A Journey for Discovering Key Elements for a Successful Market Entry into Sweden
Oliver Blomqvist
Examensarbete för tradenomexamen
Utbildningsprogrammet för företagsekonomi
Åbo 2019 EXAMENSARBETE
Författare: Oliver Blomqvist Utbildning och ort: Tradenom, Åbo Inriktningsalternativ/Fördjupning: Marknadsföring Handledare: Thomas Finne
Titel: En process för att upptäcka centrala element för ett framgångsrikt marknadsinträde i Sverige ______Datum 10.5.2019 Sidantal 43 Bilagor 6 ______Abstrakt
I dagens läge är Sverige en av Finlands viktigaste handelspartner. På en global skala har de två länderna väldigt liknande kulturer. Ändå skiljer sig handelsklimaten och synerna på varandra till viss mån, vilket i sin tur kan förorsaka missförstånd och andra svårigheter när man gör affärer.
I detta examensarbete analyseras kulturskillnader mellan Finland och Sverige, samt olika strategier om hur man kunde komma in på den svenska marknaden. Genom att använda kvantitativa och kvalitativa forskningsmetoder och genom att hänvisa till tidigare studier, erbjuder detta arbete ett bredare perspektiv på de existerande kulturskillnaderna mellan Finland och Sverige. Arbetet behandlar även förslag på alternativ hur man kan komma in på den svenska marknaden.
Målsättningen är att ge finska företagsledare riktlinjer och uppmärksamma andra väsentliga faktorer som bör tas i beaktan, för att så framgångsrikt som möjligt hjälpa dem att närma sig den svenska marknaden med succé. Genom att känna till kulturskillnaderna är det möjligt för finska företag att utveckla och justera sin försäljning, marknadsföring och sina förhandlingsmetoder för att de ska anpassa sig till den svenska marknaden på det bästa möjliga sättet. Resultatet av arbetet är tio riktlinjer som finska företag bör ta i beaktande när de närmar sig den svenska marknaden ______Språk: engelska Nyckelord: Kultur, marknadsinträde, framgång ______
OPINNÄYTETYÖ
Tekijä: Oliver Blomqvist Koulutus ja paikkakunta: Tradenomi, Turku Suuntautumisvaihtoehto/Syventävät opinnot: Markkinointi Ohjaaja: Thomas Finne
Nimike: Tutkimusmatka Ruotsin markkinoille pääsyyn tarvittavien keskeisten tekijöiden löytämiseksi ______Päivämäärä 10.5.2019 Sivumäärä 43 Liitteet 6 ______Tiivistelmä
Tänä päivänä Ruotsi on yksi Suomen tärkeimmistä kauppakumppaneista. Maailmanlaajuisesti katsottuna näillä kahdella maalla on hyvin samanlaiset kulttuurit. Liikekulttuureissa ja näkemyksissä löytyy kuitenkin eroavaisuuksia, jotka saattavat johtaa väärinkäsityksiin sekä muihin vaikeuksiin kaupanteossa.
Tässä opinnäytetyössä Suomen ja Ruotsin välisiä kulttuurieroja ja vaihtoehtoisia strategioita Ruotsin markkinoille pääsemiseksi analysoidaan. Käyttäen kvantitatiivisia ja kvalitatiivisia tutkimusmenetelmiä ja viitaten aiempiin tutkimuksiin, tämä työ antaa lukijalle laajemman käsityksen Suomen ja Ruotsin välisistä kulttuurieroista ja markkinoillepääsystrategioista.
Tavoitteena on antaa suomalaisten yritysten johtajille suuntaviivoja ja käsitys vaikuttavista tekijöistä, jotka auttaisivat heitä lähestymään Ruotsin markkinoita menestyksekkäästi. Sisäistämällä kulttuurierot on mahdollista kehittää ja sopeuttaa myynti-, markkinointi- ja neuvottelutyyli Ruotsin markkinan mukaisesti parhaalla mahdollisella tavalla. Tuloksena esitetään kymmenen suuntaviivaa, jotka on tarkoitettu suomalaisille yrityksille, jotka lähestyvät Ruotsin markkinoita. ______Kieli: englanti Avainsanat: Kulttuuri, markkinoille tulo, menestys ______
BACHELOR’S THESIS
Author: Oliver Blomqvist Degree Programme: Bachelor of Business Administration, Turku Specialization: Marketing Supervisor: Thomas Finne
Title: A Journey for Discovering Key Elements for a Successful Market Entry into Sweden ______Date 10.5.2019 Number of pages 43 Appendices 6 ______Abstract
Today Sweden is one of the most important trade partners to Finland. On a global scale, the two countries have very similar cultures. Yet the business climate and perceptions of one another are different on some levels, which might cause misunderstandings and other difficulties, when doing business.
In this thesis, cultural differences between Finland and Sweden, and alternative market entry strategies are analysed. By using quantitative and qualitative research methods, and by referring to earlier studies, this work offers the reader a wider picture of the existing cultural differences between Finland and Sweden, as well as suggestions for market entry options.
The aim is to give Finnish company managers guidelines, and factors to consider, in order to help them to approach Sweden successfully. By acknowledging the cultural differences, it is possible for Finnish companies to develop and adjust their sales, marketing and negotiating styles to fit into the Swedish market in the best possible way. As a result, ten guidelines are presented for Finnish companies approaching the Swedish market. ______Language: English Key words: Culture, market entry, success ______
Table of contents
1 Introduction ...... 1
Background and problem definition ...... 1 Aim and vision ...... 1 Methodology and scope of work ...... 2 Turku Chamber of Commerce in brief...... 3 Finnish-Swedish Chamber of Commerce in brief ...... 3 Thesis structure ...... 3 2 General overview of Finnish and Swedish trade...... 4
Trade between Finland and Sweden ...... 5 Exchange of goods and services between Finland and Sweden ...... 6 Finland’s most important trade countries ...... 6 Foreign direct investments...... 8 Chapter summary ...... 9 3 Business culture ...... 10
The common history and culture of Finland and Sweden ...... 10 Cultural differences as market entry barrier...... 11 How culture is defined and measured ...... 11 Hofstede´s cultural dimensions theory ...... 12 The Culture Map - Erin Meyer ...... 13 3.5.1 Finland and Sweden ...... 14 3.5.2 Finland and the Scandinavian countries ...... 15 3.5.3 Finland, Sweden, Germany and Russia ...... 16 Hanasaari report - Finnish-Swedish Business Environment ...... 16 Chapter summary ...... 18 4 Market entry strategies ...... 18
Market entry modes ...... 18 Ansoff´s matrix ...... 19 Extended Ansoff´s matrix ...... 20 Field experience from market entry and customer process...... 20 4.4.1 Commitment and capability when entering new markets ...... 21 4.4.2 Applied customer process model ...... 22 Chapter summary ...... 23 5 Survey – Business in Sweden ...... 23
Background and methodology ...... 24
Survey results ...... 24 5.2.1 The Competitive Strength / Market Attractiveness Matrix ...... 25 5.2.2 Open-ended questions ...... 28 Summary of quantitative research ...... 29 6 Expert interviews ...... 29
6.1.1 The most common cultural challenges Finnish companies face in Sweden 29 6.1.2 Stages were Finnish companies face difficulties while doing business with Sweden ...... 31 6.1.3 The recipe for success in Sweden ...... 32 6.1.4 Successful market entry cases ...... 33 6.1.5 Advice to Turku Chamber of Commerce on how to encourage companies to enter the Swedish market ...... 33 Summary of qualitative research ...... 34 7 Conclusions ...... 34
Comparison – The results and earlier studies ...... 35 The guidelines for a successful market entry in Sweden ...... 35 Critical review ...... 38 Summary ...... 39 References ...... 41
Appendices Appendix 1 Survey questionnaire Appendix 2 Survey result information Appendix 3 Hanasaari report graphs Appendix 4 Expert interview questions and interviewee profiles Appendix 5 Definitions of Hofstede´s cultural dimensions Appendix 6 The Culture Map definitions
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1 Introduction
This thesis deals with finding the key elements about how Finnish businesses can successfully enter the Swedish market. This comprehensive work includes many parts and elements, and in this chapter the background, framework, aim and structure of this work are defined and outlined.
Background and problem definition
This project was originally carried out by the request of Turku Chamber of Commerce (Turun Kauppakamari) and World Trade Center Turku. World Trade Center Turku provides international services for Turku Chamber of Commerce. This project advanced partly in close cooperation with Turku Chamber of Commerce. In addition, a big part of this project was achieved with the support of the Finnish-Swedish Chamber of Commerce (Suomalais- ruotsalainen kauppakamari), to include other perspectives, in order to get deeper insights into this theme. The main problem was that Turku Chamber of Commerce needed more knowledge of how to contribute in assisting their member companies that are doing business with Sweden or if they want to enter the Swedish market, and if they are motivated to do so. To express how important the Swedish market is to Finland, the long common Finnish and Swedish history and trade statistics are presented. In addition, since understanding cultural differences belongs to one of the key elements of international business, the perspective this research undertakes is mainly cultural. As this thesis is also about market entry, it was important to include some theories about market entry strategies. The theories point out some very important factors that shall be taken into consideration, when entering a new market. By combining of a theoretical framework, research about culture and an empirical part consisting of qualitative and quantitative methods, it will be possible to come to conclusions and give general guidelines on how to enter the Swedish market successfully.
Aim and vision
The aim of this thesis was to understand which factors contribute to a successful market entry in Sweden from a Finnish point of view. Moreover, the aim was to assist Turku Chamber of Commerce to gather valuable data of their members’ views on the Swedish market. Based on a professionally directed survey, as well as expert interviews, Turku Chamber of Commerce will advance with new solutions for their future procedures within
2 international services and take the right measures to encourage growing companies to expand their businesses towards Sweden. In addition, the collected information might be useful to any other Finnish company who plans a market entry strategy towards Sweden. The vision is also that this thesis, among other projects, could positively make a difference to improve Finnish-Swedish trade relations and business climate. With the help of this work Finnish executives might discover their actual potential in expanding their businesses towards the Swedish market.
The following main questions were set in this project: How to identify key elements for a successful market entry? and What are the key elements?
Methodology and scope of work
This project is limited to investigate the trade situation and cultural differences between Finland and Sweden. Most importantly, this project is also about finding key elements for successful market entry strategies for Finnish companies that plan to approach Sweden. The empirical part was focused on the members of Turku Chamber of Commerce, which are companies in Southwest Finland (Varsinais-Suomi) and on the members of the Finnish- Swedish Chamber of Commerce.
