Harvard Case - Suominen Wipes the Slate Clean
"Suominen Wipes the Slate Clean" Harvard business case study is written by Boris Groysberg, Kalle Heikkinen, Michael Norris. It deals with the challenges in the field of Strategy. The case study is 26 page(s) long and it was first published on : Jun 13, 2016
At Fern Fort University, we recommend Suominen pursue a strategic diversification strategy focused on innovation and sustainable growth within the nonwovens market. This involves expanding into new product categories, leveraging their core competencies in nonwoven technology, and aggressively pursuing market development strategies in emerging markets.
2. Background
Suominen, a Finnish company, is a leading global producer of nonwovens, primarily for hygiene and medical applications. The case study highlights their struggle to maintain profitability in a mature and competitive market. Suominen faces challenges such as price pressure from low-cost competitors and increasing demand for sustainable and innovative products. The main protagonist is the CEO, who needs to navigate this complex landscape and chart a course for future success.
3. Analysis of the Case Study
To analyze Suominen's situation, we utilize a combination of frameworks:
1. Porter's Five Forces:
- Threat of new entrants: Moderate due to significant capital investment required for nonwoven production.
- Bargaining power of buyers: High, as large retailers and manufacturers have significant buying power.
- Bargaining power of suppliers: Moderate, with raw material prices fluctuating and some supplier concentration.
- Threat of substitute products: Moderate, with alternative materials and technologies emerging.
- Competitive rivalry: High, with several established players competing on price, quality, and innovation.
2. SWOT Analysis:
Strengths:
- Strong brand reputation and market leadership in certain segments.
- Advanced nonwoven technology and manufacturing expertise.
- Global presence and established supply chains.
- Commitment to sustainability and innovation.
Weaknesses:
- Dependence on mature and competitive markets.
- Price pressure from low-cost competitors.
- Limited product diversification beyond hygiene and medical applications.
Opportunities:
- Growing demand for nonwovens in emerging markets.
- Increasing consumer interest in sustainable and innovative products.
- Potential for new product development and market expansion.
Threats:
- Economic volatility and potential downturns.
- Raw material price fluctuations.
- Competition from emerging players and alternative technologies.
3. Value Chain Analysis:
Suominen's value chain highlights their core competencies in manufacturing and technology. However, they need to strengthen their marketing and R&D capabilities to drive innovation and differentiation.
4. Business Model Innovation:
Suominen can explore business model innovation by:
- Developing new product lines: Expanding into new segments like automotive, construction, and filtration.
- Offering customized solutions: Tailoring products and services to specific customer needs.
- Adopting a circular economy model: Focusing on product reuse and recycling to reduce environmental impact.
- Leveraging digital technologies: Implementing AI and machine learning for process optimization and product development.
4. Recommendations
1. Strategic Diversification:
- New Product Development: Invest in R&D to develop innovative nonwoven products for new markets like automotive, construction, and filtration.
- Market Development: Focus on expanding into emerging markets with high growth potential, particularly in Asia and Latin America.
- Strategic Acquisitions: Consider acquiring smaller companies with specialized technologies or strong market positions in new segments.
2. Sustainable Growth:
- Environmental Sustainability: Implement a comprehensive sustainability strategy, including reducing waste, using renewable energy, and sourcing sustainable raw materials.
- Social Responsibility: Engage in ethical sourcing practices and support local communities.
3. Innovation and Technology:
- Digital Transformation: Invest in digital technologies like AI and machine learning to improve efficiency, optimize manufacturing processes, and develop new products.
- Open Innovation: Collaborate with universities, research institutions, and startups to access new technologies and ideas.
4. Marketing and Brand Management:
- Product Differentiation: Focus on developing unique product features and benefits to differentiate Suominen's offerings.
- Brand Building: Invest in marketing and branding initiatives to enhance brand awareness and customer loyalty.
- Digital Marketing: Leverage online platforms and social media to reach new customers and build brand engagement.
5. Basis of Recommendations
These recommendations align with Suominen's core competencies in nonwoven technology and manufacturing. They also address the need for sustainable growth and market expansion. The recommendations are supported by a strong understanding of the external environment, including competitive forces, industry trends, and emerging markets.
Quantitative Measures:
- NPV and ROI: Evaluating the financial viability of new product development and market expansion initiatives.
- Break-even Analysis: Assessing the time frame for achieving profitability for new products and ventures.
Assumptions:
- Continued growth in the nonwoven market.
- Increasing consumer demand for sustainable products.
- Availability of skilled labor and resources for innovation and expansion.
6. Conclusion
Suominen is well-positioned to capitalize on the growing nonwovens market by pursuing a strategic diversification strategy focused on innovation and sustainable growth. By leveraging their core competencies, expanding into new markets, and embracing digital technologies, Suominen can achieve long-term success and maintain its leadership position in the industry.
7. Discussion
Alternatives:
- Cost Leadership: Focusing on cost reduction and price competition, which could lead to lower margins and a potential race to the bottom.
- Mergers and Acquisitions: Acquiring competitors to gain market share, which could face regulatory hurdles and integration challenges.
Risks:
- Execution Risk: Successfully implementing the diversification strategy requires strong leadership, effective resource allocation, and organizational change management.
- Market Risk: The success of new product development and market expansion depends on consumer acceptance and market demand.
- Competition: Emerging players and alternative technologies could pose a significant challenge to Suominen's market position.
Key Assumptions:
- The nonwoven market will continue to grow.
- Consumer demand for sustainable products will continue to increase.
- Suominen will be able to successfully develop and launch new products.
8. Next Steps
Timeline:
- Year 1: Develop a comprehensive strategic plan, including specific product development and market expansion initiatives.
- Year 2: Invest in R&D, acquire key technologies, and establish a presence in new markets.
- Year 3: Launch new products, expand operations, and monitor progress against strategic goals.
Key Milestones:
- Develop a detailed product roadmap for new product lines.
- Secure funding for R&D and market expansion.
- Establish partnerships with key stakeholders in new markets.
- Implement a robust sustainability strategy.
- Monitor market trends and competitor activity.
By taking these steps, Suominen can successfully navigate the challenges of a mature and competitive market and position itself for sustainable growth and long-term success.
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Case Description
In 2016, after successfully turning around Finnish nonwovens manufacturer Suominen, CEO Nina Kopola faces a decision on the company's strategy moving forward.
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