Business Strategy for Market Expansion: A Case Study in the Arboriculture Market

Abstract

Following the industry life cycle, markets eventually reach decline, forcing companies to search outside of their core areas to find new opportunities for growth. This process poses managerial challenges since new opportunities that align with the firm’s internal and external environment needs to be identified. Driven by a stagnating market, this is now the situation of the investigated case company, Husqvarna, and they are therefore looking to refocus their strategy towards a new market, namely arboriculture. However, this transition offers several challenges that need to be handled and the aim of this thesis is therefore to support Husqvarna’s strategy formulation as well as increase the theoretical understanding of the arboriculture market. The study is of a qualitative nature and consists of a case study and a literature review, in order to understand the internal and external environment of the case company. This was carried out by conducting 19 semi-structured interviews with arborists, store representatives, and employees at Husqvarna. The findings of the study shows that arborists value a range of attributes when purchasing equipment and that the attributes varied depending on what category of equipment that was discussed. Some attributes that were mentioned by the arborists were innovativeness, quality, safety, ergonomics, and reliability, and all the arborists interviewed exhibited strong brand preferences. The primary distribution channels, physical and online stores, both had their advantages, according to the arborists. For physical stores, accessibility, seller competence, testing products, and service and maintenance were discussed as benefits. Lack of available physical stores and a complete assortment were dimensions discussed regarding online stores. In the results from the interviewed stores, the long and close relationship with the end customer was emphasized, as well as the exchange of feedback. The resources and capabilities analyzed at Husqvarna were market position, brand, market intelligence, product development capabilities, marketing, sales department, and dealer network. The key success factors of the arboriculture industry were concluded to be: brand, safety and the ability to convey robustness, well designed and innovative products, ability to understand the challenges of the arborist, capability to turn market intel into innovative products, and establish the brand in the arborist community. When assessing Husqvarna’s resources and capabilities, the result showed that the brand, product development capabilities, sales department, and dealer network all constitute sustainable competitive advantages, while marketing, market position, and market intel do not. Lastly, the analysis concludes that the case company should focus on extending their brand to complement products and deploy their strong product development capabilities efficiently in adjacent product categories. Furthermore, the competence and incentive structure of the sales department and dealer network should be focus areas for improvement.