Reorganising Friesland Hungaria - A Case Study*
Buzády, Zoltán, Journal for East European Management Studies
This teaching case study focuses on the shifting of company strategy from the national to the CEE-regional level. Friesland, a Dutch-owned dairy company in Hungary, was extremely successful in the national context since 1993, but the 2004-enlargement of the European Union initiated a process of regional integration across Central European countries. Management has to face new challenges for company strategy (such as regional expansion) and organisational structures (fitting an existing national company to the new international group of businesses).
Diese Fallstudie veranschaulicht, wie sich Firmenstrategie van nationaler Ebene auf den zentral-europäischen Kontext ausweitet. Friesland Ungarn, ein Molkerei Konzern mit holländischen Eigentümern, war seit der Privatisierung im Jahre 1993 außerordentlich erfolgreich, doch die Osterweiterung der Europäischen Union bewirkte einen über mehrere Länder in der Region übergreifenden Integrationsprozess. Somit musste sich das Managementteam neuen Herausforderungen stellen: Strategische Neuorientierung (Regionale Expansion) sowie Umgestaltung der Organisationsform (bestehende Firmen in das neue Unternehmensnetzwerk zu integrieren).
Key words: Strategic management / organisational change / EU-enlargement / regional strategies / leadership / case study
1. Case Synopsis1
In dairy industry the privatisation process started much later than in other food sectors in Hungary. Some companies were more successful than others in applying the new experiences gained from related industries so stepping ahead in their restructuring process. The case gives insights into the rapid changes in business environment, both at competitive level and consumer behaviour, during the transition period. The case demonstrates how Nutricia Hungary has successfully maintained a growth strategy by constantly adjusting it to the changed environment. The case ends in mid-2003, just a few months before the EU accession of several Central European countries. At that time almost all companies in Hungary expected radical changes caused by the advent of one single European market but nobody was certain about its future impacts. Companies and government bodies had high expectations, but also faced high insecurities.
The case describes the rapid growth of Nutricia Hungary, which started off as a Dutch-Hungarian joint-venture company: first it grew by strong acquisition activity, and then gained its competitiveness by focusing on the various elements of the company's value chain. In the third phase, which begins with the international expansion of Nutricia Hungary into three neighbouring countries, accession to the European Union becomes a new strategic factor. The company makes a pre-emptive approach and attempts to establish itself as the regional leader in the dairy industry.
Apart from the strategy content issues, the case also gives insights into the strategy making process. Nutricia Hungary is different from many other multinational companies operating in Hungary in that respect that its success was masterminded and executed by a local, Hungarian management team.
However, the major issue of the case is the immanent decision, which the newly appointed Hungarian CEO is facing: whether or not to reorganise the formerly eight now three Hungarian companies into a single legal entity. This question is not straightforward, since the company has been very successful so far, and the effects of EU accession are unknown.
The case explores major questions concerning the relationship between strategy and structure and vice versa (cf. Chandler; Tom Peters et al.).
Overall, the case exposes the interdependence of strategic issues and is not a "numbers-based" strategy case.
2. Teaching case: Reorganising Friesland Hungaria (Shortened Version)
Kornél Temesvári (34) newly appointed CEO of the largest Hungarian dairy company was waiting patiently in the traffic jam, and was content that as a result of modern cooling technologies their fresh dairy products did not perish in delivery trucks, even on days as hot as that particular day. …