This study focuses on the SME strategy formation process in which the industry analysis plays an important role. Strategy formation in the SME sector is stepwise, at first analyzing and positioning, then causalities investigating and at last an innovative and creative process. Identifying and exploiting the strategic groups is an essential part of this process. The strategic group is a homogenous set of companies, which follow the same kind of strategy. In this study strategic groups are used to identify the key elements, which are the most important for the economic performance of a firm in the industry. The production function is used to identify the most important strategic inputs in the production process. The empirical data was collected from the Finnish greenhouse industry, which has been under strong structural change during last fifteen years. The data includes 121 Finnish greenhouse company’s profit and loss accounts and balance sheets during 11 years. The data sample consists of 1012 financial statements with demographic background data and the collected sample represents big companies in the industry, which covers about 23 percent of the Finnish greenhouse area. The result shows that the average ROI (Return on Investment) declined between 1998 – 2008 from 23% to 7%. On the grounds of production function two strategic groups were identified and the difference between groups in ROI was 6,5 percentage points (p<0,01). Inside groups, significant difference in ROI was not found and they were homogenous in relation to performance. The group with less intensive input level in relation to the production unit (m2) succeeded better and the input level of capital, labor and materials was about one third of the input level of more intensive group. In spite of declining performance, companies in the industry did not change their strategy essentially, but the group structure stayed relatively stable during the whole research period. In this study the systematic strategy process model was developed for SMEs on the strength of industry analysis, two strategic groups were identified from the Finnish greenhouse sector and different strategy scenarios were discussed. Using production function as a base for strategic variables, clear strategic groups were found in the greenhouse sector and the invocation of strategic group proved to be an essential part of the strategy process.
|Publication status||Published - 2012|
|MoE publication type||G4 Doctoral dissertation (monograph)|
- environmental economics