Description
Description explain about strategic repositioning in global manufacturing companies.
!
School of Economics and Management
Department of Business Administration
Corporate Entrepreneurship and Innovation
Internship and degree project (Master thesis 15 ECTS)
Spring 2013
Strategic repositioning in global manufacturing companies
Authors: Georgi Georgiev & Philip Werner
Supervisor: Joakim Winborg
#
Acknowledgement
The authors would like to thank the staff at Thule group for their support and stewardship that
made this thesis possible, especially Magnus Mattsson and Magnus Welander.
The authors would like also to thank Håkan Lagerquist and Joakim Winborg from
Lund University for their supervisions and mentorship.
$
Title: Strategic repositioning in global manufacturing companies
Date: April 29, 2013
Program: Master Program in Entrepreneurship, Corporate Entrepreneurship and Innovation
Course: Internship and degree project (Master thesis 15 ECTS)
Authors: Georgi Georgiev and Philip Werner
Supervisor: Joakim Winborg
%
Abstract
Thesis purpose: Thule Group is a practical example of a global manufacturing company that is
applying a repositioning strategy, for instance, through acquisitions and new product
introductions. Therefore, it is suitable to let Thule Group serve as a case to be studied in this
context. By acquiring a more extensive understanding of how triggering events affected
repositioning strategy at Thule, the researchers will contribute to current research on the topic.
Methodology: Researchers selected the “Case Study Design” for the thesis, which was initiated
during a master’s degree project at Thule Group. Semi structured interviews were conducted and
secondary data was used.
Theoretical perspectives: Ryan, et al. (2007) framework for successful strategic repositioning,
company structure, diversification and core competence were used. The study also explores the
forms of corporate entrepreneurship and entrepreneurial strategy.
Conclusions: The authors proposed a conceptual model consisting of several factors, considered
of major importance for the strategic repositioning process. Three of the nine factors were
considered most significant. Researchers concluded that repositioning should be led from the top
management of the company. The business should know its consumers very well and the
company’s core competence will determine the strategic repositioning direction. Thus, top
management commitment, high customer awareness and sensitivity and core competence were
determined the most important factors.
Keywords: strategic repositioning, corporate entrepreneurship, and entrepreneurial strategy
&
Table of Content
1. Introduction 6
1.1 Background 6
1.2 Problem discussion 7
1.3 Research question 8
1.4 Purpose 8
1.5 Disposition of the thesis 10
2. Theoretical fame of reference 11
2.1 Forms of corporate entrepreneurship 11
2.2 Strategic Repositioning 12
2.3 Frameworks for successful repositioning 14
2.3.1 Organizational Structure 15
2.3.2 Core Competence 16
2.3.3 Diversification 18
3. Method 22
3.1 Research design 22
3.2 Process and data collection 23
3.3 Method for data analysis 26
3.4 Reflections on method choices 27
4. Case Introduction 28
4.1 Thule Group Background 28
4.2 M&A’s and organic product launches at Thule Group. 29
4.3 New category ideas 32
4.4 Focus on organic growth 35
4.5 Pack ‘n Pedal launch in 2012 38
4.6 Chariot acquisition in 2011 38
4.7 Hike ‘n Trek launch in 2014 39
4.8 Thule Partner Program 39
4.9 Situation today 40
5. Analysis 42
5.1 Strategic repositioning 42
5.2 Models for successful repositioning discussion 43
5.2.1 Six elements framework discussion 44
5.2.2 Diversification 49
5.2.3 Core Competence 51
6. Conclusions and implications 53
6.1 Conclusions 53
6.2 Limitations and implications for further research 54
6.3 Practical implications 55
Appendix 56
References 60
'
1. Introduction
----------------------------------------------------------------------------------------------------------------
In this chapter, a background of entrepreneurial strategy leads to the specific research area of
strategic repositioning. A problem discussion concerning the phenomenon of strategic
repositioning and the importance of global manufacturing companies then shows the way to the
purpose and research questions of this study.
