Strategic groups and performance: an empirical analysis of strategic groups in the wind energy industry in Europe

The strategic group theory provides an intermediate level of analysis between a single company and the whole industry for identifying issues about the company's competitive position and strategic choices. Strategic groups are companies within an industry with similar strategic characteristics or competing on similar bases. Strategic choices are aligned with the firms’ resources. The purpose of this study was to identify the strategic groups in the wind energy industry in Europe, and study, whether a certain group membership results in financial performance differences. Altogether 80 European wind energy companies were included in the study, which were clustered into four strategic groups according to their age and growth rate. Each group corresponds to a different strategy. The results show that the wind energy companies can be clustered according to the chosen strategic characteristics. Strategic decisions were investigated with characteristic variables. Performance variables were used in the analysis measuring profitability, liquidity and solvency of the groups. These strategic choices of the companies did not have a significant influence on the firms’ performance. The more mature and slower growing group proved to be the most successful. However, the differences between groups were generally not statistically significant. The only statistically significant difference found was in the solvency ratio between Mature Slow and Young Rapid groups. Measured with these variables, more mature and slower growing companies performed better. Therefore, a certain strategic group membership results in performance differences.

An analytic approach to distribution logistics strategic management

Logistics management is increasingly being recognised by many companies to be of critical concern. The logistics function includes directly or indirectly many of the new areas for achieving or maintaining competitive advantage that companies have been forced to develop due to increasing competitive pressures. The key to achieving a competitive advantage is to manage the logistics function strategically which involves determining the most cost effective method of providing the necessary customer service levels from the many combinations of operating procedures in the areas of transportation, warehousing, order processing and information systems, production, and inventory management. In this thesis, a comprehensive distribution logistics strategic management process is formed by integrating the periodic strategic planning process with a continuous strategic issues management process. Strategic planning is used for defining the basic objectives for a company and assuring co operation and synergy between the different functions of a company while strategic issues management is used on a continuous basis in order to deal with environmental and internal turbulence. The strategic planning subprocess consists of the following main phases: (1) situational analyses, (2) defining the vision and strategic goals for the logistics function, (3) determining objectives and strategies, (4) drawing up tactical action plans, and (5) evaluating the implementation of the plans and making the needed adjustments. The aim of the strategic issues management subprocess is to continuously scan the environment and the organisation for early identification of the issues having a significant impact on the logistics function using the following steps: (1) the identification of trends, (2) assessing the impact and urgency of the identified trends, (3) assigning priorities to the issues, and (4) planning responses to the, issues. The Analytic Hierarchy Process (AHP) is a systematic procedure for structuring any problem. AHP is based on the following three principles: decomposition, comparative judgements, and synthesis of priorities. AHP starts by decomposing a complex, multicriteria problem into a hierarchy where each level consists of a few manageable elements which are then decomposed into another set of elements. The second step is to use a measurement methodology to establish priorities among the elements within each level of the hierarchy. The third step in using AHP is to synthesise the priorities of the elements to establish the overall priorities for the decision alternatives. In this thesis, decision support systems are developed for different areas of distribution logistics strategic management by applying the Analytic Hierarchy Process. The areas covered are: (1) logistics strategic issues management, (2) planning of logistic structure, (3) warehouse site selection, (4) inventory forecasting, (5) defining logistic action and development plans, (6) choosing a distribution logistics strategy, (7) analysing and selecting transport service providers, (8) defining the logistic vision and strategic goals, (9) benchmarking logistic performance, and (10) logistic service management. The thesis demonstrates the potential of AHP as a systematic and analytic approach to distribution logistics strategic management.

Imperfectly informed voters and strategic extremism

We analyze a unidimensional model of two-candidate electoral competition where voters have im- perfect information about the candidates' policy proposals, that is, voters cannot observe the exact policy proposals of the candidates but only which candidate offers the most leftist/rightist platform. We assume that candidates are purely office motivated and that one candidate enjoys a valence advan- tage over the other. We characterize the unique Sequential Equilibrium in very-weakly undominated strategies of the game. In this equilibrium the behavior of the two candidates tends to maximum extremism, due to the voters' lack of information. But it may converge or diverge depending on the size of the advantage. For small values of the advantage candidates converge to the extreme policy most preferred by the median and for large values of the advantage candidates strategies diverge: each candidate specializes in a different extreme policy. These results are robust to the introduction of a proportion of well informed voters. In this case the degree of extremism decreases when the voters become more informed.