The research was based on both quantitative and qualitative methods. The quantitative part was achieved in cooperation with Turku Chamber of Commerce that sent out the questionnaire to its 1.500 members in Southwest Finland. The questionnaire in the web tool, Questback, was sent out to the respondents per email with a two-week response time (see the complete questionnaire in Appendix 1). The qualitative method was performed by interviewing four experienced personnel members of the Finnish-Swedish Chamber of Commerce. The subjects of the interview were sent to the interviewees in advance, in order to receive more well considered answers. Some of the questions are based on the theoretical framework presented in this thesis and some by the request of Turku Chamber of Commerce. The theoretical framework consists of theories and research regarding cultural differences and theories about market entry strategies. Through the survey and the interviews it is possible to reflect upon the reliability of the presented theories and research. By additionally presenting trade statistics, as well as common history and background of Sweden and Finland, it is possible to comprehend the importance and motivation of this thesis.
3 Turku Chamber of Commerce in brief
The purpose of Turku Chamber of Commerce is to increase networking cooperation and promoting interests of the companies in the region. Turku Chamber of Commerce is organizing different networking events and discussion groups for its member companies every month. They organize for example discussion groups created for international business as well small seminars and company visits throughout the year. Each event is considered as a networking opportunity. Turku Chamber of Commerce is also co-operating with the major organisations in the region, such as The Regional Council of Southwest Finland and the city of Turku, to name a couple. In addition, they cooperate with universities in the region of Southwest Finland. (Kauppakamari, n.d.)
Finnish-Swedish Chamber of Commerce in brief
The Finnish-Swedish Chamber of Commerce is an organisation functioning as a reliable partner and a resource for Finnish companies. They especially assist Finnish SMEs to enter the Swedish market. With their broad competence, knowledge and network they are able to give companies an opportunity to develop in order to reach their goals. The Finnish-Swedish Chamber of Commerce offers assistance if a company looks for growth, development or information about the Swedish market. Besides, they organise great networking opportunities, such as seminars and other events. (FINSVE, n.d.)
Thesis structure
There are five main parts set in this thesis. All the parts contribute to find the key elements for a successful market entry to Sweden. Every main part has a separate analysis and summary because of the comprehensiveness of this thesis. The end conclusions will naturally include every part and the guidelines will represent the “end product” of this project. In Table 1 the structure of this thesis is clarified.
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Table 1. Thesis structure 1. General overview of Finnish and Swedish trade
By briefly introducing the past and current status of trade between Finland and Sweden an understanding of the importance and the motivation of this particular matter can be created.
2. Business culture
This chapter brings up a cultural perspective and why it can be important in business. It contains earlier research and key findings in cultural differences between Finland and Sweden.
3. Market entry options
There are several different strategies a business can use in a market entry process and many important aspects to consider.
4. Empirical research
The empirical part provides valuable information about which factors can contribute to a successful market entry to Sweden.
5. Conclusion and guidelines
The guidelines are made to briefly conclude the key elements for how to enter the Swedish market successfully. The guidelines are made to be valuable for businesses from different branches of industry, and they are therefore presented on a very general level.
2 General overview of Finnish and Swedish trade
Why is Sweden so important? Why should we care? Sweden has been an important trade partner for Finland for a very long time in both export and import (Formin.finland.fi, 2015).The following statistics of Finnish and Swedish trade are presented briefly to express how important Sweden is to Finland as a trade partner.
5 Trade between Finland and Sweden
During the last decades the Finnish imports and exports have increased exponentially. In Table 2 (Tulli, 2017) below it is notable how trade of goods between Finland and Sweden has increased during the last decades. Table 2 demonstrates how both imports and exports have developed since 1970 until 2016. The stagnation of the trade of goods is explainable by the increased trade of services instead, which can be observed in the following subchapter in Table 3 (Tilastokeskus, n.d.). Since 1970, Sweden´s share percentage of goods, in both imports and exports. Considering the continuously increasing globalisation, Sweden has still remained as an important trade partner to Finland.
Table 2. The trade between Finland and Sweden (1970-2016) (only goods)
Year Imports Share Exports Share
1 000 € % 1 000 € % 2016 6,155,274 11.2 5,562,817 10.7
2015 6,189,094 11.4 5,523,009 10.3
2014 6,568,138 11.4 6,207,858 11.1
2013 6,692,547 11.5 6,488,911 11.6
2012 6,368,596 10.7 6,291,056 11.1
2011 6,029,419 10.0 6,739,234 11.9
2010 5,248,764 10.1 6,026,240 11.5
2005 4,966,866 10.6 5,657,855 10.8
2000 3,815,582 10.4 4,593,921 9.3
1995 2,501,627 11.6 3,024,943 10.2
1990 2,254,926 13.0 2,431,314 14.3
1985 1,618,048 11.8 1,864,303 13.2
1980 1,181,119 12.1 1,466,172 16.5
1975 749,841 15.9 614,720 18.1
1970 299,659 16.1 246,128 15.1
6 Exchange of goods and services between Finland and Sweden
It is notable that the numbers of the different tables (only goods and goods + services) do not correlate perfectly, because they are taken from different sources. An explanation to this is that the annual export and import results can be measured in varying ways. The reason behind the short timeframe (2013-2016) presented is that the way the trade of services is measured has changed since 2013, and therefore it would not be correct to include earlier years in Table 3 (Tilastokeskus, n.d.). As earlier mentioned, the exchange of goods has taken a rather decreasing form over the last few years, but the exchange of services is steadily increasing.
Table 3. Exchange of goods and services between Finland and Sweden (2013-2016)
Year 2013 2014 2015 2016 Finland-Sweden Export to Sweden (Million €) Goods 7 129 6 381 6 066 6 370 Services 2 822 2 899 3 009 3 306
Total 9 951 9 280 9075 9676 Import from Sweden (Million €) Goods 9 517 9 474 9 049 9 034 Services 3 701 3 386 3 689 3 766 Total 13 218 12 860 12 738 12 800
Finland’s most important trade countries
How important is Sweden to Finland as a trade partner? To get a general overview and to create understanding of how important Sweden is to Finland, it is necessary to compare it with other countries. In the following tables the most important trade partners to Finland are listed. Furthermore, the development of trade from year 2006 to 2016 is presented. In Table 5 (Tulli.fi, 2017) is worth noticing, that the total imports of Finland has remained more or less the same within the last decade, meanwhile the total exports, in Table 4 (Tulli.fi, 2017), has decreased remarkably with almost ten billion euros. It is, however, more relevant to observe how the share percentages of the countries have developed between 2006 and 2016. The share percentage gives a perspective of the importance of a trade partner, as countries are compared against each other. In the last decade Sweden has become the second most important country, as it earlier was only the third. Sweden has gotten a bigger share in both
7 exports and imports during the last ten years, meanwhile the importance of trade with Russia has decreased significantly. The export to Russia has decreased with over 50%, which equals over three billion euros.
Table 4. Benchmarking Finland´s most important export countries (2006-2016) Exports 2006 Exports 2016
Country value 1000 € share % Country value 1000 share € %
Total exports 61,489,232.0 100.0 Total exports 51,878,144 100.0
1 Germany 6,945,944.9 11.3 1 Germany 6,814,418 13.1
2 Sweden 6,456,866.6 10.5 2 Sweden 5,562,817 10.7
3 Russia 6,220,271.3 10.1 3 USA 3,922,694 7.6
4 USA 4,012,115.9 6.5 4 Netherlands 3,484,927 6.7
5 United 4,000,350.1 6.5 5 Russia 2,977,423 5.7 Kingdom 6 Netherlands 3,155,811.0 5.1 6 China 2,680,327 5.2
7 France 2,064,536.5 3.4 7 United 2,491,858 4.8 Kingdom
8 China 1,974,010.2 3.2 8 Belgium 1,728,951 3.3
9 Italy 1,955,077.5 3.2 9 France 1,587,339 3.1
10 Estonia 1,773,025.5 2.9 10 Norway 1,544,865 3.0
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Table 5. Benchmarking Finland´s most important import countries (2006-2016) Imports 2006 Imports 2016
Country value 1000 € share % Country value 1000 € share %
Total imports 55,252,640.6 100.0 Total imports 55,002,765 100.0
1 Russia 7,768,115.0 14.1 1 Germany 8,174,979 14.9
2 Germany 7,667,711.7 13.9 2 Sweden 6,155,274 11.2
3 Sweden 5,422,228.7 9.8 3 Russia 6,145,317 11.2
4 China 4,108,649.2 7.4 4 China 4,067,151 7.4
5 United Kingdom 2,654,320.3 4.8 5 Netherlands 3,350,420 6.1
6 Netherlands 2,440,687.8 4.4 6 France 2,232,539 4.1
7 USA 2,079,409.1 3.8 7 USA 2,113,851 3.8
8 Italy 1,869,032.2 3.4 8 Estonia 1,659,455 3.0
9 France 1,810,530.6 3.3 9 United 1,651,795 3.0 Kingdom
10 Denmark 1,737,207.0 3.1 10 Poland 1,623,618 3.0
Foreign direct investments
A foreign direct investment is an investment made by an individual or company that has business interests in another country. A direct investment is characterised by being made in order to have control of the target market or at least a substantial influence. A foreign direct investment could be e.g. a Swedish company that buys shares from a Finnish company in order to have a certain impact on the Finnish market, which might benefit their business interests in their target market, Finland. According to Figure 1 (Stat.fi, n.d.), in 2015, half of all the foreign direct investments came from Sweden. It tells us that numerous Finnish companies are partly owned by Swedish investors. In Figure 2 (Stat.fi, n.d.), it can similarly be observed in which countries Finland invests. Approximately a third of all the outward direct investments from Finland are made to Sweden.
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Figure 1. Direct investments into Finland by the immediate investor country on 31 December 2015
Figure 2. Finland's outward FDI by immediate host country on 31 December 2015
Chapter summary
Sweden has been a very important trade partner for a very long time. Still today Sweden is gaining its importance and is now the second most important Export and Import country. The exchange of services between Finland and Sweden is steadily increasing. Meanwhile, the importance of Russia as a trade partner has decreased, according to the trade statistics. In conclusion, Swedish companies have a substantial influence on the Finnish market. As much as 50% of the foreign direct investments come from Sweden. Over a third of Finland´s outward FDI are in Sweden.
10 3 Business culture
Which cultural differences do exist between Finland and Sweden? And how does it affect business? There is no simple answer to these questions, as different companies within a country do business in very different ways. Therefore, this chapter does not present specific details in particular branches of industry, instead it focuses more on the general business culture in Finland and Sweden. By acknowledging the major cultural differences, companies are able to improve their market entry strategies by adjusting them according to the culture of the target market.
The common history and culture of Finland and Sweden
When researching the Finnish and Swedish trade relations it is essential to understand their common history. Sweden is considered to be the closest trade partner to Finland for several reasons. Nowadays when Russia has become weaker and more unstable in the global market the trade relations with Sweden is predicted to become even more important to Finland. (Rapoza, 2013.)
Finland and Sweden do not only share a long border, but they also share a long common history, a similar culture and therefore they have a lot of shared social values. Finland belonged to the Kingdom of Sweden for about 600 years until the beginning of the 19th century (11edu, n.d.). Today around 60.000 people with a Finnish nationality live in Sweden in addition to first, second and third generation immigrants, consisting of approximately 675.000 people (Formin.finland, n.d.).