----------------------------------------------------------------------------------------------------------------
1.1 Background
Companies with mature businesses can often struggle to deliver the growth rates demanded by
analysts and shareholders (Lichtenthaler, 2005). As a result of the recessions or other minor
economic downturns, many companies have been downsizing and refocusing on their core
business. Therefore, many companies end up losing their ability of creating new business
ventures separate from their core business. (Lichtenthaler, 2005)
To tackle the issue, businesses today are introducing corporate entrepreneurship strategy,
consisting of persistent and innovation-related activities (Ireland, et. al., 2009). The strategy
helps revitalize not only their operations but also build new capabilities as a result (Ireland, et.
al., 2009). By searching for entrepreneurial strategies, companies place themselves in a position
to regularly and systematically recognize and exploit entrepreneurial opportunities (Eisenhardt &
Martin 2000).
Renewal and repositioning efforts within established global businesses are essential parts of
entrepreneurial strategy, thus paid special attention in this thesis (Ryan et. al., 2007; Ireland et.
al., 2009). More specifically, strategic repositioning is defined as a very attractive area for further
knowledge exploration (Ryan, et al., 2007). Due to the low amount of studies on the topic,
questions arise about the factors influencing strategic repositioning in global manufacturing
companies.
(
1.2 Problem discussion
The role of global manufacturing companies today continues to grow. In next 15 years, 1.8
billion people will enter the global consuming class, which will double worldwide consumption
to $64 trillion (Manylka et al., 2012). Manufacturing businesses have helped drive economic
growth and living standards for three centuries. They also remain a vital source of innovation and
competitiveness while making contributions to research, development and productivity growth
(Manylka et al., 2012). When global manufacturing companies struggle with their business, the
effects on to the world economy can therefore be severe.
Strategic repositioning efforts as a tool for entrepreneurial strategy implementation can help
revitalize these companies, thus creating more jobs and stability in the world. Strategic
repositioning is an act initiated by companies as a way to adapt to changing market surroundings
(Turner, 2003; Porter, 1996). These strategic changes often represent an important shift in the
fundamental value proposition of the company as it seeks to change the market it targets or its
fundament of differentiation advantages (Porter, 1996). Turner (2003) describes the phenomenon
as “a conscious act undertaken by enterprises as they adapt to a changing commercial
environment”. Such strategy change often represents a fundamental shift in the underlying value
proposition of the enterprise as it seeks to change its targeted market segment. (Turner, 2003)
Researchers identified only two empirical studies closely related to strategic repositioning,
including the case study of Cable and Wireless (Turner, 2003) and the case study of Bulmer
cider (Ryan, et al., 2007). The Cable and Wireless case is an example of unsuccessful strategic
repositioning, where the company expanded too far from its core business (Turner, 2003). With
reference to Turner (2003), one can claim that C&W’s case is too narrow on the core business
with a predominant orientation on the external environment. Also, the attempt to strategically
)
reposition itself that was too radical and can almost fall into the category of “turnaround”
(Bibeault, 1982; Turner, 2003). Meanwhile, the Bulmer cider study is an example of a successful
strategic repositioning case where the company followed logical steps of repositioning without
steering too far from their core in efforts to change its brand perception (Ryan, et al., 2007).
Therefore, we believe through our Thule Group case, we will be able to contribute to existing
literature by exploring an interesting case of repositioning while determining the most important
factors for the process.
1.3 Research question
By using a single case-study approach, this thesis attempts to explore the following question:
What are the key factors influencing strategic repositioning in global manufacturing companies?
1.4 Purpose
This paper examines the global manufacturing company Thule Group. Thule was owned by three
different private equity companies in the past decade which contributed to many operational
changes within the company. When EQT acquired Thule, the company was focused on
production units expansion and some acquisitions occurred. When Candover acquired Thule,
heavy investments were made in car related company acquisitions. Under the current ownership
of Nordic Capital, Thule Group is still the market leader in gear transportation solutions.
However, the company is slowly repositioning itself from being a Car Accessory Company
towards being an Outdoor Sporting Goods Company. For instance, through strategic acquisitions
of Case Logic bags and Charriot child carriers, and new product introductions such as bike bags
and technical backpacks. Therefore, it is suitable to let Thule Group serve as a case to be studied
in this context.
*
By acquiring a more extensive understanding of the key factors that influenced the strategic
repositioning process at Thule Group, the researchers will contribute to current research on the
topic is several ways. Firstly, the study reflects how global manufacturing companies can focus
their energy and resources on the most crucial factors while implementing repositioning strategy.