Strategic choices and performance – an empirical analysis of largest European and North American energy companies

Energy industry has gone through major changes globally in past two decades. Liberalization of energy markets has led companies to integrate both vertically and horizontally. Growing concern on sustainable development and aims to decrease greenhouse gases in future will increase the portion of renewable energy in total energy production. Purpose of this study was to analyze using statistical methods, what impacts different strategic choices has on biggest European and North American energy companies’ performance. Results show that vertical integration, horizontal integration and use of renewable energy in production had the most impact on profitability. Increase in level of vertical integration decreased companies’ profitability, while increase in horizontal integration improved companies’ profitability. Companies that used renewable energy in production were less profitable than companies not using renewable energy.

Strategic Development of Electricity Distribution Networks – Concept and Methods

Strategic development of distribution networks plays a key role in the asset management in electricity distribution companies. Owing to the capital-intensive nature of the field and longspan operations of companies, the significance of a strategy is emphasised. A well-devised strategy combines awareness of challenges posed by the operating environment and the future targets of the distribution company. Economic regulation, ageing infrastructure, scarcity of resources and tightening supply requirements with challenges created by the climate change put a pressure on the strategy work. On the other hand, technology development related to network automation and underground cabling assists in answering these challenges. This dissertation aims at developing process knowledge and establishing a methodological framework by which key issues related to network development can be addressed. Moreover, the work develops tools by which the effects of changes in the operating environment on the distribution business can be analysed in the strategy work. To this end, the work discusses certain characteristics of the distribution business and describes the strategy process at a principle level. Further, the work defines the subtasks in the strategy process and presents the key elements in the strategy work and long-term network planning. The work delineates the factors having either a direct or indirect effect on strategic planning and development needs in the networks; in particular, outage costs constitute an important part of the economic regulation of the distribution business, reliability being thus a key driver in network planning. The dissertation describes the methodology and tools applied to cost and reliability analyses in the strategy work. The work focuses on determination of the techno-economic feasibility of different network development technologies; these feasibility surveys are linked to the economic regulation model of the distribution business, in particular from the viewpoint of reliability of electricity supply and allowed return. The work introduces the asset management system developed for research purposes and to support the strategy work, the calculation elements of the system and initial data used in the network analysis. The key elements of this asset management system are utilised in the dissertation. Finally, the study addresses the stages of strategic decision-making and compilation of investment strategies. Further, the work illustrates implementation of strategic planning in an actual distribution company environment.

Strategic practices : : hidden histories of gender in Finland 1880-2005 : projektikuvaus

Ajankohtaista

Strategic Orientation of Knowledge Management: Influence on Company's Performance

Nowadays, the huge part of the most important research is done in the area of interaction of two or more fields of research. They open doors for new ideas and help to find that was not possible to find before, explain simple things, which was missed because of narrow vision. This research investigates the interconnection of strategy study and knowledge management. Well-known researches (e.g. Michael Zack, 2003) point out that organization should align its' knowledge management to strategy to gain success. But this is not well developed area yet. This research contributes to the growing knowledge of knowledge management - strategy alignment. The research tests the relation between strategic orientation of knowledge management and performance of the company. It also investigates the nature of strategy typology influence on strategic orientation of knowledge management. These two points have critical importance for development of this area. Moreover, it has management implication for those practitioners, who cares about sustainable success of their company based on knowledge.