Furthermore, the second official language in Finland is Swedish and there are over 300.000 Swedish speaking Finns which cover approximately 5,5% of the population (ÅSUB, 2015; Svenskfinland.fi, n.d.; Renholm & Myllymäki, 2012). The Swedish language is naturally an advantage when doing business in Sweden and it should not be overlooked. Even the Finnish speaking Finns are taught the basics of Swedish in elementary school. However, English is very often used as the common language in business between Finland and Sweden. (Svenskfinland.fi, n.d.)
Nowadays, there are many different associations binding the countries even closer together. The close social connections, EU, the Nordic Council, and the Finnish-Swedish Chamber of Commerce, are a few of the different associations that encourage trade partnership and close relations. In a report, Anders Ahnlid, the current ambassador of Sweden to Finland mentions
11 that the connection between the two countries is broader and deeper than ever before on several levels. He emphasises that the Baltic Sea is functioning as an important link between Finland and Sweden. The ferry connections between Stockholm, Åland islands, Turku and Helsinki carry in total over 8 million passengers per year, which is a lot considering the amount of population living in Sweden and Finland. Ahnlid also states that the military activity around the Baltic Sea has increased since Russia started the Crimean crisis. Finland and Sweden have had e.g. common marine force practices to increase safety in a crisis, such as war. Sweden is, after Germany the second most important export country to Finland. Besides, approximately half of the foreign investments in Finland come from Sweden. In Finland there are about 800 Swedish companies employing over 70.000 people, while in Sweden there are about 600 Finnish companies employing about 60.000 people. (Ahnlid, 2017.)
Cultural differences as market entry barrier
Culture plays a major role in all areas of marketing. Cultural differences can be seen as a very common barrier to an international market entry. The barrier is built on people´s values, customs and beliefs. Product and service offerings can for example be viewed quite differently depending on which culture one comes from. It is therefore crucial to have knowledge and an understanding of the cultural differences in the markets of interest. Nonetheless, one should not forget that subcultures exist within cultures. (Kahler & Kramer, 1977.)
Thus, the barrier of cultural differences sets the grounds for other existing trade barriers, such as language, access to distribution channels etc. The culture reflects how a society has adjusted to its own environment. And as cultures change very slowly, it is therefore important to adjust the marketing strategies according to the culture of the target market. (Kotler, 1988.)
How culture is defined and measured
Culture is a highly complex and abstract concept. About culture, numerous books have been written and it is very often conceptualised with reference to levels and layers: core basic assumptions, values, behaviours and other traditions. In addition, the concept of culture implies that there are distinguishable differences between different social groups. The differentiation of cultures from one and another does not conclude individual exceptions. A
12 culture is rather a classification and identification of a social group’s shared values and assumptions, as well as interactional patterns. However, even when cultural differences are measured between nations or other social groups, the actual culture of a specific organisation is most often not being measured, which remains a significant problem. On the other hand, it is clear that culture, on some level, has an influence on managerial behaviour and management styles. The author and researcher Geert Hofstede has done one of the most well- known researches about cultural differences. He introduces culture as a multidimensional concept and that differences can be measured by taking certain dimensions into account. (Ward, 2001, p.82.) The Culture Map, done by Erin Mayer, measures culture in a very similar way to Hofstede’s Cultural Dimensions. The Culture Map is a benchmarking tool used for comparing different cultures by nation.
Hofstede´s cultural dimensions theory
Geert Hofstede is a researcher in organisational studies. His research is more specifically about, cultural economics, organisational culture and management. He is widely known as a pioneer in researching cross-cultural groups and organisations and contributed to the development of a systematic framework for evaluating and differentiating cultures within nations and organisations. His research is about how the behaviour of different societies and organisations is influenced by regional and national cultural groups. Hofstede's books have been translated into 23 languages. Between 1981 and 2011 more than 9,000 journals citing one or more of Hofstede´s publications were listed, according to the World Wide Web’s citation indexes. Thus, Hofstede is the most cited European social scientist. Geert Hofstede has developed a framework for communication across cultures called Hofstede´s cultural dimensions theory. The theory expresses which values a society´s culture has and how they affect the behaviour of its members. The theory has often been used in plenty of fields as a sample for research, especially in studies about, international management, cross-cultural psychology and communication across different cultures. In Appendix 5 (Hofstede, n.d.) definitions are directly cited from the website of Hofstede. (Hofstede, Hofstede, & Minkov, 2017.)
With a couple of exceptions, Finland and Sweden score nearly the same in many dimensions, according to Figure 3 (Hofstede, n.d.). The power distance being low in both Finland and Sweden makes it easier for us to co-operate. The common characteristics are: Independence, coaching leadership style, decentralised power distribution, equal rights and having a facilitating and empowering management. Both countries in question have individualist
13 societies, which basically, means that individuals are expected to take care of themselves and their immediate family solely. The relationship between employers and employees are contracts formed on mutual advantage. Both countries have feminine cultures on a global scale. However, when comparing Finland directly to Sweden, the differences are quite remarkable. Sweden has an even more feminine culture, which means that they are more consensus oriented, less hierarchy and long discussions, including “small talk”. Sweden has also a more relaxed attitude towards uncertainty e.g. situations differing from the norm are tolerated with ease. In Finland the working style is rather principle and rule based, and there is a certain level of intolerance towards unorthodox behavior, situations and ideas. With a relatively low score in long term orientation, the Finnish culture is classified as a rather normative culture. In the Finnish culture people tend focus more on achieving quick results, instead of on achieving long term results, as Finland has a lower score in the dimension for long term orientation, meanwhile Sweden remains neutral in this dimension. Lastly, Finland and Sweden have highly indulgent cultures. In indulgent cultures, people consider leisure time to be highly important, they spend money as they wish and do what they like.
Figure 3. Hofstede´s cultural dimensions theory – Country comparison; Finland and Sweden (see precise definitions in Appendix 5)
The Culture Map - Erin Meyer
Erin Meyer is a professor at INSEAD, which is one of today’s leading international business schools. She has studied business systems and different communication styles around the world and become an expert in what she does. With her knowledge she has already taught
14 thousands of executives in several different continents about cross-cultural complexities, and how to work more effectively by taking the differences into consideration. One of her greatest works is The Cultural Map, which is a tool for benchmarking different cultures and business behaviours country-wise. The Cultural Map contains eight different cultural factors were the countries are compared on a scale To be able to read The Cultural Map it is crucial to understand what the different factors stand for. The precise definitions for the factors are directly cited from Meyer´s own website (See Appendix 6) (Meyer, n.d.). In the following subchapters Finland is benchmarked against other countries on the map. The preceding analyses explain how to interpret the Culture Map.
3.5.1 Finland and Sweden
Finland and Sweden are culturally very similar countries. However, there are some remarkable differences with regards to leadership, decision making and way of confrontation in disagreements, as Figure 4 (Meyer, n.d.) indicates. In Sweden, the leadership is highly egalitarian, which means that the organisational structure is often rather flat and the distance between the boss and the subordinates is ideally low. Generally, the decision making process also looks a bit different in Sweden, where decisions are normally made by the group, in comparison to Finland, where the boss slightly more often will make the decision. The most remarkable difference between the Finnish and Swedish business culture is in how disagreements are confronted. In Finnish organisations open confrontation of disagreements and debates do not have a negative impact on the relation. In Finland on the other hand, directness is rather appreciated and respected. In Sweden on the other hand, disagreement shall be confronted more carefully. A too open communication style in case of disagreement is considered inappropriate and may damage the group harmony.
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Figure 4. Cultural comparison between Finland and Sweden
3.5.2 Finland and the Scandinavian countries
Culturally the Scandinavian countries; Sweden, Norway and Denmark, are very much alike while Finland partly differs from the others. As Figure 5 (Meyer, n.d.) shows, all of the countries communicate in a similar way, have a mutual understanding of time and do approach discussions in a rather concrete situation-based manner and avoid talking about only theory and principles.
Figure 5. Cultural comparison between Finland and the Scandinavian countries
16 3.5.3 Finland, Sweden, Germany and Russia
In Figure 6 (Meyer, n.d.), it can be worth noticing that Finland is not only geographically between Sweden and Russia, but also culturally. As Russia and Sweden are cultural opposites from one another, Finland is somewhere between the two on the Culture map. In general Finland is much more similar to Sweden. Germany and Finland are also very much alike in many areas such as decision making, trusting and evaluating. To conclude, there are small cultural differences between Finland and the Scandinavian countries. However, the differences are less remarkable when the cultures compared with e.g. the Russian culture. On a global scale the Nordic countries are very similar, which is an advantage in business, as there are less cultural misunderstandings and similar working styles.
Figure 6. Cultural comparison between Finland, Sweden, Germany and Russia
Hanasaari report - Finnish-Swedish Business Environment
In 2016 a group of ten students from Haaga-Helia-University of Applied Sciences did a project about the current and overall Finnish and Swedish business climate. The project was ordered by Hanasaari-Swedish Finnish Cultural Centre. The students made a targeted survey where the Finnish respondents could give their opinion about Sweden and vice versa. Among other things, it contains various questions about culture, working style, leadership style. In this quantitative research, a total of 189 respondents returned the survey. Despite a
17 satisfactory number of respondents it was possible to benchmark the opinions of the Finns and Swedes.
Of those who returned the survey 34,2 % were Swedish and 65,8% were Finnish. The statistics shows us which function the respondents have in their organization and clearly most of the respondents are executives and other managers. Considering that the survey was directed to companies that do business internationally (Finland and Sweden), the content of the results should not be generalized with all the Finnish or Swedish companies. Anyway, what the graphs tell us is that a lot of Swedish speaking Finns answered the survey. This certainly indicates that many Swedish speaking Finns work for companies that do business between Finland and Sweden. Below are conclusions made from the statistics in the figures of the report (see graphs in Appendix 3, (Aleksandra Azaize, 2016)).
High working moral, honesty, productivity, transparency and flexibility are highly appreciated values that Finns and Swedes have in common. The Finns percieve their Swedish collegues to be more personal as the Swedes consider Finns to have a rather professional communication style in business environments. There are also quite big differences in how they perceive directness and whether their communication is task or relationship oriented.
The report was highly comprehensive. It describes many areas regarding cultural differences in Finnish and Swedish companies. The authors of the project concluded the research results in the following way.
“Similarities in culture makes networking easier, with both parties sharing similar ideals in terms of best ways to network. Language is not considered a barrier in business relations, but can generally be viewed as an inconvenience when communicating to foreign counterparts. Finnish respondents view Swedish language as a vital element in business life, while Swedish respondents took an opposite stance about the Finnish language. Differences existing leadership and communication styles, but both parties seem to have similar thoughts on what makes a good leader. Gender and age discrimination are the most prevalent instances of witnessed discrimination in business of both countries.” (Aleksandra Azaize, 2016.)