Secondly, the Thule Group case provides valuable data about important decision making
processes during a repositioning strategy. Finally, we believe our study will decrease the gap of
existing strategic repositioning studies using the Thule Group case as an example. The study
should also have practical application to managers and companies, considering the insights it can
provide while taking strategic decisions.
!+
1.5 Disposition of the thesis
Chapter 2 - Theoretical frame of reference
In this chapter the researchers will discuss the theoretical tools, key concepts and theories that
will be used to analyze this case study. In the beginning, different forms of corporate
entrepreneurship are presented, followed by a discussion of frameworks for strategic
repositioning, core competence and diversification.
Chapter 3 - Method
The researchers choose the “Single Case Study Design” for this thesis. The process and the data
collection are presented, followed by the method for data analysis and also their reflection of the
method chosen.
Chapter 4 - Case introduction
This chapter aims to provide a better understanding of the case. The researchers lay out an
overview of Thule Group and a timeline of the company’s history. The chapter follows with the
key events that lead to the launch of the technical backpacks category.
Chapter 5 - Analysis and discussion
In this chapter authors will analyze empirical data from ch.4. In respect of the proposed
theoretical frame of reference, the authors will evaluate if Thule’s case of corporate
entrepreneurship bears all the traits of strategic repositioning. Secondly, the chapter presents the
analyzed interview data compared with the frameworks for successful strategic entrepreneurship
from ch.2 in effort to test the models and evaluate the factors affecting the strategic repositioning
process.
Chapter 6 - Conclusions and implications
In chapter 6 the researchers conclusion, implication to future research and practical implications
are presented.
!!
2. Theoretical frame of reference
----------------------------------------------------------------------------------------------------------------
The following chapter will present and discuss theoretical tools, key concepts and theories that
will be used of the analysis of the case study in Chapter 5.
----------------------------------------------------------------------------------------------------------------
2.1 Forms of corporate entrepreneurship
Before providing a more detailed discussion of strategic repositioning, researchers believe it is
important to introduce the different forms of corporate entrepreneurship, which were analyzed by
researchers.
A number of researchers conceptualize several different types of corporate entrepreneurship,
including sustained regeneration, organizational rejuvenation, domain redefinition, strategic
renewal and strategic repositioning (Covin & Miles, 1999; Kuratko et al., 2011; Ireland et al.,
2009). Strategic regeneration is the most frequent form of corporate entrepreneurship within
organizations (Covin & Miles, 1999). It is described as a process where the firm “develops
cultures, processes, and structures to support and encourage a continuous stream of new product
introductions in its current markets as well as entries with existing products into new markets”
(Covin & Miles, 1999).
Organization rejuvenation is targeting firm’s internal processes, structures, and capabilities
where the focus is on improving its ability to execute strategies. The term is mainly related to the
internal areas of the organization, focused on process and administrative innovations rather than
product innovations. However, introducing new products and entering new markets with existing
products is an integral part of rejuvenation (Kuratko et al., 2011; Dess et al., 2003).
Domain redefinition is defined in firms proactively seeking to create new product market
positions that competitors have not recognized yet, where the focus is on exploring “what is
!#
possible” rather than exploring “what is available” (Covin & Miles, 1999). Strategic renewal is
defined in firms seeking to change the way they compete, allowing the firm to more profitably
exploit product-market opportunities (Covin & Miles, 1999). We believe the term Strategic
renewal is very closely related to Strategic repositioning, which is the act of adapt to a changing
commercial environment”. (Turner, 2003)
After analyzing the given forms of corporate entrepreneurship, researchers believe that strategic
repositioning is the most appropriate term of Thule Group’s case. A more detailed analysis of
strategic repositioning will follow in ch. 2.2.
2.2 Strategic Repositioning
According to Covin and Miles (1999), the areas related to strategic renewal are the basis of
strategic repositioning literature where strategic renewal is a broader concept, also referred to as
the “corporate entrepreneurship phenomenon where an organization seeks to redefine its
relationship with its market or industry competitors.” Agrawal and Helfat (2009) further argue
that in strategic renewal, “the content and process of strategy are heavily intertwined, involving
multiple dimensions of change” (Agrawal and Helfat, 2009). ,-./ 0123. 4-04 54104.267 1.8.90:
68;08/ 05?.745 A @?:.A @61> 1.50/ C. 1.8.9.=A C34 0:5< 4-. 1
Description explain about strategic repositioning in global manufacturing companies.
