Strategic Analysis and Recommendations for Stockmann's Russia Strategy

This report critically evaluates Stockmann's corporate strategy, particularly its operations in Russia. It begins by examining the core concept of strategy as a long-term direction, discussing its practical implications for business organizations. The report then contrasts Stockmann's Russia strategy with its broader corporate strategy, analyzing the company's approach to customer satisfaction, efficiency, and restructuring, including the divestment of non-core businesses and the impact of the global financial crisis. The analysis highlights the importance of strategic planning and thinking for adapting to market changes. The report further advises Mikki Raikonnen on future strategies for Stockmann, considering the basis of strategy, directions for possible development using Ansoff's matrix, and the discussion of internal development, mergers, acquisitions, and alliances to achieve long-term goals and financial stability. The report emphasizes the need for integrated approaches and adaptation to ensure sustainable growth and profitability, drawing on various sources to support its arguments. The report also analyzes how Stockmann's strategic choices are essential for long-term development and financial stability.

Strategic Management

TABLE OF CONTENTS
“Stockmann’s Corporate Strategy in Russia: No Hurry” ..............................................................1
Question 1: Critical evaluation and the practical implications of “Strategy is the long term
direction of an organisation” (Johnson et al, 2013, p4)...................................................................1
Question 2:Contrast Stockmann's Russia strategy with what you understand to be their...............4
corporate strategy, making use of the concepts in Question 1........................................................4
Question 3: Advise Mikki Raikonnen on future strategy for Stockmann. Your answer should take
..........................................................................................................................................................5
into account: - The basis of strategy- Directions for possible development using Ansoff’s matrix
-........................................................................................................................................................5
Discussion of internal development, mergers and acquisitions and alliances.................................5
REFERENCES................................................................................................................................9

“Stockmann’s Corporate Strategy in Russia: No Hurry”
Question 1: Critical evaluation and the practical implications of “Strategy is
the long term direction of an organisation” (Johnson et al, 2013, p4)
Answer: For any business organization in order to make success there are various things
included. It can be for the present planning or for the future depending upon the condition of the
company. Strategies are the plan that are required to achieve long-term goals, mission, vision and
profit in an organization. Things involved in it are planning, thinking, and final goals. McKeown
(2011) defines it as thing that shape future or attempt made by humans to get the desirable ends
with available means while Mintzberg from McGill University has defined as the decisional
pattern with a view of strategy as planning. Other than them, there are various authors and
researchers have identified that if proper and planned strategies are made then it can help the
organisation to achieve long-term goals and provides them direction.
According to Pirraglia (2017), it is used by the business to achieve success and involves
various things such as vision, mission and ideas that needs to be different from others. In simple
words it is travel plan that assist to achieve the position where we want to go, identifying details
and how to achieve such position. Planned strategies are very important for the companies as
they provide functional approach to remain focused at goals and achieve the successful results. It
helps to be creative and innovative so that they can improvise on the traditional approach and
implement it in more better manner. It is the action plan that leads to the success of your
company. Along with this, strategic thinking helps to gather information about the resources
limitation. For the organisation it aids about how to utilize the resources and what are the most
effective and advance methods that can lead firm to its objectives. Additionally, short-term goals
can also be achieved with the help of strategies (Hill, Jones and Schilling, 2014). It assist the
entity while they are expanding to new areas and reduces costly mistakes they could make.
Due to changing environment, there are various competitive threats from the internal and
external of the company. Further, there are opportunities such as new market, business
expansion, and threats such as materials or inventory rise that can affect the firm in very adverse
manner. However, using the strategies approach such changes does not hamper as they are
already evaluated. This allows firms to grab the opportunities and reduce damage of unforeseen
negative events. Other than this, tools and techniques enhancing the ability of the firm to reach
its vision.
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As per the Taylor (2017) strategies are required for the long-term success of the firm as in
future there are things that are beyond your competitive environment which organization needs
to identify. Further, if sudden changes arrives then companies cannot shift or make changes in
their organizational structures with limited period of time. However, if strategies were there then
any enterprise can implement changes that align with their strategic goals (Bettis and et. al.,
2016). Earlier success requires only planning but now there is need of strategies planning and
thinking so that through enterpriser or owner are willing ready and prepared accommodate
changes that are inline with your company goals. Moreover, every industry now have their own
strategies and policies (FELICIANO, 2008). For example: In Amazon strategies and policies
they have customer loyalty, interactive website as-well-as IT capabilities, technology, logistical
efficiency and real-time shipping tracking data. They stick to it so that more customer
satisfaction and profit can be made. Along with this, it keeps them away from such from any
financial or market up-downs supporting them to provide better competition to their rivals.