18 Chapter summary
Finland and Sweden have a long common history and therefore they are culturally very similar. However, the two countries have also cultural differences. Culture is a very abstract and complex concept. The differentiation of cultures does not include individual exceptions. In other words it is a generalization, and in this case two whole nations are generalized into cultural categories. In business, a lack of cultural knowledge can become a trade barrier. Hofstede´s cultural dimensions theory, The Culture Map by Erin Meyer and the Hanasaari- report compare the cultures between Finland and Sweden in different ways. The researches tells us about the cultural differences as well as similarities. The biggest differences are found in decision making, in how trust is built and directness. The similarities can be found in time perception, communication and appreciated core values, such as high working moral, flexibility, honesty, transparency and productivity.
4 Market entry strategies
Which factors should we consider in a market entry strategy? How do we use our knowledge? There are several different ways for businesses to enter new markets with products and services. It can be difficult to decide which market entry option to choose, but first one has to know what the options are and based on which factors certain decisions can be made. The theoretical models in this chapter suggest different market entry modes, risk factors and other helpful elements to consider in the planning process of a market entry strategy.
Market entry modes
There are five entry modes companies can choose from: Indirect exporting, direct exporting, joint ventures, licensing and direct investment. Indirect exporting is a way of marketing a product through middlemen who work for commission or sometimes buy the manufacturer´s product to sell it abroad. Direct exporting is when the manufacturer sells its products directly in international markets. In a joint venture, a company establishes a partnership with another company which is located in the target market. Licensing is a market entry mode that requires an agreement with another foreign company that desires to buy the rights to manufacture a product. Direct investment involves production and own facilities in a foreign country or investing in a local firm from the target market.
19 Each of the mentioned market entry modes has its pros and considerations. Direct exporting is by many considered to be the riskiest entry mode, in case there are no stakeholders in the target market. On the other hand licensing poses very low risk, but the profitability might not be as efficient. A common belief among executives is that a joint venture often is an entry mode with many advantages, because of shared risk and local stakeholders with market knowledge. (Karakaya & Stahl, 1991.)
Ansoff´s matrix
The Ansoff´s matrix can be used as a tool when a company plans its market entry strategy. It presents the different ways a company or an organisation can attempt to grow in. The different categories are suggested main alternatives for a company´s growth strategy. It also, describes the risk level of each of the four alternatives. (Kotler, 1988.)
Table 6. Ansoff´s matrix
Table 7. Definitions of Ansoff´s matrix (see Table 6) Market Penetration (Low risk) Selling existing products into existing markets Market Development (Medium risk) Selling existing products into new markets Product Development (Medium risk) Selling new products into existing market Diversification (High risk) Selling new products into new markets (Ansoff, 1957)
20 Extended Ansoff´s matrix
The figure below tells that the expansion to a new market may be taken in steps. In the following example, the enterprise starts by introducing a new product in the existing market with a lower risk. In stage 2, when the product is well introduced in the home market, the step towards new customers with an extended product is taken. The numbers in the fields correspond the risk level itself. The timeline between Stage 1. and Stage 2. is ,however, not defined. There are several different transitions a company can undergo from an already existing market position in order to grow. Traditionally, companies grow by extending the sales by shifting with the same product to new markets or customers from sector 1 to sectors 2 and 3. By this traditional shift, the companies generally emphasise on cost, as well as operational efficiencies. Moving to sectors 4, 5 and 6 will involve a redesign of the product, where the emphasis is on flexibility rather than cost efficiency. A shift from sector 1 to sectors 7, 8 and 9 is when a company introduces a new product, which is considered to be a shift of high risk. It often involves fundamental changes in the supply chain to meet the needs of the new product. (Sharifi, 2009.)
Figure 7. Extended Ansoff´s matrix for growth strategy
Field experience from market entry and customer process
This chapter does not belong to the empirical part of this thesis. The following theories are based on an interview with Pekka Rouhiainen, the Chief Adviser, D.Sc. (Tech.), Prizztech Oy. Dr. Rouhiainen has more than 35 years of experience working in the oil and gas, offshore
21 and marine industry in Finland, the USA, Russia and Canada. He is currently Project Manager of a public project promoting the export of the Finnish SMEs in Norway and Russia funded by the Ministry of Economy and Employment, and the City of Pori. Prior to his current responsibilities, Dr. Rouhiainen has worked in different managerial positions for companies, such as, Kvaerner, Technip, RR-Offshore, Aker Maritime and Rauma-Repola. Dr. Rouhiainen is in his professional work promoting Finnish SMEs, adapting the following business models that he has found as highly applicable.
4.4.1 Commitment and capability when entering new markets
When a company decides to enter a new market it has to have a certain level of commitment as well as capabilities. Lacking in one of these two areas will most likely not lead to a favourable market entry. The prerequisite for any kind of international market expansion is the commitment by the owner itself, since there shall exist a sense for calculated risks and awareness that a new market entry may take time. Reaching a new market may take several years in case of an organic growth in Figure 8 (Rouhiainen, 2017). There are several matters that must be in place before an SME is capable for entering a new market. E.g. the product or service must be competitive and the SME shall have the managerial competencies in place and, last but least, the enterprise shall have the financing capability, as visually demonstrated in Figure 8. The measuring of the enterprise’s current international expansion, commitment and capability require qualified information as well as expertise. The risks vs. opportunity/reward are always at stake in the decision making regarding internationalisation.
Figure 8. Importance of commitment and capabilities in the market entry process
In case a company is committed to enter the new market with a competitive business concept, but lacking e.g. financial capabilities, there is another way to enter the market, as
22 demonstrated in Figure 9 (Rouhiainen, 2017). Having a new selectively chosen shareholder is a considered option for entering a new market. A prerequisite, in such a case, is that the new shareholder is fully committed to open the market and to use his know-how and existing market channels in the target country. The new shareholder may e.g. be the shareholder in the parent company or the subsidiary in the target market country, or for example a joint venture solution. However, a new shareholder may be a risk that shall be considered, states Rouhiainen.
Figure 9. The market entry process if a company has a lack of capabilities
4.4.2 Applied customer process model
To enter a market requires a professional systematic approach and the customer process itself contains certain steps, which should not be overseen. The model below in Figure 13 is a universal model of how the customer process generally works in practice according to Rouhiainen. The search for new customers who commit to an idea of a product or service can often be a very long process. However, in Figure 10 (Rouhiainen, 2017), Rouhiainen has further added a step called “Idea Carrier”. An Idea Carrier can be a person, or a group of persons, that starts to support the new solution that create value for the customer’s own business. Through the Idea Carrier it is much easier to manage to get through the whole customer process until the contract is made. Furthermore, following a successful delivery, the customer is likely to buy a new product or service more easily in the future. Thereby, it can become a repeating process with a much higher probability. The repeating process benefits both parts, as the whole process does not necessarily have to be executed all over again, says Rouhiainen. (2017.)
23
Figure 10. Applied customer process model
Chapter summary
There are different market entry modes, which of each have different risk levels. The modes are: Indirect exporting, direct exporting, joint venture, licensing and direct investment. Depending on the commitment and capabilities and the perception of the target market it is possible to analyse which entry mode suits one´s own business. Ansoff´s matrix can be used as a tool for analysing risks in a market entry process. Commitment and finding an “idea carrier” are factors worth consideration in order to succeed over the long term. By using the mentioned market entry theories as tools in the market entry process companies are more likely able to make analysed decisions through risk assessments. The Competitive Strength / Market Attractiveness Matrix, which also is a theory about market entry modes and risks, is presented in the next chapter, because of its direct connection with the empirical part of this thesis.
5 Survey – Business in Sweden
The empirical part of this thesis includes a quantitative survey that was made by request of Turku Chamber of Commerce. The results of this survey are analysed, and thereby Turku Chamber of Commerce will have a clearer view on which measures they could take in the
24 future to encourage organisations with notable potential to enter the Swedish market or to prevent those who already are in the Swedish market not to leave it.
Background and methodology
The survey was sent to the 1500 members of Turku Chamber of Commerce in October 2017. The aim was to get an overview of their interest in the Swedish market and whether they do business in Sweden or not. If they are doing business in Sweden it is not only interesting to know how they are doing it, but also what experiences they have had. On the other hand, if they are not doing business in Sweden it is very important to know why. Furthermore, if some organisations have had business in Sweden, but not anymore, we also wanted to find out why. The participants could answer to what extent they agreed to statements. Additionally, they could express their opinions and experiences in some open questions. The questions were asked to be answered honestly from their professional viewpoint.
Most of the questions are directly connected to a theory called Competitive Strength / Market Attractiveness Matrix. The respondents were allowed to describe the competitive strength of their businesses and to express their thoughts and opinions of the Swedish market attractiveness. The aim is to map if they could have potential in Sweden and what market entry mode would fit them. In this research only some of the most important factors describing competitive strength and market attractiveness are used. If all of the questions were used, there would be too difficult questions for some participants and it would take too much time to respond to them. Therefore, too demanding questions might have led to falsified results. To receive accurate answers was prioritized in this survey. The raw data from the responses was analysed with Microsoft Excel.
Survey results
Only 65 out of 1500 members of Turku Chamber of Commerce responded to the survey, which resulted in a 4,3 % response rate. Most of the respondents work in an organization that mainly operates in the Turku area. The respondents are from all different sized of companies and the majority described that they have a CEO or executive function in the organisation they represent. A vast majority of the companies operate in the manufacturing sector. Approximately half of those who does business with Sweden does it in the Greater Stockholm area as well (see Appendix 2 for specified information).
25 In Figure 11 the answers from the respondents who have not any business relation with Sweden are analysed. The respondents were asked to answer on a scale (1-5) whether they fully agree (5) or totally disagree (1) on the statements. The statements in Figure 11 aim to measure why companies have not entered the Swedish market. Figure 11 indicates that many companies just has no interest in expanding their businesses to Sweden or do not perceive the market as attractive. Anyhow, six respondents informed that they plan to enter Sweden. The respondents who plan to enter Sweden scored 2,83 on average on the statement: “It is difficult to find information about the Swedish market”(Appendix 2).