!
School of Economics and Management
Department of Business Administration
Corporate Entrepreneurship and Innovation
Internship and degree project (Master thesis 15 ECTS)
Spring 2013
Strategic repositioning in global manufacturing companies
Authors: Georgi Georgiev & Philip Werner
Supervisor: Joakim Winborg
#
Acknowledgement
The authors would like to thank the staff at Thule group for their support and stewardship that
made this thesis possible, especially Magnus Mattsson and Magnus Welander.
The authors would like also to thank Håkan Lagerquist and Joakim Winborg from
Lund University for their supervisions and mentorship.
$
Title: Strategic repositioning in global manufacturing companies
Date: April 29, 2013
Program: Master Program in Entrepreneurship, Corporate Entrepreneurship and Innovation
Course: Internship and degree project (Master thesis 15 ECTS)
Authors: Georgi Georgiev and Philip Werner
Supervisor: Joakim Winborg
%
Abstract
Thesis purpose: Thule Group is a practical example of a global manufacturing company that is
applying a repositioning strategy, for instance, through acquisitions and new product
introductions. Therefore, it is suitable to let Thule Group serve as a case to be studied in this
context. By acquiring a more extensive understanding of how triggering events affected
repositioning strategy at Thule, the researchers will contribute to current research on the topic.
Methodology: Researchers selected the “Case Study Design” for the thesis, which was initiated
during a master’s degree project at Thule Group. Semi structured interviews were conducted and
secondary data was used.
Theoretical perspectives: Ryan, et al. (2007) framework for successful strategic repositioning,
company structure, diversification and core competence were used. The study also explores the
forms of corporate entrepreneurship and entrepreneurial strategy.
Conclusions: The authors proposed a conceptual model consisting of several factors, considered
of major importance for the strategic repositioning process. Three of the nine factors were
considered most significant. Researchers concluded that repositioning should be led from the top
management of the company. The business should know its consumers very well and the
company’s core competence will determine the strategic repositioning direction. Thus, top
management commitment, high customer awareness and sensitivity and core competence were
determined the most important factors.
Keywords: strategic repositioning, corporate entrepreneurship, and entrepreneurial strategy
&
Table of Content
1. Introduction 6
1.1 Background 6
1.2 Problem discussion 7
1.3 Research question 8
1.4 Purpose 8
1.5 Disposition of the thesis 10
2. Theoretical fame of reference 11
2.1 Forms of corporate entrepreneurship 11
2.2 Strategic Repositioning 12
2.3 Frameworks for successful repositioning 14
2.3.1 Organizational Structure 15
2.3.2 Core Competence 16
2.3.3 Diversification 18
3. Method 22
3.1 Research design 22
3.2 Process and data collection 23
3.3 Method for data analysis 26
3.4 Reflections on method choices 27
4. Case Introduction 28
4.1 Thule Group Background 28
4.2 M&A’s and organic product launches at Thule Group. 29
4.3 New category ideas 32
4.4 Focus on organic growth 35
4.5 Pack ‘n Pedal launch in 2012 38
4.6 Chariot acquisition in 2011 38
4.7 Hike ‘n Trek launch in 2014 39
4.8 Thule Partner Program 39
4.9 Situation today 40
5. Analysis 42
5.1 Strategic repositioning 42
5.2 Models for successful repositioning discussion 43
5.2.1 Six elements framework discussion 44
5.2.2 Diversification 49
5.2.3 Core Competence 51
6. Conclusions and implications 53
6.1 Conclusions 53
6.2 Limitations and implications for further research 54
6.3 Practical implications 55
Appendix 56
References 60
'
1. Introduction
----------------------------------------------------------------------------------------------------------------
In this chapter, a background of entrepreneurial strategy leads to the specific research area of
strategic repositioning. A problem discussion concerning the phenomenon of strategic
repositioning and the importance of global manufacturing companies then shows the way to the
purpose and research questions of this study.