As stated by Nagel (2014) that for long-term running the business and shaping future
there is need of strategizing. Through this company can, empowers themselves to shape their
future. Decision-making process and higher-quality planning leads to greater management of
risk. Many entrepreneurs before investing at any place and things, they actually thinks
strategically which prevents their loss and provides them opportunities to grow further. It has
been analysed that more than 85% entrepreneurs spend their half months engaged in strategic-
thinking (Ethiraj,Gambardella and Helfat, 2016).
Strategies are prepared through the decision and planning which is about the long-term
direction of entity, scope of activities, achieving competitive success, adopting environmental
changes, values and expectation of stakeholders and building resources and competences. As it is
related to the future planning so it is complex in nature, uncertain and can affect the operational
decisions. Additionally, there is need of integrated approach that is support from the internal and
external of an organization (Bettis and et. al. 2014). Besides this, there are various changes that
need to be implemented while making the strategic decisions. Strategy has three horizons that are
extended and defended core business, building emerging business and create viable options. In
order to accomplish their goals companies requires stakeholder that are profit motives and their
decision are important for the firms.
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There are three level of strategies corporate, business and operational level strategies.
Corporate level strategies is related to the overall purpose and scope that adds value to the firm
units. Business level strategies is about getting complete success in the market and regarding
such concerns (Nagel, 2014). Operational however, is about the organizational parts that delivers
the strategy for resources management and process. There are three main terms that are needed to
be concerned for making strategies, these are fundamental goals, organizational activities scope
and the capabilities that are required to be delivered. Internationally expended companies and
local companies all have strategic specialists that them in their strategical planning or analyst
roles.
For example, Accenture, IBM Consulting have strategic consultants that assist them in general
management consulting. Moreover, there are firms that have grown as specialists strategic
consulting firms. These companies provides assistance in the international level such as The
Boston Consulting Groups, McKinsey & Co. (Bergh and et. al., 2016). As stated by the Johnson,
there are three strategy's branches which comprise of context, content and process. In terms of
context it requires research on industrial, cultural and resource-based view. For this finding must
be made to the internal and external environment. Then comes content that is strategic options, it
is based on the choice and performance where finding are to be made. At last comes the process
which is about formation and implementation, which comprise of strategic planning, choices and
changes required and strategy-as-practice (Nicholas and Steyn, 2017). Johnson also described
about the exploring strategy model which comprise of three things that are strategic position,
choices and action taken. In order to understand the strategic-position organisation needs to
understand the culture-shape, capability, environment opportunities and basic-purpose. Strategic-
choices are made so that firm can choice their direction for making strategies and methods
through which they can pursue it. To make the strategic-choices they have to identify business,
corporate role, innovation, international planning and Acquisition and Alliances. At last
strategic-action are taken which is based on changing environment, evaluating things, organising,
processing and practising.
As per the Feliciano (2017), 9 out of 10 organization fails to achieve their goals and
vision. This is only because they do not have proper and well-planned strategies. Moreover, as
mentioned by Kaplan and Norton that the organization fails as the strategies are not properly
carried out by managers, work force, executive team and finance department. It is essential as it
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aids employees achieve goals. Organisation consider these type of approaches as supportive part
for their mission statement.
Question 2:Contrast Stockmann's Russia strategy with what you understand
to be their
corporate strategy, making use of the concepts in Question 1.
Answer:Corporate strategy is about the values that are created across different businesses. It is
the competitive strategies that make then differ from the other countries. For this organizations
have to invest on different things such as business portfolio, structures, design, valuable set of
resources, systems and corporate function and transfer skills across businesses. Russia has made
certain changes in order to achieve its goals. In order to gain the long-goals and for their well-
being they have made changes in their customer satisfaction and efficiency. As said by Johnson
that strategies are made for the long-term achievement and direction so Stockmann's have
reviewed their strategies and policies (Carroll, Primo and Richter, 2016).
Under their new strategies, for customer's that is: ”Every day is a new opening” which is
about enhancing the shopping experience and increasing sales (Penttilä, 2016). The second
changes they made in increasing their efficiency that is “Every square metre needs to be
profitable” which is made so that shops have effective and optimal space for sales. Other than
this, it will support to the store network as-well-as supportive functioning of the firm. Moreover,
changes made by them in their corporate structures are, they have withdrawn from the non-core
businesses in which Seppälä and Academic Bookstore were divested, Stockmann Beauty stores
was closed and Hobby hall is for the sale process (strategy in brief. 2014). Further, they are
identifying new areas of markets increasing their strong partnership in the retail and real estate
businesses.