Opinions about the Swedish market
My company should consider Sweden as a 2,13 “home market” Our company has plans to enter the Swedish 2,25 market The language barrier is a great reason not to 1,56 enter Sweden It is difficult to find information about the 2,44 Swedish market Our company has no interest to expand to 3,63 Sweden
The Swedish market is not attractive 2,25
Figure 11. Measuring the Swedish market attractiveness for companies who have not any business relation/contact with Sweden (Scale: 1-5)
5.2.1 The Competitive Strength / Market Attractiveness Matrix
Measuring the competitive strength and market attractiveness is a process where quantitative methods are used. The Competitive Strength / Market Attractiveness Matrix includes a questionnaire, a raw data analysis and putting the data in the matrix for further analysis. First the businesses’ competitive strength, has to be measured. It can be measured by taking certain factors into consideration e.g.; market presence, marketing, price and conditions, demand strength, obtainable market share, image and financial resources, to mention a few (see precise statements in Appendix 1). To measure whether the new target market is attractive, the following factors can be used; market size, prices, buying power, market
26 access, competitive intensity, political economic risks etc. The Competitive Strength / Market Attractiveness Matrix is a tool that can help businesses to measure whether or not they should enter a new target market. With the results it is also possible to give advice how a business should enter a market. According to the theory there are three main market categories; A countries, B countries and C countries (see definitions in Table 8). To each of these market categories a different kind of approach should be chosen. (Hollensen, 2011.)
In Figure 12 (Hollensen, 2011), the results of the survey are applied to the Competitive Strength / Market Attractiveness Matrix. By answering questions on a scale 1-5, belonging to the two categories either measuring the Swedish market attractiveness (y-axis) and the competitive strength of the business unit (x-axis), an individual score is given for each category, by calculating an average of all statements per category. To specify, the A, B and C country categories in the matrix refer in this research to how a company perceives Sweden. It is measuring whether Sweden belongs to an A, B or C country for a particular business unit. The higher the score, the more likely Sweden, as a market, will be in the A country category , which indicates that companies should consider bolder market entry modes, for example direct exporting. Logically, companies who scored poorly consider Sweden as a C country, which means that they should consider less risky market entry modes, such as licensing.
The blue, red and black dots are manually marked in the matrix in Figure 12. The colour of the dot shows whether an enterprise is in business contact with Sweden or not (See definitions in Table 8). The majority of the companies who already have a business relation/contact fall in to the “A country” category. Opinions of the companies who have not entered the Swedish market (red dots in Figure 12) are more spread out, but scored relatively well in the matrix, which theoretically means that some of them should consider expanding their businesses towards Sweden. Additionally, the companies who have not entered the Swedish market, but fit in the A country category are not only the companies who have plans to enter the Swedish market. This indicates that there is undiscovered potential amongst Finnish companies.
27
Figure 12. The market attractiveness / competitive strength matrix and the survey results
Table 8. Definitions to Figure 12 The y-axis: How attractive respondents considered the Swedish market
The x-axis: How strong respondents considered their own business unit
Blue dots: Has a business relation/contact with Sweden Red dots: No business relation/contact with Sweden Black dots: Has had a business relation/contact with Sweden but not anymore
A countries These are considered to be key markets. These markets offer the very best opportunities for a strategic long-term development for an organisation. To do a thorough research program and to establish a permanent presence in these markets might be a very good option. ______
28 B countries These are considered to be the secondary markets. In these markets, opportunities are identified, but the risks are too high to make long-term commitments. The risks might be economical or political. These market should be handled more carefully e.g. by identifying risks and by having a broad marketing information system
C countries These markets are the tertiary markets. Entering these markets can be very risky, and therefore the input of resources shall be minimal. The objectives of entering these kind of markets would be rather short-term, without any real commitment.
(Hollensen, 2011)
5.2.2 Open-ended questions
In the same survey, the respondents had the possibility to answer two different open-ended questions, depending on their businesses´ relationship status with Sweden. Those who had continuous contact with Sweden responded to the question: ”What valuable advice would you give to Finnish companies entering Sweden? Please tell us about your own experiences”. And those who did not have any contact with the Swedish market responded to the request: “Please describe in your own words what would motivate or help your company to enter the Swedish market”.
The respondents mentioned that it is helpful to use the Swedish language when a company wants to approach the Swedish market. They also advised to focus on building relationships with people and to make personal connections and physical visits. One of the respondents recommended to be aware of the cultural differences and that the Swedish decision making process is different from the Finnish. Having patience during the market entry process is seen as a highly important success factor. Another respondent suggests, Sweden can be regarded as a home market and that nothing special is required. Some respondents claimed that their companies are local and that they do not think expanding to Sweden would be an option. On the other hand, one respondent stated that local marketing assistance and better traffic connections between Turku and Stockholm are factors that would help the company to enter the Swedish market.
29 Summary of quantitative research
With a response rate, which is barely 5%, highly significant conclusions cannot be drawn. In the same survey, where quantitative methods mainly are used, respondents had a possibility to answer open-ended questions. The key messages were that in business Sweden people tend to focus more on building relationships and that patience during the market entry process is important. The Swedish language was also mentioned to be useful during the process.
The survey focuses mainly on the quantitative part. Many of the respondents scored relatively well on the Competitive Strength / Market Attractiveness Matrix. The respondents who scored well regard Sweden as an A country. Theoretically those who scored well should consider entering the Swedish market, if they already have not. A countries are also markets where a more risky market entry mode is recommended. Five respondents had not had any business contact with Sweden, even though they regarded Sweden as an A country. It indicates that there is undiscovered potential among members of Turku Chamber of Commerce.
6 Expert interviews
The interviews were performed in many different ways; they were done personally, over the phone and per email. All of the original answers and statements are translated from Swedish to English. All of the interviewees have confirmed that they fully agree with the following interpretations. The interviewees have different backgrounds and most of them have over a decade of experience in international business (see specified profile descriptions in Appendix 4). The interviews were performed in order to receive expert opinions on how to successfully enter Sweden and information about other key issues regarding this matter. The opinions are expressed from a perspective that gives value to Finnish companies. In this chapter, the key statements are collected and categorised, followed by brief analyses including key findings.
6.1.1 The most common cultural challenges Finnish companies face in Sweden
“Cultural differences, lack of sufficient market knowledge & prejudices about the lack of cultural differences in Sweden and Finland are the most common challenges Finnish companies when entering the Swedish market.
30 It is very important that Finnish companies acknowledge these challenges. The recognition of these challenges may decide whether a Finnish company will succeed in the Swedish market or not, whether they are “in or out” in the next market entry step. The Swedish leadership, decision making and communication style differ from the Finnish. In a decision making process Swedes are typically more consensual, which means that decisions are made by a group rather than by individuals – and that decisions are made in due time. Swedes might carefully think about different scenarios before decision making and execution. Therefore, the decision making process might take a relatively long time. In comparison, Finns have a more hierarchical style which is more direct and often quicker. When Finns do business with Swedes they should be aware of the differences and consider adapting to the Swedish way of doing business. To conclude, Finns should have patience while doing business with Swedes. It is important to understand the concept of “small talk” and to build a long-term trust relationship before considering quick decisions. Furthermore, it is good to know that marketing skills is needed in Sweden on this highly competitive market.” (Hagberg-Andersson, 2017)
“One of the most common challenges is the Swedish decision making style. The Swedes usually prefer to have multiple long meetings before making a real decision. For Finns this often feels to be very time consuming, because they usually prefer to make quicker decisions, in a rather hierarchical way. Another challenge for Finns is that Swedes commonly find it difficult to say ”no” at a face to face meeting, and might give a negative answer afterwards. Finns often misunderstand the outcome of the meeting by having high hopes and it can often lead to a disappointment. Furthermore, Finns think work titles and education play a highly important role, meanwhile in Sweden it is not such a big topic.” (Skoglund, 2017)
“A common challenge is the Swedish language. It is a great advantage to know Swedish to some extent when doing business with Swedes. Another common challenge is the differences in how Finns and Swedes make their decisions. Finns are more dynamic and make thereby quicker decisions, as Swedes are usually more formal and consensus oriented, which often makes the decision making process a bit slower.” (Sirviö, 2017)
“On the surface Finns and Swedes are the same, but differences are revealed in closer relationships and interactions. Generalizations about the difference between Finnish and Swedish leadership provide an image of opposition, in the
31 realm we talk about the whole spectrum of leadership that is situational, from indirectly discussing to direct, order-giving. In fact, no contradiction, tradition and history, we judge the situation differently.
Even in a meeting, for example, in a sales situation, the challenge for Finns can be to understand the importance of building good relationships and confidence in the person before you can start doing business, i.e. talking about your skills and products.” (Eivergård, 2017)
Many of the answers have similarities with previously mentioned research, such as the previously mentioned Hanasaari Report, Hofstede´s Cultural Dimensions and Erin Meyer´s Culture Map. The Swedish consensus and relationship oriented style can be seen in both leadership and negotiations. The responses strongly suggest that good relationships and interpersonal knowledge is important and highly relevant while doing business in Sweden. The similarity in the responses shall not be unnoticed. There might be a lot of economic potential, if this knowledge reaches the people who face these challenges.
6.1.2 Stages were Finnish companies face difficulties while doing business with Sweden
“If a Finnish company is not well informed about the cultural differences & the consensual decision making style, there is a big risk that there will be market entry failure. Companies can seek help from organisations, such as for example the Finnish-Swedish Chamber of Commerce, that have knowledge about the Swedish market and business culture, and a broad good network of contacts.” (Hagberg-Andersson, 2017)
“To find the right contact person in Sweden tend to be difficult for Finns when they want to enter the Swedish market. In the meeting phase Finns tend to give up too early. It is highly crucial to understand that Swedes need most often more time. Finns having slightly more patience with Swedes will definitely increase chances to make a deal and further co-operation.” (Skoglund, 2017)
“Making contact, setting up a meeting and creating a continuous business relationship is often a challenge that Finns meet in Sweden. Finns might be often a bit inflexible and do not want to adapt their product or concept to the Swedish market, which makes it harder to sell. Understanding the cultural differences and having a full commitment is very important, when entering the Swedish market.” (Sirviö, 2017)
32 “Contact, meeting and so on. Finns tend to rush to decision and do not understand decision-making in Sweden, because they often underestimate the importance of participation and co-determination.” (Eivergård, 2017)
Most of the answers suggest that major difficulties could be found in the contact of or meeting phase (see Figure 10). The differences in the consensus orientation seems to be the core of the problem. It leads to a different pace in the decision making process and might therefore create misunderstandings.
6.1.3 The recipe for success in Sweden
“To acknowledge the cultural differences, the Swedish business style and to have knowledge about the target market“ (Hagberg-Andersson, 2017)
“To learn how to sell, to do marketing and to go in for the global market.” (Skoglund, 2017)
“To do a thorough market research; to have knowledge about competitors, the distribution chain and business climate. Be patient, it takes time!” (Sirviö, 2017)
“To quote President Roosevelt, "People do not care how much you know before they know how much you care". Listen and ask to understand, not just to have an opportunity to talk. Trust your knowledge and ability, but create respect for you as a person. Try to look behind the notions of how Swedes are, trust the process of decision-making and take time, everyone should be involved even when executed. Exercise on your social skills, you have to sell yourself if you want to sell your machine. Big ears and curiosity, so-called "intelligent ignorance". Instead of "knowing" how Swedes are, ask!