----------------------------------------------------------------------------------------------------------------
1.1 Background
Companies with mature businesses can often struggle to deliver the growth rates demanded by
analysts and shareholders (Lichtenthaler, 2005). As a result of the recessions or other minor
economic downturns, many companies have been downsizing and refocusing on their core
business. Therefore, many companies end up losing their ability of creating new business
ventures separate from their core business. (Lichtenthaler, 2005)
To tackle the issue, businesses today are introducing corporate entrepreneurship strategy,
consisting of persistent and innovation-related activities (Ireland, et. al., 2009). The strategy
helps revitalize not only their operations but also build new capabilities as a result (Ireland, et.
al., 2009). By searching for entrepreneurial strategies, companies place themselves in a position
to regularly and systematically recognize and exploit entrepreneurial opportunities (Eisenhardt &
Martin 2000).
Renewal and repositioning efforts within established global businesses are essential parts of
entrepreneurial strategy, thus paid special attention in this thesis (Ryan et. al., 2007; Ireland et.
al., 2009). More specifically, strategic repositioning is defined as a very attractive area for further
knowledge exploration (Ryan, et al., 2007). Due to the low amount of studies on the topic,
questions arise about the factors influencing strategic repositioning in global manufacturing
companies.
(
1.2 Problem discussion
The role of global manufacturing companies today continues to grow. In next 15 years, 1.8
billion people will enter the global consuming class, which will double worldwide consumption
to $64 trillion (Manylka et al., 2012). Manufacturing businesses have helped drive economic
growth and living standards for three centuries. They also remain a vital source of innovation and
competitiveness while making contributions to research, development and productivity growth
(Manylka et al., 2012). When global manufacturing companies struggle with their business, the
effects on to the world economy can therefore be severe.
Strategic repositioning efforts as a tool for entrepreneurial strategy implementation can help
revitalize these companies, thus creating more jobs and stability in the world. Strategic
repositioning is an act initiated by companies as a way to adapt to changing market surroundings
(Turner, 2003; Porter, 1996). These strategic changes often represent an important shift in the
fundamental value proposition of the company as it seeks to change the market it targets or its
fundament of differentiation advantages (Porter, 1996). Turner (2003) describes the phenomenon
as “a conscious act undertaken by enterprises as they adapt to a changing commercial
environment”. Such strategy change often represents a fundamental shift in the underlying value
proposition of the enterprise as it seeks to change its targeted market segment. (Turner, 2003)
Researchers identified only two empirical studies closely related to strategic repositioning,
including the case study of Cable and Wireless (Turner, 2003) and the case study of Bulmer
cider (Ryan, et al., 2007). The Cable and Wireless case is an example of unsuccessful strategic
repositioning, where the company expanded too far from its core business (Turner, 2003). With
reference to Turner (2003), one can claim that C&W’s case is too narrow on the core business
with a predominant orientation on the external environment. Also, the attempt to strategically
)
reposition itself that was too radical and can almost fall into the category of “turnaround”
(Bibeault, 1982; Turner, 2003). Meanwhile, the Bulmer cider study is an example of a successful
strategic repositioning case where the company followed logical steps of repositioning without
steering too far from their core in efforts to change its brand perception (Ryan, et al., 2007).
Therefore, we believe through our Thule Group case, we will be able to contribute to existing
literature by exploring an interesting case of repositioning while determining the most important
factors for the process.
1.3 Research question
By using a single case-study approach, this thesis attempts to explore the following question:
What are the key factors influencing strategic repositioning in global manufacturing companies?
1.4 Purpose
This paper examines the global manufacturing company Thule Group. Thule was owned by three
different private equity companies in the past decade which contributed to many operational
changes within the company. When EQT acquired Thule, the company was focused on
production units expansion and some acquisitions occurred. When Candover acquired Thule,
heavy investments were made in car related company acquisitions. Under the current ownership
of Nordic Capital, Thule Group is still the market leader in gear transportation solutions.
However, the company is slowly repositioning itself from being a Car Accessory Company
towards being an Outdoor Sporting Goods Company. For instance, through strategic acquisitions
of Case Logic bags and Charriot child carriers, and new product introductions such as bike bags
and technical backpacks. Therefore, it is suitable to let Thule Group serve as a case to be studied
in this context.
*
By acquiring a more extensive understanding of the key factors that influenced the strategic
repositioning process at Thule Group, the researchers will contribute to current research on the
topic is several ways. Firstly, the study reflects how global manufacturing companies can focus
their energy and resources on the most crucial factors while implementing repositioning strategy.