The company have to take such major changes as they have not adopted the strategic
planning and thinking which is necessary for any organization to withstand market. Besides this,
as stated above that strategy are made so that financial support can be maintained. For
Stockmann Group’s they were continuously facing global financial crisis since 2008-2014. The
company was completely devastated as their 7 Russian department stores were sold to the
Reviva Holdings Limited. However, this has provided them opportunities and enabled them for
business continuity to customers. It was found that there were 2300 employees and 1.7 million
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customers in Russia. The new strategic plan adopted by the company will make them financial
stable and will increase their profitability level.
As company was not having proper and well-planned strategies due to which they have to
face crises and made their future insecure. Moreover the slow market growth also affected
strategies of the company. However, they are heading towards the profitability and market
growth. The firm has successfully completed the sustainable investment program. They have
analysed their past issues and have reframed their strategies. Now due to their new strategies
their are having profitability growth in year 2016. They are able to completely use their available
resources in more efficient and effective ways. Additionally, they have started focusing on the
their capital, existing assets, inventories, and costs. The company is making their future
investment in decreasing the capital investment so that they can remain focus on the limited
areas. As they have higher loan issues so that are having no plan for new department stores.
However, they wanted to enlarge and renovate their current departmental stores as through this
they can maintain the customers satisfaction and can gain financial support. Besides this, they are
focusing on expanding their fashion chain. In order to achieve their strategy and for long-term
development they have to be financial stable. As through the strategies they have overviewed
that they require greater challenges in their market development so they wanted to increase their
20% ROCE, 12% EBIT, 40% equity ratio and sales-growth above industry average.
All the changes that are adopted by the company will help them grow in more positive
way. They will have better market image and higher customer satisfaction. Along with this, they
can easily gain financial stability and can make sustainable development in Russia. For the
company these were the corporate strategies that are supporting them and helping them to
overcome the losses they have received earlier.
Question 3: Advise Mikki Raikonnen on future strategy for Stockmann. Your
answer should take
into account: - The basis of strategy- Directions for possible development
using Ansoff’s matrix -
Discussion of internal development, mergers and acquisitions and alliances
Answer: As the company was facing long term losses so proper strategies are required so that
betterment can be implemented into that areas. Though, they have made modification in their
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Group’s long-term competitiveness but their are further improvement that are needful to
enforced. They should focus on the limited services so that development can be made in more
appropriate ways. Along with this, in order to provide strong competition they have to make
changes in their fashion, cosmetics, home-products, food as-well-as complement, and customers
satisfaction. In order to make better planning and strategy they can use Porter's Generic
Strategies, Ansoff’s matrix and brief discussion can be made related to the internal development,
mergers and acquisitions as-well-as alliances (Chen, Delmas and Lieberman, 2015).
Porter's Generic Strategies is used so that proper, planned and well-structured route can
be identified for the success. Moreover, Stockmann's relative position within Russian industry
determines whether its profitability is above or below the industrial average. In order to gain
average profitability the organisation needs to have sustainable competitive advantage which can
be gained by them if they have low price or different strategies. Additionally, if these two are
added with scope of activities then there is need to modify the three sub parts. In order to
improve the performance they have focus on the cost-leadership, differentiation and direction.
Further, the directions strategy has 2-variable, price and differentiation focus.
Cost Leadership: In order to increase the competition, pricing is the best strategies that must be
adopted. If the organisation is low-cost producer in its industry then it will surely have more
profit level. However, there are various changes required such as, economies of scale,
technologies, high preferential access to resources and other factors. The organisation must adopt
all the resources in effective manner that cost of the product as-well-as production can be
reduced (Ferlie and et. al., 2016). Achieving sustaining overall cost-leadership, Stockmann's can
be above average performer and can increase their profitability in market.
Differentiation: In order to be different the firm must adopt the strategies that are different from
others. Similar, strategies were adopted by Starbucks when their market image was hampered
and they were continuously facing loss and negative sales. For this there are two important terms
perceive and uniquely positions that assist customers to meet those needs. Most of companies
like Starbucks are popular due to their uniqueness and differentiated strategies they have (Certo
and et. al., 2016). Further, Stockmann's can influence more customers from its uniqueness and
premium prices.
Focus: While making the strategies, competitive focus is very essential to be overviewed within
the confined industry (Hubbard, Rice and Galvin, 2014). The managers can select particular
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areas where they wanted to make development and other changes. Further, employees can aid in
serving them as exclusion for others. As discussed above there are two variable that help in
making focus strategy.
a) In Russia, the company can provide cost advantages which will bring profitability to them.
b) Having different focus they can achieve greater target segmentation.