The role of power relations in strategic supply management – A value net approach

Supplier relationships are key elements of supply management and thus have attracted substantial research interest among academics and practitioners. The collaborative nature of relationships has been the focus of the mainstream research, and limited interest has been channelled towards power in buyer–supplier relationships. However, power is one of the key factors determining the outcomes in many business relations. Hence, one of the main objectives of this dissertation is to clarify how power may influence the nature of buyer–supplier relationships and, moreover, the depth of collaboration. Another main objective is to clarify the role of power relations in strategic supply management. Given the different nature of relationships, the firm needs divergent strategies in its supply management in order to handle them efficiently. Power has been identified as one of the factors that affect the nature of buyer–supplier relationships, and firms should thus develop strategies for handling power relations. Three research questions are addressed in pursuit of these objectives, the aim being to clarify the sources of power, the influence of power on collaboration, and the role of buyer–supplier relationships in the firm’s supply strategy. This dissertation has two parts. The first part provides a synthesis of the overall dissertation, and the second part comprises five complementary research papers. The qualitative research method is applied in an empirical case study from the Finnish food industry. The main contribution of this dissertation is that it clarifies the role of power relations in strategic supply management in value nets, and discloses the nature of power as an influencing factor in supplier relationships. It extends the discussion on power in buyer– supplier relationships in highlighting the context of networks and raising the question of network effects on power relations. It also illustrates how power positions and power relations in value nets can be determined based on the sources of power of the network actors, and shows their influence on collaboration.

IDEAS for Strategic Technology Management: Design of an electronically mediated scenario method

The age-old adage goes that nothing in this world lasts but change, and this generation has indeed seen changes that are unprecedented. Business managers do not have the luxury of going with the flow: they have to plan ahead, to think strategies that will meet the changing conditions, however stormy the weather seems to be. This demand raises the question of whether there is something a manager or planner can do to circumvent the eye of the storm in the future? Intuitively, one can either run on the risk of something happening without preparing, or one can try to prepare oneself. Preparing by planning for each eventuality and contingency would be impractical and prohibitively expensive, so one needs to develop foreknowledge, or foresight past the horizon of the present and the immediate future. The research mission in this study is to support strategic technology management by designing an effective and efficient scenario method to induce foresight to practicing managers. The design science framework guides this study in developing and evaluating the IDEAS method. The IDEAS method is an electronically mediated scenario method that is specifically designed to be an effective and accessible. The design is based on the state-of-the-art in scenario planning, and the product is a technology-based artifact to solve the foresight problem. This study demonstrates the utility, quality and efficacy of the artifact through a multi-method empirical evaluation study, first by experimental testing and secondly through two case studies. The construction of the artifact is rigorously documented as justification knowledge as well as the principles of form and function on the general level, and later through the description and evaluation of instantiations. This design contributes both to practice and foundation of the design. The IDEAS method contributes to the state-of-the-art in scenario planning by offering a light-weight and intuitive scenario method for resource constrained applications. Additionally, the study contributes to the foundations and methods of design by forging a clear design science framework which is followed rigorously. To summarize, the IDEAS method is offered for strategic technology management, with a confident belief that it will enable gaining foresight and aid the users to choose trajectories past the gales of creative destruction and off to a brighter future.

Strategic supply chain alignment to customer buying behavior

In search for competitive advantage, designing and managing supply chain networks have become a necessary competence for organizations. The target of this thesis is to answer a question, how to design a multiple supply chain network. The purpose is to study, what kind of different supply chain designs exist and, how to choose appropriate supply chain designs for a company. In the thesis, the focus is on the supply chain alignment to customers, more specifically to customer buying behavior. The research method was a case study. A framework for measuring customer buying behavior was developed based on the literature and it was used in the study of customer buying behavior in the case environment. In the case company structured interviews and data records were used as sources of evidence. Persons working in the customer-interface were interviewed face-to-face and through an e-mail questionnaire. When analyzing the data, a Quality function deployment matrix was used as one analysis method. As a result of the thesis, supply chain network of the case company is proposed to be divided into three separate supply chains, which focus on different areas and they could be called lean, agile and continuous replenishment supply chains. In conclusion, in the supply chain alignment to customer buying behavior several aspects have to be studied from different perspectives. According to the results, a multiple supply chain strategy is recommended to be implemented in the case company, since the diversity of the customer needs cannot be managed efficiently through a single supply chain.

