The fourth industrial revolution increases uncertainty about the future. Many traditional companies are afraid of losing direct contact with the consumers as new players aim to gain control over the customer interface. Businesses are being developed As-a-Service, forcing also the manufacturing industry to develop new business models. Disruptive technologies have the power to break down the business logic of an entire industry. Network effects create intense competition in markets where the best digital ecosystems allow the winner(s) take it all. Also, previously geographically restricted markets face new kind of international competition in which the physical presence is no longer needed.
Identifying potential future operating environments in advance makes strategic decision-making stronger and more thorough, for instance when making decisions on specific investments, geographical markets or business areas. Future scenarios help to visualize the cause-and-effect relationships of major events concerning the industry, competitive field, clients, technologies, legislation and so forth. In effect, alternative and plausible scenarios help the company to connect individual events to bigger phenomena.
An effective scenario method produces consistent and logical scenarios that are relevant to strategic decision-making. At Capful, we have developed a new solution to improve the efficiency, quality, and functionality of scenario work. Scenario Builder relies on mathematical algorithms – also used in machine learning – and draws on consistency analysis to assess the interconnections and logical inconsistencies between multiple alternative scenarios.
Based on the impact analysis, necessary strategic decisions and actions are drafted and concrete back-up plans for alternative future developments created.
Scenario Builder helps to evaluate the potential developments within a multidimensional business environment. Moreover, it enables a comprehensive assessment of individual events and their relationships with one another. The probability of ignoring plausible scenarios decreases and the efficiency and quality of the scenario process improves. Scenarios can later be used as a framework for monitoring the changes taking place in the organization’s operating environment. If or when a certain scenario appears to be materializing, the organization is able to update their strategic plans accordingly.
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In order to serve the underlying purpose of any business, to make a profit for its shareholders, companies regardless of size, industry or geographical location need to consider and seek growth. However, creating growth is not a simple task but requires thorough thinking and decision making from top executives steering their businesses.
The objective of this study is to find out the factors or approaches that companies take into consideration when generating strategic growth alternatives. Also the sources of these inputs are examined. In addition, the study aims to address the ways in which the growth alternatives are communicated to the decision makers.
The theoretical foundation of this thesis lies on rational strategic decision making and strategic growth alternatives. The empirical data for the study was gathered from 13 semi-structured thematic interviews with top level executives responsible for strategy in their organizations. At the time of the research, all the companies were listed on NASDAQ OMX Helsinki and had a market capitalization in excess of 250 million euros. The interviewed strategy executives represented the following companies: TeliaSonera, Neste Oil, Elisa, Cargotec, Valmet, Tieto, Sanoma, Aktia, Oriola-KD, Basware, F-Secure, Finnair and Lemminkäinen. The interviews were interpreted through thematic analysis using a systematic coding process. Data collection and data analysis were conducted as an iterative process building on the theoretical framework constructed based on earlier research on the topic.
Generation of strategic growth alternatives is a multi-dimensional process including various inputs. Based on the findings, the outside-in approach, in which external operating environment is essential, is emphasized when creating strategic growth alternatives. Especially customers are seen as an invaluable source for growth opportunities. High priority factors from the external environment are also market growth and the competitive field. In addition, the relevance of widely discussed static positioning strategies seems to be eroding. Core competencies, capabilities and even organizational culture are replacing the older underpinnings when it comes to new business development. Growth generation needs to be continuous – not tied to the calendar year.
Keywords: strategic management, strategic decision making, new business development, strategic
growth alternatives, growth, NASDAQ OMX Helsinki
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