Mentioned variants about the focus strategy relies on differences between competitors in
the market segmentation. Both the strategies must be adopted so that they can provide greater
stability and market success to the company. Along with this, there will be greater production
and delivery system that will aids to the profitability of the entity. These focus strategies also
assist in exploiting the special needs and requirement of buyers in Russia.
There is another thing that can provide assistance in the mitigation of the risk using the
different option. The Ansoff Matrix which is also popularly known as Product/Market Expansion
Grid. As the company was facing the issues regarding the expansion and maintenance market
expansion can support to the company. Business managers and leaders understand that if long
term profitability, growth and success is required by the organization, they have to different from
the usual business mindset, even when things are going well. Being innovative makes more
customers attracted towards the company which results in increasing profit and new customer
exception. Ansoff Matrix helps to develop plan that keeps away from the potential risk and
provides most suitable plan for your situation (Johnson and et. al. 2013). It is quick and simple
way through which risks can be reduced and effective growth can be maintained. There are 4
variants that are needed to be discussed here. These are market development, diversification,
market penetration and product development. As it was made to mitigate the risk associated with
Stockmann's so the different approaches helps in following ways:
Market Development: The company should identify new areas based on the geographical
markets, using different sales channels, market segmentation and marketing mix so that effective
approaches can be made and competences can enhanced. It will provide new opportunities to the
firm.
Diversification: There is little risk in this strategy as there is need to achieve economics of sales.
Moreover, various variety of products are sold to them. However, it may lead to suffer company
from adverse circumstances.
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Market Penetration: Using the techniques existing products of the company can be sold. For
this, there is requirement of new marketing strategies so that more people can be attracted and
encouraged. Different plans can be used such as loyalty scheme, pricing techniques, sales forces
activities or purchasing competitor's firm.
Product Development: As company's customer belong to Russia so the company needs to
provide different variants, or repackage existing products so that more customers can be attracted
(Kiryukov, 2010). Moreover, improvement must be made in services, quality and customer's
experience.
Firm can also make certain changes in their internal development where Stockmann's xan
develop their strategies based on their business capabilities as-well-as resources available. It is
the most popular strategies where designing and developing new product ranges are made. There
are another areas where company can make development it is the corporate finances,
management and strategy dealing with purchasing and/or joining with other companies. If the
company has great loss they can combine with other organization so that they can effectively
earn profit and market shares. However, in the other the company is owned by the other person
and they have rights regarding the company that is their shares. They can also form the alliance
which can assist them for changes.
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REFERENCES
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management. Strategic Management Journal. 37(2). pp.257-261.
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Strategic Management Journal. 37(11). pp.2191-2192.
Bettis, R. and et. al. 2014. Quantitative empirical analysis in strategic management. Strategic
Management Journal. 35(7). pp.949-953.
Bergh, D. D. and et. al., 2016. Using meta‐analytic structural equation modeling to advance
strategic management research: Guidelines and an empirical illustration via the strategic
leadership‐performance relationship. Strategic Management Journal. 37(3). pp.477-497.
Carroll, R. J., Primo, D. M. and Richter, B. K., 2016. Using item response theory to improve
measurement in strategic management research: An application to corporate social
responsibility. Strategic Management Journal. 37(1). pp.66-85.
Chen, C. M., Delmas, M. A. and Lieberman, M. B., 2015. Production frontier methodologies and
efficiency as a performance measure in strategic management research. Strategic
Management Journal. 36(1). pp.19-36.
Ferlie, E. and et. al., 2016. Strategic management in the healthcare sector: the debate about the
resource-based view flourishes in response to recent commentaries. International journal
of health policy and management. 5(2). p.145.
Certo, S. T. and et. al., 2016. Sample selection bias and Heckman models in strategic
management research. Strategic Management Journal. 37(13). pp.2639-2657.
Hubbard, G., Rice, J. and Galvin, P., 2014. Strategic management. Pearson Australia.
Johnson, J. and et. al. 2013. Exploring Strategy.
Texts and Cases. 10 th Edn. Harlow: Pearson Education
Kiryukov, S., 2010. Stockmann’s Corporate Strategy in Russia: No Hurry!. Graduate School
of Management: St Petersburg State University
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Nicholas, J. M. and Steyn, H., 2017. Project management for engineering, business and
technology. Taylor & Francis.
Online
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<http://www.stockmanngroup.com/en/strategy>. [Accessed on 17th October 2017].
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<http://www.stockmanngroup.com/documents/10157/17374/1_cmd2011_strategy.pdf>.
[Accessed on 17th October 2017].
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