The problem faced by Valio was both internal and external. During that period there were rapid changes in the external as well as internal environment. Thus the company struggled to cope up with the changing environment. This was the main problem faced by Valio that affected it internally as well as externally. The first problem that affected the company internally was the centralization of the sales objectives of all the dairy cooperatives of Valio (Lamprinakis, 2012). This affected the internal structure of Valio by changing its former model and giving birth to a modern Valio with changes affecting people, resources, money, managers, employees, and culture. Secondly, there was extensive competition in the external environment. The above-mentioned problems are lined by distinct causes that hold responsible for Valio’s transformation. Firstly the introduction of a new Competition law was the main cause that resulted in restructuring the former business model of Valio into a modern business model. Before the enforcement of the competition law, the entire dairy production was structured into a number of cooperative diaries that were characterized by a common sales organization having common objectives. However, the competition law prohibited such competitive marketing. Thus this required Valio to merge the regional cooperative diaries otherwise it had to compete with them. This gave rise to a new modern Valio. Thus, the internal structure underwent rapid changes during this period. Secondly, Finland’s preparation for EU membership was seen as a threat by Valio. This membership brought about a change in the external environment in a way that gave rise to a more liberal and market-driven economy. However, the prices of Finland products were high. This lack of cost advantage leads to a lack of cooperative advantage in the European market. Thus causes are of two types that are internal or external. Both these causes affect the organization in two ways that are either strengthens or weakens its internal environment or brings opportunities or threats in its external environment.
Since the organization underwent rapid changes that affected it both internally and externally Valio could adopt a few alternative steps in organizational change and adaptation. Firstly the organization should thoroughly analyze its internal strengths and weaknesses. The strengths need to be in line with production effectiveness. Secondly changes in the internal environment like changes in leadership, IT and human resources and many more cause distress and insecurity among employees. Thus Valio should focus on its management tasks, employee wellbeing, and productivity and job resources. In addition to this, instead of cutting costs, the organization should focus on the survival of the organization in the market. The brand name should be given importance and the company should be sustainable and have a competitive advantage. Thus this alternative suggests Valio to always be prepared to face challenges and changes in the business environment. In order to overcome the problems faced by Valio; it used effective response strategies. Valio used an ambidextrous response to fight the critical problems in its organization (Puisto & Alavi, 2016). It undertook a blend of two strategies namely (proactive) investment and retrenchment (rationalization) strategies. Proactive strategies are those strategies that are undertaken by an organization to combat changes in the economic environment (Drach et al., 2017). These are aggressive in nature. Retrenchment strategies ensure the financial stability of an organization by cutting down expenditures and operations of the organization. In this scenario, proactive strategies were used in the internal environment through detailed and effective research and development and quality check (Puisto & Alavi, 2016). In the external environment, however, more emphasis was given to customer satisfaction, market and product development. The company concentrated on producing value-added- products instead of producing goods in bulk. These variations in products not only targeted the domestic market but also the foreign market. Thus new markets were traversed. This strengthened its brand image and made it more market-oriented. The proactive strategies were combined with the retrenchment strategies. Retrenchment strategies primarily targeted the internal environment that is the human resource, logistics, and administration. There was rapid downsizing of plants and operations and the closing of other plants. This was done in anticipation of a streamlined company resulting in an added competitive advantage.
There are many reasons why this case is relevant to a study of business. The above-discussed case reveals that business changes and environmental changes are inevitable (Le Déaut, ). A business organization has to undergo these changes in its life cycle. However, these changes may negatively impact a business and should not be ignored. Success after these changes is uncertain. Thus this case helps to explore various alternatives that can be adopted by a business organization in times of rapid changes in the business environment.
Drach, U., Halachmi, I., Pnini, T., Izhaki, I., & Degani, A. (2017). Automatic herding reduces labour and increases milking frequency in robotic milking. Biosystems Engineering, 155, 134-141.
Lamprinakis, L. (2012). Organizational Innovation in the Face of Institutional Change: The Case of the Finnish Dairy Sector (No. 1020-2016-81753, pp. 148-160) .
Le Déaut, M. J. Y. Innovation and Climate Change: The Role of Scientific and Technological Assessment. Puisto, A., & Alavi, H. (2016). Abuse of Dominant Market Position by Predatory Pricing; The Valio Case. Hasanuddin Law Review, 1(1), 24-37.
Discussion - 2
This case revolves around the motivational factors that guide Melodie Stewart in launching and planning her new business. The root problem that led her to her new business is when the magazine, Atlantic Women, went bankrupt. She was left with no money, job, due mortgage payments and a debt of $12000.
Thus the root cause of her problem was the magazine that she worked for going bankrupt. Melodie was an independent woman and she decided to dig up various possibilities available to her. She devised an idea of a networking business. She analyzed and researched on the various possibilities of this business. She discussed the idea with her parents who offered her financial help to get started. Next she asked her friend, Kim Doherty, for help and invited her for a partnership. Kim was more into the administration and Melodie was more into creating social contacts. If they had used this alternative it would have created balance in business. Firstly she devised a business plan and approached the banks for funds. However the banks did not fund her because they considered her plan to be unstable and risky. Thus she undertook the strategy of self- motivation. She applied for lease for her own office and prepared a client list and
contacted few of her ex-clients, from her previous, job for support. She got various fax letters coming in for supports. She provided these along with the lease to the banks again. This time the bank manager realised how innovative and exciting her idea was. Thus she started her journey with a small overdraft of $1500 and later on her business, Pro-Net survived to obtain $10,000 from the Canadian Youth Business Foundation to pay for their trademark, incorporation, copyright and partnership.
This case proves to be relevant an important to business study in many ways. The tremendous efforts of the two women entrepreneurs are great examples of individual interest, hard-work, motivation and business ethics (Joshi, 2010). These motivational factors, new business ideas and alternatives are an important and can be adopted by ambitious young individuals striving to become successful entrepreneurs.
Joshi, M. (2010). Seizing the opportunity for innovation: a case study from India. International Journal of Technology Marketing, 5(1), 90-104.