The language! Dare to use your school Swedish initially, nothing is as flattering as showing that you are trying to find a common language. Forget about the perfectionism.” (Eivergård, 2017)
Swedish language is recommended to be used initially during the customer process, if possible. It has a positive effect. Patience and market knowledge seem to be important key factors, according to the answers. To gain market knowledge it is recommended to ask someone else with more expertise.
33 6.1.4 Successful market entry cases
“In an anonymous ongoing case a company changed their communication style to fit the Swedish market. They have focused more now on developing the content of their marketing and culturally developing the message they want to communicate to their customers. In Finland for example you communicate more of harder elements like efficiency while marketing or selling a product or service. In Sweden, on the other hand, they tend to focus on softer values instead. By changing the focus from harder to softer cultural values, Finnish companies might succeed more likely in Sweden.” (Hagberg-Andersson, 2017)
“Parmaco (construction industry) and Nordautomation (forest industry). Both of the companies had simply a good product with a high demand.” (Sirviö, 2017)
“Kone; Leadership from top management with clear consistent behavior downwards” (Eivergård, 2017)
Hagberg-Andersson states that the marketing and sales process can sometimes be adjusted according to the target market. In Sweden customers tend to focus on different values and they make their decisions accordingly. The key finding is that companies shall be able to adjust, if necessary, and have good market knowledge in order to succeed during the market entry process.
6.1.5 Advice to Turku Chamber of Commerce on how to encourage companies to enter the Swedish market
“To emphasise the economic advantages an additional market area can bring. To understand the advantages of economies of scale is very important. Moreover, experiencing the Swedish market can also be considered to be a ”knowledge journey”. When the company has its foot in Sweden it gets more experience, knowledge and capacity. Thereby, the company can become even stronger in its own home market, Finland.” (Hagberg-Andersson, 2017)
“Make personal contacts through personal visits. E.g. go visit a target company physically. Make an effort to know the market well and do your ”homework”. Moreover, it is an advantage to know Swedish language in the traditional sector.“ (Skoglund, 2017)
“A well-made market research and market knowledge is important. I recommend to contact the Finnish- Swedish Chamber of Commerce.” (Sirviö, 2017)
34 “Learn more about our common history, value base. Again the language, use bilingualism in Finland. Think strategically, Sweden is not the final destination, but the gateway to bigger markets, dare to take one step at a time and learn. What about the little brother complex, is it still alive? Take care of all the help you can get in Sweden, through the Chamber of Commerce, consultants, others who have succeeded. Ask for help, it's perfectly OK to not be able to do it yourself, the challenge to show that you cannot ... Focus on your core business, let others take care of the rest. Find out what the problem really is.
Clear, engaging and meaningful goal (why?), Self-confidence that you can and can create the prerequisites for success (how?), Perseverance and focus on correct action and energy use and help from the environment (what?). Good luck!” (Eivergård, 2017)
The interviewees give their advice to Turku Chamber of Commerce comprehensively. Many of the previously mentioned key issues are advised. The key issues are relationship orientation, long term orientation and market knowledge.
Summary of qualitative research
The four interviewees are experts in their fields with many years of experience. Valuable information from their responses is received. They all gave similar advice on how Finnish companies could succeed in approaching Sweden. According to them the Finns should be rather patient, build long term relationships and keep in mind that the Swedish decision making style is generally different. To do a proper market research is highly important if one want to succeed in new target markets. To consider using a different marketing style, that fits the target market, is important. A different kind of marketing, where you communicate softer values, might work better in Sweden. Using the Swedish language, at least initially, instead of English is advantageous when approaching Sweden and it is often good to use consulting services, if an enterprise wants to achieve positive results.
7 Conclusions
Including several key elements this work is concluded in the following subchapters. By comparing results of empirical research and earlier studies, it is possible to highlight the key differences in the Finnish and Swedish culture. By combining key factors regarding cultural aspects, expert knowledge, and theories about market entry strategies, ten guidelines are
35 presented. Considering methodology and academic work process this chapter includes a critical review. In the final subchapter the whole thesis is summarised.
Comparison – The results and earlier studies
Hofstede, Erin Meyer and the Hanasaari-report all suggest that the Finnish and Swedish culture are very similar. They also tell us about the differences, and all the earlier studies tend to get the same results when comparing Finnish and Swedish business cultures:
Swedes are more personal and relationship oriented Swedes are more consensual Swedes are not as direct as Finns Swedes take more time during the decision making process
In earlier studies, no major contradictions can be found even if the questions might have been asked in different ways. In the empirical part of this thesis more or less the same conclusions are made, which strengthens the earlier studies even more. Additionally, the qualitative part, consisting of expert interviews, gives us an even deeper understanding of how these differences can be seen in reality, how they can be interpreted and how we can manage them.
The guidelines for a successful market entry into Sweden
The following guidelines are constructed in order to maximise business potential. Most of the guidelines have a rather cultural perspective and are not highly detailed. In this way, they can be helpful for a business person seeking a broader perspective on the Swedish business climate. The guidelines are listed with only a very modest explanation and are thanks to their simplicity easy to memorise. Some of them might seem to overlap each other, but on the other hand it only expresses their importance. The guidelines for how to approach Sweden successfully are listed in Table 9:
36
Table 9. Guidelines for a Successful Market Entry into Sweden 1. Think long-term
Personal contacts/face-to-face meetings. Make personal contacts with Swedes through visits and invitations. Swedes are very similar to Finns, but they tend to focus on the business relationship slightly more than Finns do. “Small talk” and avoiding quick “efficient” decisions might lead to positive results with a higher likelihood. “You have to sell yourself if you want to sell your machine”.
Get an “idea carrier”. Once you have stepped into a new market you most likely also want to continue to do business there in the future. Therefore, it will be advantageous to build strong relationships with people who believe in your company and support your ideas.
Patience. The Finnish decision making style is usually quicker than the Swedish. Thus, it makes sense when Swedes sometimes see Finns as impatient during the negotiation process. Finnish companies approaching Sweden shall remember that the Swedish decision making style is often more consensual and they need therefore more time in the negotiation process.
Sweden is a good market to start with / a gateway to new markets. Entering the Swedish market at first, might be in many cases the easiest, most problem free option if a Finnish company wants to grow internationally. As a company grows it can use economies of scale as an advantage and become more price competitive.
37 2. Adapt
Language. Language is not necessarily a barrier, however, speaking Swedish with Swedes is much more convenient. When making new business contacts, communicating in Swedish can be a good way to initiate the relationship.
Consider a different marketing style. In Sweden they might have different values. To adjust the marketing according to the culture in the target market will give you an advantage.
Be flexible, you might have to adjust your product or service. Make sure that there is a demand for your product in your new target market. Listen to the customer. Sometimes this means that you have to adjust your product or service in order to fit in the market.
3. Be prepared
Make contact with trade associations, such as the Finnish- Swedish Chamber of Commerce and/or other consultants. You do not have to know everything yourself, instead ask people who are experts in the field. Doing a proper market research can save you a lot of money in the long term.
Consider which market entry option really suits your business. There are many different ways to enter a new market. If you lack commitment or if the risk is too high, consider less risky market entry options.
Commitment and capabilities shall be on place when approaching new markets. If you want the best results when approaching a new market you shall be very well prepared and fully committed.
38 Critical review
This work is very comprehensive, and it only scratches the surface of many different subtopics instead of having more depth in one specific topic. The purpose of this work was however to find different key elements of successful market entries, and not to deeply dig into one specific area. This work is more about moving from one key element to another, and to analyse the discoveries concisely.
The response rate of the survey, under 5%, was quite low. The response rate of the companies who had not had any business contact with Sweden was too low to be able to draw any conclusions. However, this is an example of how market entry theories can be applied in reality and how all kinds of businesses can measure their competitive strength and the attractiveness of the potential target market. Thinking creatively, companies can internally ask the management members questions individually that measure the competitive strength and market attractiveness. Thereafter it is possible to analyse the results in order to compare if the members of the management have a similar view on this particular matter.
After I analysed the survey results we needed to take action in order to increase the value of this work. I decided to interview experts within the field who have knowledge about how Finnish and Swedish companies perceive each other and how Finnish businesses succeed in Sweden. Three out of four interviewees are working for the same organization, FINSVE, which explains the similarity in their opinions. Positively all the interviewees have different backgrounds, in terms of international experience.
The reliability of the research about cultural differences is particularly high in this work, due to its comprehensiveness. By using earlier research, such as Erin Meyer´s culture map, Hofstede´s cultural dimensions and the Hanasaari-report, as supporting evidence I am able to confidently make conclusions in terms of business culture. The empirical part of this thesis contains both qualitative research from experienced field experts and quantitative research responded by company executives who already have approached Sweden with their businesses. The variety of empirical evidence and the high similarity in results does definitely increase the reliability of this work. Further by applying market entry theories in this work I was able to demonstrate the variety of opportunities companies have when entering new markets, which support the answer of the original research questions. On one hand, this work contains a lot of already existing knowledge, but on the other hand, this work strengthens the reliability of earlier research and summarises the key elements into ten guidelines.
39 As I aimed to make this thesis valuable for Turku Chamber of Commerce and for Finnish company executives who are interested in approaching Sweden, the purpose of this work is well fulfilled. Moreover, I particularly wish that the cultural angle in this project could give new ideas and perspectives to readers of this thesis.
Summary
In conclusion, the following important aspects are presented in this thesis: The general trade status of Finland and Sweden; the cultural differences and why it is important to understand them in business environments; in which different ways Sweden (and new markets in general) can be approached. By finally analysing the empirical data, theories and earlier research, valuable advice and guidelines on how to approach the Swedish market are given in this conclusion.
To understand which factors contribute to a successful market entry in Sweden, it is important to understand some cultural differences as well as similarities. The Finnish directness in the decision making process, problem confrontation and leadership is where the Finnish business culture seems to be somewhat different than Sweden´s. Taking the differences into consideration may lead Finnish businesses toward better market entries into Sweden. A more relationship oriented approach and patience, regarding decision making, will more likely lead to favourable results.
Another important success factor is the ability to make personal connections. In business communication the Swedes are typically less hierarchical and on some levels more people oriented. To build personal relationships through small talk and informal meetings is highly valued in Sweden. In addition, an ability to, at least initially, speak Swedish language with Swedish customers or potential business partners is an advantage. Moreover, it is crucial to find an idea carrier to obtain long-term customer relationships, during the customer process,.
In the market entry process it is important to evaluate the company´s commitment and capability. In case a company lacks e.g. financial capability, an option is to find a well- committed investor who has an already existing Swedish market share. To reduce risk, the most favourable alternative might as well be to enter the Swedish market with an already existing product.
