W
OODSTRAT
: A S
UPPORT
S
YSTEM FOR
S
TRATEGIC
M
ANAGEMENT
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P
IRKKO
W
ALDEN AND
C
HRISTER
C
ARLSSON
Institute for Advanced Management Systems Research
Åbo Akademi University (Finland)
AND OSSI KOKKONEN
Metsä-Serla Oy (Finland)
T
HE
C
ORPORATION AND THE
C
OMPETITIVE
E
NVIRONMENT
Today, Finland has more forests than it has had for the
last several hundred years. This is due to the ecological
concept of sustainable development, in which a considerable
part of the forest’s natural growth remains unexploited.
Although Finnish pine and spruce forests are only about
1 percent of the total resources in the world, Finland has
been able to build a leading position among the forest in-
dustry nations.
Metsä-Serla is a Finnish forest products group with
1993 net sales of FIM 8,239 million (U.S. $881 million). It
is the fourth-largest forest products company in Finland;
its operating profit was FIM 964 million (U.S. $220 mil-
lion) and the consolidated financial result was over FIM
550 million (U.S. $126 million) better than in 1992. This
shows an impressive recovery from a severe recession in
the Finnish forest industry. The year 1993 will be remem-
bered “as one in which, in real terms, prices for several
forest products on world markets fell to their lowest level
in 20 years’’ (Timo Poranen, president and CEO of Metsä-
Serla). In its eight divisions, which operate rather inde-
pendently, Metsä- Serla processes wood raw material into
paper and paperboard, corrugated board, and tissue as
well as sawn goods, pulp, and chemicals. It has production
and marketing operations in Europe and sells its products
worldwide; exports from Finland and sales through for-
eign subsidiaries together contribute 84 percent of net
sales. Metsä-Serla’s basic strategy is to expand and
strengthen its market positions in carefully selected core
businesses (Metsä-Serla, Annual Report 1993). In 1993, the
number of employees was approximately 8,700, of whom
almost 30 percent worked outside Finland.
Metsä-Serla has undertaken a rapid and thorough
adaptation to the emerging characteristics of its European
markets. It was one of the first companies in Finland to
adopt modern environmental values and has actively de-
veloped proenvironmental technology and products. “We
see it as a trend that we should be directly involved in,
right from the start,’’ says Timo Poranen. “We are concen-
trating on manufacturing the type of products that best
bring out the excellent properties of primary fiber; an ad-
ditional factor is that products should be well suited to re-
cycling and processes should consume as little energy as
possible.’’ Strategic thinking has a long history in the cor-
poration and new ideas have, on many occasions, been
very successfully implemented.
In the corporation, strategic planning used to be rather
a formal exercise. This is the case in most forest industry
corporations, where the pressures of rapidly changing
markets and strong competition quickly make most
strategic plans obsolete. Ossi Kokkonen, a senior vice
president, did not feel very happy with the way things
were done. He heads a division with nine small business
units (SBUs) representing sawn goods, pulp, and building
materials. These SBUs operate with multiple products in
different markets and market segments. Softwood and
hardwood pulps are mainly sold to Metsä-Serla’s other
mills, and fluff pulp (a speciality that is used as raw mate-
rial for hygiene products) is marketed mainly to Euro-
pean and North American manufacturers. Important seg-
ments for the sawn goods are joinery, planing mill,
furniture, packaging, and construction industry. Sawn
goods are marketed through the division’s own sales of-
fices in Denmark, the United Kingdom, France, and
Switzerland; in the other markets, sales are taken care of
by local agents. Building materials—windows, doors, log
houses, and saunas—are distributed to European mar-
kets, but also remote markets such as the Japanese have
been attractive for log houses. Ossi Kokkonen’s view on
traditional strategic planning is that the process offers
very little substance to its participants. He elaborates as
follows:
My vision is that the process should be a dynamic one,
sensitive to changes in the competitive context and
aimed at creating strategic advantages. I want more ef-
fective strategic management processes, as I expect my
people to be well prepared to face drastic changes and
new challenges in the markets. I am not too sure that
my managers are practicing customer-oriented think-
ing, which is one of the cornerstones in my manage-
ment philosophy [forest industry companies have tra-
WOODSTRAT: A S
UPPORT
S
YSTEM
FOR
S
TRATEGIC
M
ANAGEMENT
PART I Case Study
3377/Turban/PtI/Case 10/5/98 11:02 AM Page 165
