Storck’s entry into the Swedish candy market
torck is a medium-size candy company headquartered in Berlin, Germany. Few years ago, Storck moved there from their original place of foundation, Halle/ Westfalen, Germany, where they still have located a vast majority of the production process.
21 years ago1, they actually went international by selling their products, with strong brands domestically, to new markets abroad. These products today are Werther’s Original, Riesen, Campino, Toffifee, merci, and Mamba, among others.2 In the following analysis, the whole “going international” process shall be simulated with the aim at a perfect internationalization of Storck’s. A focus within this comprehensive procedure will be laid at Storck’s entry into the Swedish candy market. First of all, a strategy formulation will be carried out via both an environmental scan and an internal resource analysis. The environmental scan is put into effect with the help of a PEST analysis in order to identify opportunities and threats awaiting Storck. The internal resources will be analyzed with the object of discovering the company’s strengths and weaknesses.
After generally formulating the strategy, goals will be set with regard to Storck’ s strategy and performance in general. To achieve the goals set, the implementation of that strategy should be thoroughly thought through. The perfect implementation of an internationalization strategy manifests itself by choosing the correct entry strategy and the organizational structure most suitable to Storck’s needs.
At last, recommendations shall be given to Storck in terms of dealing with internationalization as a medium-size company with limited personnel, knowledge, and financial leeway.
Since the home market is exhausted, internationalization makes sense to Storck. Although the foodstuff industry often being equipped with a high national responsiveness, the strategy that should be formulated for Storck’s entry into Sweden should be the international strategy as the need for global integration is low, so is the one for national responsiveness.3
Storck is right at the beginning of its internationalization, therefore the first entry strategy should be an import and export facility, whose main advantage is the perfect suitability to SMEs because of the “minimum of investment”4 required. But this means also a strong need for trustworthy foreign distributors. For the case of Sweden, this may not be a problematic issue as the legal surroundings are safe.
A newly installed international division should deal with the import and export activities, esp. with the upcoming paperwork.5 By an international division structure, “top management attention”6 and a “unified approach”7 to operations abroad are ensured. But one should also note that this can only be a strategy for the “developmental stage of international business”8 because difficulties in strategic acting and global sourcing9 and
between domestic and international managers10 may be fuelled with growing business. Country-specific R&D efforts11 may become necessary as well.
With a goal and a particular strategy, coordination and monitoring of the various international operations can be supported.12 Core competencies and competitive advantage over Swedish competitors can be maintained this way.
In order to implement a strategy, the environment is to be scanned carefully.
From the political and legal view, the Kingdom of Sweden is a very stable country since it is embedded in instructions predetermined by European Union. It is member of the EU (since 1995) and of the UN (1946). Therefore, legal security and political calmness are guaranteed, which especially means that contracts are secure, supported by Swedish and European law.
The “Swedish corporate tax rate [28%13] is significantly lower than in many other European countries and OECD nations”14 and, thus, makes it very attractive for foreign companies to invest in Sweden. Asides, various tax-exemptions, grants, special loans and subsidies are offered.15,16, The VAT rate lies at 25%, yet for food it amounts to only 12%.
1 Storck Sweden. 2004. Storck – Part of your world: History. (Available at: http://www.storck.com/en/history/index.php; visited on: Oct. 9th, 2005)
2 Storck Sweden. 2004. Storck – Part of your world: Brands that capture your heart.(Available at: http://www.storck.se/en/brand/index.php; visited on: Oct. 9th, 2005)
3 ”Strategy formulation and implementation“ in Hodgetts et al. 2006. International Management: Culture, Strategy and Behavior. Page 243. Irwin/McGraw-Hill. Boston.
4 ”Entry strategies and organizational structures“ in Hodgetts et al. 2006. International Management: Culture, Strategy and Behavior. Page 266. Irwin/McGraw-Hill. Boston.
6 ”Entry strategies and organizational structures“ in Hodgetts et al. 2006. International Management: Culture, Strategy and Behavior. Page 271. Irwin/McGraw-Hill. Boston.
12 ”Strategy formulation and implementation“ in Hodgetts et al. 2006. International Management: Culture, Strategy and Behavior. Page 238. Irwin/McGraw-Hill. Boston.
13 Invest in Sweden Agency. May 2004. Taxes in Sweden. (Available at: http://www.sweden.se/upload/Sweden_se/english/factsheets/ISA/Pdf-files/Taxes_in_ Sweden.pdf; visited on: Oct. 9th, 2005)
14 Invest in Sweden Agency. June 2005. Sweden in fact 2005-06. (Available at: http://www.isa.se/upload/english/Publications/Sweden%20in%20fact%202005-2006.pdf; visited on: Oct. 9th, 2005)
15 Invest in Sweden Agency. July 2003. Financial Incentives. (Available at: http://www.isa.se/upload/english/FactSheets/Financial_Incentives.pdf; visited on: Oct. 9th, 2005)
16 Invest in Sweden Agency. September 5th, 2003. Establishing a business: Simplicity and transparency.(Available at: http://www.isa.se/templates/Normal____2024.aspx; visited on: Oct. 9th, 2005)