Plenty of the respondents answered that they have customers, suppliers, as well as partnerships or a co-owned company in Sweden. The Finnish companies who have not had
40 any business contact/relation with Sweden scored relatively well in the Market Attractiveness/Competitive Strength Matrix, which indicates that they might have potential to expand their businesses towards Sweden. Furthermore, by taking the ones who had actually planned to enter the Swedish market into consideration, it can be noticed, that they had difficulties to get proper information about the Swedish market. In case there is a lack of information, it can be worth to ask people with the right kind of expertise e.g. FINSVE (Finnish-Swedish Chamber of Commerce) or other forms of consultancy.
41 References
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Kahler, R., & Kramer, R. (1977). International Marketing. Southwestern Pub Co. Karakaya, F., & Stahl, M. J. (1991). Entry barriers and market entry decisions: A guide for marketing executives. Praeger. Kauppakamari, T. (n.d.). the-chamber-of-commerce. Retrieved 10 10, 2017, from https://turunkauppakamari.fi/en/the-chamber-of-commerce/ Kotler, P. (1988). Marketing Management. Englewood Cliffs, N.J Prentice Hall. Meyer, E. (n.d.). Culture map. Retrieved 11 10, 2017, from http://erinmeyer.com/culturemap/
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42 Renholm, L., & Myllymäki, M. (2012, 10 31). Svenskan i Finland onödigt eller nödvändigt. Retrieved 11 5, 2017, from Nordenkorrespondentene: https://nordenkorrespondentene.wordpress.com/2012/10/31/svenskan-i- finland-onodigt-eller-nodvandigt/
Rouhiainen, P. (2017, 11 10). Market entry strategies. (O. Blomqvist, Interviewer) Sharifi, H. (2009, 1). Disperse Manufacturing Networks - Challenges for Research and Practice. In R. Dekkers (Ed.). Dordrecht: Springer. Sirviö, M. (2017, 10 27). How Finnish businesses succeed in Sweden. (O. Blomqvist, Interviewer) Skoglund, K. (2017, 10 28). How Finnish buinesses succeed in Sweden. (O. Blomqvist, Interviewer)
Stat.fi. (n.d.). Foreign direct investments in 2015. Retrieved from http://www.stat.fi/til/ssij/2015/ssij_2015_2016-10-27_kat_001_en.html Svenskfinland.fi. (n.d.). Suomenruotsalainen kulttuuri. Retrieved from https://svenskfinland.fi/suomeksi/ Tilastokeskus. (n.d.). Vaihtotase maittain. Retrieved 11 10, 2017, from http://pxnet2.stat.fi/PXWeb/pxweb/fi/StatFin/StatFin__kan__mata/statfin_m ata_pxt_010.px/table/tableViewLayout1/?rxid=2a7a980a-fc53-43c8-80d5- c4bff2c99b43 Tulli. (2017). Imports, exports, trade balance and change. Retrieved 10 26, 2017, from Tulli: http://tulli.fi/tilastot/taulukot/aikasarjat Tulli.fi. (2017). Trade countries according to magnitude. Retrieved 10 26, 2017, from http://tulli.fi/tilastot/taulukot/maatilastoja Ward, P. K. (2001). Globalization - the internal dynamic. John Wiley & Sons, Ltd. ÅSUB. (2015). Befolkningen 2015. Retrieved 10 10, 2017, from Ålands statistik- och utredningsbyrå: http://www.asub.ax/sv/statistik/befolkningen-2015
43 List of Figures
Figure 1. Direct investments into Finland by the immediate investor country on 31 December 2015 ...... 9 Figure 2. Finland's outward FDI by immediate host country on 31 December 2015 ..... 9 Figure 3. Hofstede´s cultural dimensions theory – Country comparison; Finland and Sweden (see precise definitions in Appendix 5) ...... 13 Figure 4. Cultural comparison between Finland and Sweden...... 15 Figure 5. Cultural comparison between Finland and the Scandinavian countries ...... 15 Figure 6. Cultural comparison between Finland, Sweden, Germany and Russia ...... 16 Figure 7. Extended Ansoff´s matrix for growth strategy ...... 20 Figure 8. Importance of commitment and capabilities in the market entry process ... 21 Figure 9. The market entry process if a company has a lack of capabilities ...... 22 Figure 10. Applied customer process model ...... 23 Figure 11. Measuring the Swedish market attractiveness for companies who have not any business relation/contact with Sweden (Scale: 1-5) ...... 25 Figure 12. The market attractiveness / competitive strength matrix and the survey results ...... 27
List of Tables
Table 1. Thesis structure...... 4 Table 2. The trade between Finland and Sweden (1970-2016) (only goods) ...... 5 Table 3. Exchange of goods and services between Finland and Sweden (2013-2016) .. 6 Table 4. Benchmarking Finland´s most important export countries (2006-2016) ...... 7 Table 5. Benchmarking Finland´s most important import countries (2006-2016) ...... 8 Table 6. Ansoff´s matrix ...... 19 Table 7. Definitions of Ansoff´s matrix (see Table 6) ...... 19 Table 8. Definitions to Figure 12 ...... 27 Table 9. Guidelines for a Successful Market Entry into Sweden ...... 36
Appendix 1 1 Survey questionnaire
Arvoisa jäsen,
Olen Oliver Blomqvist, opiskelen Ammattikorkeakoulu Novia:ssa ja suoritan opinnäytetyötäni Turun kauppakamarille. Kysely on englanniksi ainoastaan käytännön syistä, sillä tämä sama kysely tehdään myös Tukholman kauppakamarin jäsenille. Kysely kesto on noin 5-10 minuuttia. Tavoitteenamme on kartoittaa Varsinais-Suomen ja Ruotsin kauppasuhteiden tämänhetkinen tilanne. Pyydämme myös yrityksiä, jotka eivät tee kansainvälistä kauppaa vastaamaan kyselyymme. Teiltä saamamme vastaukset ovat arvokkaita ja pystymme niiden avulla kehittämään tulevaisuuden kansainvälistymispalveluja. Kaikkien osallistujien kesken arvotaan pullo kuohuvaa. Kiitos osallistumisestanne!
Ärade medlem,
Jag heter Oliver Blomqvist, jag studerar i Yrkeshögskolan Novia och gör mitt slutarbete för Åbo handelskammare. Frågeformuläret är på engelska endast på grund av av praktiska skäl, eftersom det skickas även åt medlemmarna till Stockholm handelskammare. Att besvara frågorna räcker 5- 10 minuter. Vår målsättning är att kartlägga den nuvarande handelsrelationen mellan Egentliga Finland och Sverige. Vi ber vänligen att de företag som inte idkar internationell handel också att besvara frågorna. Svaren Ni ger är värdefulla och med hjälp av dem kan vi utveckla framtida internationella tjänster. Bland alla deltagare lottar vi ut en skumvinsflaska. Tack för Ert deltagande!
Survey - Finnish and Swedish trade relations
The aim of this survey is to investigate the Finnish and Swedish trade relations and to understand why some of the companies has not entered the Swedish market. Read the questions carefully and please answer them honestly with your best professional view.
1. In which business sector does your organisation operate? Please choose one of the following options:
Public sector Manufacturing Information Technology
Appendix 1 2 Banking and Finance Marine Building and Construction Real Estate Business Services Heavy Industry & Energy Consulting, Planning & Engineering Retail Other
2. In which geographical area does your organisation mainly operate? Please choose one of the following options:
Turku area Loimaa area Uusikaupunki area Salo area Other
3. What is the current size of your organisation by number of employees? Please choose one of the following options:
1-9 10-49 50-199 >199
4. Which of the following describes your function in your organisation? Please choose one of the following options:
CEO or Executive function Board member
Appendix 1 3 Entrepreneur Middle management Employee Other
5. Does your organisation have any business relation/contact with Sweden (e.g. partnership, customers)? Please choose one of the following options:
Yes (Please go straight to question 6 and ignore all the other questions) No (Please go straight to question 7 and ignore all the other questions) Has had, but not anymore (Please go straight to question 8 and ignore all the other questions) I do not know (Please go straight to question 7 and ignore all the other questions)
6. If you answered “Yes” on question 5, please answer all the following questions:
What kind of business relation/contact do you have with Sweden? Please choose one or more options.
Partnership / Joint Venture / Co-ownership Customers Own company operates in Sweden Agent in Sweden Suppliers in Sweden Other
Does your company mainly export to / import from Sweden?
Export Import Both export and import None
Appendix 1 4 Does your company do business in Greater Stockholm?
Yes No Not yet, but maybe in the future
What valuable advice would you give Finnish companies entering Sweden? Please tell us about your own experiences.
7. If you answered “No” or “I do not know” on question 5, please answer to what extent you agree to all the following statements:
The scale is from 1 to 5, where 1 means that you “totally disagree” and 5 means that you “fully agree”
The Swedish market is not attractive 1 2 3 4 5 Our company has no interest to expand to Sweden 1 2 3 4 5 It is difficult to find information about the Swedish market 1 2 3 4 5 The language barrier is a great reason not to enter Sweden 1 2 3 4 5 Our company has plans to enter the Swedish market 1 2 3 4 5 My company should consider Sweden as a “home market” 1 2 3 4 5
The following questions are based on a theory called the Competitive Strength/Market Attractiveness Matrix or GE McKinsey Matrix. It is a tool that companies can use in a decision making process. Taking certain factors into consideration it can help one to decide whether or not to enter a new market and how to enter it. With your well reasoned answers it can be possible for us to chart out your organisation’s potential in the Swedish market.
Please answer all the following questions from a perspective where you compare your company with your already existing competitors. The scale is from 1 to 5, where 1 means that you “totally disagree” and 5 means that you “fully agree”.