Experiences in using a structured method in finding and defining new innovations: the strategic options approach

Investment decision-making on far-reaching innovation ideas is one of the key challenges practitioners and academics face in the field of innovation management. However, the management practices and theories strongly rely on evaluation systems that do not fit in well with this setting. These systems and practices normally cannot capture the value of future opportunities under high uncertainty because they ignore the firm’s potential for growth and flexibility. Real options theory and options-based methods have been offered as a solution to facilitate decision-making on highly uncertain investment objects. Much of the uncertainty inherent in these investment objects is attributable to unknown future events. In this setting, real options theory and methods have faced some challenges. First, the theory and its applications have largely been limited to market-priced real assets. Second, the options perspective has not proved as useful as anticipated because the tools it offers are perceived to be too complicated for managerial use. Third, there are challenges related to the type of uncertainty existing real options methods can handle: they are primarily limited to parametric uncertainty. Nevertheless, the theory is considered promising in the context of far-reaching and strategically important innovation ideas. The objective of this dissertation is to clarify the potential of options-based methodology in the identification of innovation opportunities. The constructive research approach gives new insights into the development potential of real options theory under non-parametric and closeto- radical uncertainty. The distinction between real options and strategic options is presented as an explanans for the discovered limitations of the theory. The findings offer managers a new means of assessing future innovation ideas based on the frameworks constructed during the course of the study.

Formal and informal mechanisms for knowledge protection and sharing

The most important knowledge in firms is mostly tacit and embedded in individuals within the organization. This background knowledge that firms possess is used for creation of new knowledge and innovations. As firms today greatly concentrate on their core competencies, they need external knowledge from various collaboration partners. Thus, collaborative relationship governance, as well as control (use of appropriability mechanisms) over background (the input from each firm in innovative activities) and foreground knowledge (the output of collaboration activities) is needed in order to successfully create and capture value from innovative activities without losing core knowledge and competitiveness. Even though research has concentrated on knowledge protection and knowledge sharing, studies that combine both of these views and examine the effects of sharing and protection on value creation and capture have been rather limited. Studies have mainly focused on the protection of the output of innovation while forgetting the protection of the input of innovation. On the other hand, as the research concentrating on the output of innovation tends to favor formal mechanisms, informal mechanisms have remained more unknown to researchers as well as managers. This research aims to combine the perspectives of knowledge sharing and knowledge protection and their relationship with value creation and value capture. The sharing and protection are viewed from two points of view: the use of appropriability mechanisms, as well as governance of the collaborative relationship. The study consists of two parts. The first part introduces the research topic and discusses the overall results. The second part comprises six complementary research publications. Both qualitative and quantitative research methods are used in the study. In terms of results, the findings enhance understanding of the combined use of formal and informal mechanisms for knowledge protection and sharing. Informal mechanisms appear to be emphasized in the protection of background knowledge, and thus are prerequisites for innovation, whereas formal mechanisms are relied on more for protecting the results of innovative activities. However, the simultaneous use of the formal and informal mechanisms that are relevant to the particular industry and innovation context is recommendedthroughout the collaborative innovation process. Further, the study adds to the current knowledge on HRM as an appropriability mechanism: on the firm level its uses include assessing and hedging against employee-related risks such as knowledge leaking and knowledge leaving. A further contribution is to the research on HRM protection and its interrelations with other appropriability mechanisms, its constituents, and its potential use in the area of knowledge protection.

The influence of strategic entrepreneurship on firm performance

In the study the recently developed concept of strategic entrepreneurship was addressed with the aim to investigate the underlying factors and components constituting the concept and their influence on firm performance. As the result of analysis of existing literature and empirical studies the model of strategic entrepreneurship for the current study is developed with the emphasis on exploration and exploitation parts of the concept. The research model is tested on the data collected in the project ―Factors of growth and success of entrepreneurial firms in Russia‖ by Center for Entrepreneurship of GSOM in 2007 containing answers of owners and managers of 500 firms operating in St. Petersburg and Moscow. Multiple regression analysis showed that exploration and exploitation presented by entrepreneurial values, investments in internal resources, knowledge management and developmental changes are significant factors constituting strategic entrepreneurship and having positive relation to firm performance. The theoretical contribution of the work is linked to development and testing of the model of strategic entrepreneurship. The results can be implemented in management practices of companies willing to engage in strategic entrepreneurship and increase their firm performance.