Secondly, the Thule Group case provides valuable data about important decision making
processes during a repositioning strategy. Finally, we believe our study will decrease the gap of
existing strategic repositioning studies using the Thule Group case as an example. The study
should also have practical application to managers and companies, considering the insights it can
provide while taking strategic decisions.
!+
1.5 Disposition of the thesis
Chapter 2 - Theoretical frame of reference
In this chapter the researchers will discuss the theoretical tools, key concepts and theories that
will be used to analyze this case study. In the beginning, different forms of corporate
entrepreneurship are presented, followed by a discussion of frameworks for strategic
repositioning, core competence and diversification.
Chapter 3 - Method
The researchers choose the “Single Case Study Design” for this thesis. The process and the data
collection are presented, followed by the method for data analysis and also their reflection of the
method chosen.
Chapter 4 - Case introduction
This chapter aims to provide a better understanding of the case. The researchers lay out an
overview of Thule Group and a timeline of the company’s history. The chapter follows with the
key events that lead to the launch of the technical backpacks category.
Chapter 5 - Analysis and discussion
In this chapter authors will analyze empirical data from ch.4. In respect of the proposed
theoretical frame of reference, the authors will evaluate if Thule’s case of corporate
entrepreneurship bears all the traits of strategic repositioning. Secondly, the chapter presents the
analyzed interview data compared with the frameworks for successful strategic entrepreneurship
from ch.2 in effort to test the models and evaluate the factors affecting the strategic repositioning
process.
Chapter 6 - Conclusions and implications
In chapter 6 the researchers conclusion, implication to future research and practical implications
are presented.
!!
2. Theoretical frame of reference
----------------------------------------------------------------------------------------------------------------
The following chapter will present and discuss theoretical tools, key concepts and theories that
will be used of the analysis of the case study in Chapter 5.
----------------------------------------------------------------------------------------------------------------
2.1 Forms of corporate entrepreneurship
Before providing a more detailed discussion of strategic repositioning, researchers believe it is
important to introduce the different forms of corporate entrepreneurship, which were analyzed by
researchers.
A number of researchers conceptualize several different types of corporate entrepreneurship,
including sustained regeneration, organizational rejuvenation, domain redefinition, strategic
renewal and strategic repositioning (Covin & Miles, 1999; Kuratko et al., 2011; Ireland et al.,
2009). Strategic regeneration is the most frequent form of corporate entrepreneurship within
organizations (Covin & Miles, 1999). It is described as a process where the firm “develops
cultures, processes, and structures to support and encourage a continuous stream of new product
introductions in its current markets as well as entries with existing products into new markets”
(Covin & Miles, 1999).
Organization rejuvenation is targeting firm’s internal processes, structures, and capabilities
where the focus is on improving its ability to execute strategies. The term is mainly related to the
internal areas of the organization, focused on process and administrative innovations rather than
product innovations. However, introducing new products and entering new markets with existing
products is an integral part of rejuvenation (Kuratko et al., 2011; Dess et al., 2003).
Domain redefinition is defined in firms proactively seeking to create new product market
positions that competitors have not recognized yet, where the focus is on exploring “what is
!#
possible” rather than exploring “what is available” (Covin & Miles, 1999). Strategic renewal is
defined in firms seeking to change the way they compete, allowing the firm to more profitably
exploit product-market opportunities (Covin & Miles, 1999). We believe the term Strategic
renewal is very closely related to Strategic repositioning, which is the act of adapt to a changing
commercial environment”. (Turner, 2003)
After analyzing the given forms of corporate entrepreneurship, researchers believe that strategic
repositioning is the most appropriate term of Thule Group’s case. A more detailed analysis of
strategic repositioning will follow in ch. 2.2.
2.2 Strategic Repositioning
According to Covin and Miles (1999), the areas related to strategic renewal are the basis of
strategic repositioning literature where strategic renewal is a broader concept, also referred to as
the “corporate entrepreneurship phenomenon where an organization seeks to redefine its
relationship with its market or industry competitors.” Agrawal and Helfat (2009) further argue
that in strategic renewal, “the content and process of strategy are heavily intertwined, involving
multiple dimensions of change” (Agrawal and Helfat, 2009). ,-./ 0123. 4-04 54104.267 1.8.90:
68;08/ 05?.745 A @?:.A @61> 1.50/ C. 1.8.9.=A C34 0:5< 4-. 1