way that catered to the

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German notions of cleanliness. Sales improved considerably after this strategy was changed,
and it was evident that the business had to focus on not only cost advantage but also other
factors such as German standards of cleanliness, in order to make its services appealing for
the German customer base (Bertozzi et al. 2019).
It was the change in focus that helped a company like FISS to market its industrial
cleaning services a lot better in the countries of expansion. It became imperative for the
company to offer high quality services at competitive prices but also in a way that the nature
of the service appealed to the specific target audience of the specific country, such as in the
case of Germany (Bertozzi et al. 2019).
The evolutionary approach to strategic management proves to be quite significant
with respect to the case of FISS in Europe (Daft and Marcic 2019). This is largely because of
the fact that the policies and the workings of the company are seen to have evolved greatly
from the time it was started in 1948 by FridolfVarssen in Smaland to the time that it was
taken over by Fridolfvarssen’s son in law, Linneyrd, at time by when the company had
expanded to other locations in Europe. When FridolfVarssen started the company in 1948, his
intention was to make it work like a traditional cleaning firm, offering industrial cleaning
services at affordable prices in Smaland. In time however, it was realized by him, that if the
company were to gain a competitive edge in the market in Sweden, then it could not simply
stick to the provision of traditional cleaning services, and that instead it needed to evolve by
moving to a different geographical location and by offering diversified services. It was
realized on the part of the business owner that new markets in different geographic regions
would mean a brand new customer base, new challenges and of course the possibility of
earning much more profit than the company could earn if it kept its operations confined only
to Sweden. As a result, Fridolfvarssen took immediate steps to explore different markets in
other parts of Europe, and located opportunities in other parts of Sweden first, after which it