Appendix 1 5 Competitive Strength vs. your existing competitors
Your company has a big market share 1 2 3 4 5 Your company has been successful at marketing and thereby gained competitive strength 1 2 3 4 5 Your company is able to compete with customer friendly prices 1 2 3 4 5 Your product or service has a high demand 1 2 3 4 5 Your company is financially stable and strong 1 2 3 4 5
Please answer all the following questions from a perspective where Sweden hypothetically would be your target market. Please state own personal opinion. The scale is from 1 to 5, where 1 means that you “totally disagree” and 5 means that you “fully agree”
The Swedish market attractiveness
The Swedish market size is big enough 1 2 3 4 5 The Swedish customers could afford your product or service 1 2 3 4 5 The Swedish market is easily accessible 1 2 3 4 5 The toughness of competition in Sweden is not a big problem 1 2 3 4 5 The political or economic risks are not a trade barrier 1 2 3 4 5
Please describe with your own words what would motivate/help your company to enter the Swedish market:
8. If you answered “Has had, but not anymore on question 5, please answer to what extent you agree to all the following statements:¨
With your answers we can find out why your business relation/contact with Sweden has ended. The scale is from 1 to 5, where 1 means that you “totally disagree” and 5 means that you “fully agree”
Too much competition 1 2 3 4 5 The product or service did not fit in the Swedish market 1 2 3 4 5 There was communication problems because of the language 1 2 3 4 5 There was communication problems because of culture 1 2 3 4 5 More costs than profit 1 2 3 4 5
Appendix 1 6
Please describe with your own words why the business relations ended:
Kiitos vastauksistanne! Halutessanne osallistua arvontaan olkaa hyvä ja täyttäkää alla olevat tiedot: Tack för Era svar! Om Ni vill delta i lotteriet, vänligen fyll i följande uppgifter:
Nimi / Namn:______Sukunimi / Efternamn:______Sähköposti / E-post:______Puhelinnumero / Telefonnummer:______Osoite / Address:______Postitoimipaikka / Postanstalt: ______
Yhteystiedot / Kontaktuppgifter
Oliver Blomqvist Puh. / Tel. +358 44 259 5229 S-posti / E-post: [email protected]
Appendix 2 1 Survey result information
Uusikaupunki area, 3 % Loimaa area, 4 %
Other, 20 %
Turku area, 68 Salo area; 5 % %
Respondent location
Position in the organisation
Middle management 7
Entrepreneur 12
Employee 1
CEO or Executive function 41
Board member 4
0 10 20 30 40 50
Position in the organisation
Appendix 2 2 Organisation size by employees
30 26 24 25
20
15 10 10 5 5
0 10-49 1-9 200 or over 50-199
Size of the organisation of the respondent
16 Business sector 15 14 12 10 8 6 5 4 3 3 3 3 2 2 2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
0
Hotel
Retail Retail Retail
Marine
security
Transport
pharmacy
Cleantech
Education
wholesale
Real Estate Real
Publicsector Publicsector
Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing
Business Services Business Services Business
Media,newspaper
Banking and Finance Banking
Information Technology Information Technology Information
Heavy Industry & Energy IndustryHeavy & Energy IndustryHeavy
Building and Building Construction
Consulting, Planning & Engineering & Consulting,Planning Engineering & Consulting,Planning Loimaa area Other Salo area Turku area Uusikaupunki area
Business sector of the respondent
Appendix 2 3
Business relation / contact with Sweden
Yes 46
No 16
Has had, but not anymore 3
0 5 10 15 20 25 30 35 40 45 50
Business relation / contact with Sweden
Note: 15 out of 65 respondents answered that their companies do not have any business relation/contact with Sweden. 22 ot of 46 who are in business with Sweden had does business in Greater Stockholm area as well
Type of business relation / contact
Suppliers in Sweden 10
Agent in Sweden 4
Own company operates in Sweden 8
Customers 28
Partnership / Joint Venture / Co-ownership 13
Other 3
0,00 5,00 10,00 15,00 20,00 25,00 30,00
Type of business relation / contact with Sweden
Appendix 2 4
My company should consider Sweden as a 3,33 “home market”
Our company has plans to enter the Swedish 4,33 market
The language barrier is a great reason not to 1,50 enter Sweden
It is difficult to find information about the 2,83 Swedish market
Our company has no interest to expand to 1,83 Sweden
1,50 The Swedish market is not attractive
Opinions about the Swedish market from companies who have not any business relation/contact with Sweden. (Opinions of six companies who plan to enter the Swedish market on scale: 1-5)
Appendix 2 5 What valuable advice would you give to Finnish companies entering Sweden? Please tell us about your own experiences.
“Get connected. Visit dealers and distributors etc. to make personal connection to People behind the companies.”
“Learn Swedish and small talk”
“You only go and find/meet your customers there”
“Be patient and build relationships.”
“Tala svenska, så vinner du mycket.”
“You have understand cultural differences, decision making is different than in Finland.”
“It is like a home market, nothing special required”
“People in Sweden seem to think, that whatever you present, say or do, can be published or forwarded to other companies in there. Take care of your IPR!”
Please describe with your own words what would motivate / help your company to enter the Swedish market: “We can´t export anything to Sweden because there is our sister company”
“Local marketing assistance, better traffic connections between Stockholm and Turku”
“We're a local district heating company, so there is no chance to enter the Swedish Market”
“As a local fixed network/IT provider it is not an option to go abroad.”
Note: There was no quotations from the respondents who had ended their business relation/contact with Sweden.
Appendix 3 1 Hanasaari report graphs
Appendix 3 2
Appendix 4 1 Expert interview questions and interviewee profiles
The interviews were performed in many different ways; they were done personally, over the phone and per email. All of the original answers and statements are translated from Swedish to English.
Interview questions
1.Name: 2.Title. 3.Company/organisation: 4.Company size (number of employees): 5.Business sector: 6.What is your background and how many years of international work experience do you have? 7.What are the most common cultural challenges Finnish companies face in Sweden? 8.At what stage during the customer process do Finnish companies usually face difficulties, while doing business with Sweden? Why? 9.What is the recipe for success in Sweden? Advice to Finnish companies. 10. Name a company that has managed to expand to Sweden very successfully. Which factors have contributed to the success? 11. How could Finnish companies be encouraged to enter the Swedish market? Advice to Turku Chamber of Commerce 12.Other comments:
Appendix 4 2
Interviewee profiles
Name: Åsa Hagberg-Andersson Title: Market advisor Company/organisation: Finnish-Swedish Chamber of Commerce Company size (number of employees): 5 Business sector: Market advising
Background and international work experience:
5 years of international work experience in USA, Norway, France, UK and Sweden.
Name: Kjell Skoglund Title: CEO Company/organisation: Finnish-Swedish Chamber of Commerce Company size (number of employees): 5 Business sector: Market advising
Background and international work experience:
15 years of international experience in the Nordic countries.
Name: Markku Sirviö Title: Market advisor Company/organisation: Finnish – Swedish Chamber of Commerce Company size (number of employees): 5 Business sector: Market advising
Background and international work experience:
Law degree, Education in economies, 10 years entrepreneur and worked 20 years for the Finnish-Swedish Chamber of Commerce. Has helped a lot of Finnish companies to enter the Swedish market and vice versa.
Appendix 4 3 Name: Riitta Eivergård
Title: CEO
Company/organisation: Pragmator Management AB Company size (number of employees): 2
Business sector: Consulting
Background and international work experience:
Education from both Finland and Sweden, ca. 5 years university. Worked as a consultant for ca. 13 years, which of the last 5 years in both Finland and Sweden in big organisations with Finnish and Swedish cultural heritage.
Appendix 5 1 Definitions of Hofstede´s cultural dimensions
Power distance
“This dimension deals with the fact that all individuals in societies are not equal – it expresses the attitude of the culture towards these inequalities amongst us. Power Distance is defined as the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally.”
Individualism
“The fundamental issue addressed by this dimension is the degree of interdependence a society maintains among its members. It has to do with whether people´s self-image is defined in terms of “I” or “We”. In Individualist societies people are supposed to look after themselves and their direct family only. In Collectivist societies people belong to ‘in groups’ that take care of them in exchange for loyalty.”
Masculinity
”A high score (Masculine) on this dimension indicates that the society will be driven by competition, achievement and success, with success being defined by the winner/best in field – a value system that starts in school and continues throughout organisational life.”
Uncertainty avoidance
“The dimension Uncertainty Avoidance has to do with the way that a society deals with the fact that the future can never be known: should we try to control the future or just let it happen? This ambiguity brings with it anxiety and different cultures have learnt to deal with this anxiety in different ways. The extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these is reflected in the score on Uncertainty Avoidance.”
Appendix 5 2 Long-term orientation
“This dimension describes how every society has to maintain some links with its own past while dealing with the challenges of the present and future, and societies prioritise these two existential goals differently. Normative societies. which score low on this dimension, for example, prefer to maintain time-honoured traditions and norms while viewing societal change with suspicion. Those with a culture which scores high, on the other hand, take a more pragmatic approach: they encourage thrift and efforts in modern education as a way to prepare for the future.”
Indulgence
“One challenge that confronts humanity, now and in the past, is the degree to which small children are socialized. Without socialization we do not become “human”. This dimension is defined as the extent to which people try to control their desires and impulses, based on the way they were raised. Relatively weak control is called “Indulgence” and relatively strong control is called “Restraint”. Cultures can, therefore, be described as Indulgent or Restrained.”
(Hofstede, n.d.)
Appendix 6 1 The Culture Map definitions
Communicating Low-context “Good communication is precise, simple and clear. Messages are expressed and understood at face value. Repetition is appreciated if it helps clarify the communication. High-context Good communication is sophisticated, nuanced and layered. Messages are both spoken and read between the lines. Messages are often implied but not plainly expressed.
Evaluating Direct Negative Feedback Negative feedback to a colleague is provided frankly, bluntly, honestly. Negative messages stand alone, not softened by positive ones. Absolute descriptions are often used when criticizing. Criticism may be given to an individual in front of a group. Indirect Negative Feedback Negative feedback to a colleague is provided softly, subtly, diplomatically. Positive messages are used to wrap negative ones. Qualifying descriptors are often used when criticizing. Criticism is given only in private.
Leading Egalitarian The ideal distance between a boss and a subordinate is low. The best boss is a facilitator among equals. Organizational structures are flat. Communication often skips hierarchical lines. Hierarchical The ideal distance between a boss and a subordinate is high. The best boss is a string director who leads from the front. Status is important. Organizational structures are multilayered and fixed. Communication follows set hierarchical lines.
Appendix 6 2 Deciding Consensual Decisions are made in groups through unanimous agreement. Top-down Decisions are made by individuals (usually the boss).
Trusting Task-based Trust is built through business-related activities. Work relationships are built and dropped easily, based on the practicality of the situation. You do good work consistently, you are reliable, I enjoy working with you, I trust you. Relationship-based Trust is built through sharing emails, evening drinks, and visits at the coffee machine. Work relationships build up slowly over the long term. I've seen who you are at a deep level, I've shared personal time with you, I know others well who trust you, I trust you.
Disagreeing Confrontational Disagreement and debate are positive for the team or organization. Open confrontation is appropriate and will not negatively impact the relationship. Avoids Confrontation Disagreement and debate are negative for the team or organization. Open confrontation is inappropriate and will break group harmony or negatively impact the relationship.
Appendix 6 3 Scheduling Linear-time Project steps are approached in a sequential fashion, completing one task before beginning the next. One thing at a time. No interruptions. The focus is one the deadline and sticking to the schedule. Emphasis is on promptness and good organization over flexibility. Flexible-time Project steps are approached in a fluid manner, changing tasks as opportunities arrive. Many things are dealt with at once and interruptions accepted. The focus is on adaptability, and flexibility is valued over organization.
Persuading Principles First Individuals have been trained to first develop the theory or complex concept before presenting a fact, statement, or opinion. The preference is to begin a message or report by building up a theoretical argument before moving on to a conclusion. The conceptual principles underlying each situation are valued. Applications First Individuals are trained to begin with a fact, statement or opinion and later add concepts to back up or explain the conclusion as necessary. The preference is to begin a message or report with an executive summary or bullet points. Discussions are approached in a practical, concrete manner. Theoretical or philosophical discussions are avoided in a business environment.” (Meyer, n.d.)