The entry strategy of JSC "Smurfit Kappa RUS" onto the Belarusian market
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Statement of a substantive character of the graduate qualification thesis 2
Introduction 4
Chapter 1 The theoretical basis of the concept 8
1.1 General description of the company 8
1.2 Managerial Problem statement 11
1.3 Research methodology 13
Chapter 2 External analysis of the Belarusian market 24
2.1 Introduction before the external analysis of the Belarusian market 24
2.2 PESTEL analysis 24
2.3 Porter's five forcers analysis 35
Chapter 3 Entry strategy for JSC “Smurfit Kappa RUS" onto the market of the Republic of Belarus 43
3.1 Entry strategy 43
3.2 Business Canvas 74
Conclusion 88
List of used sources 90
Application 95
Introduction 4
Chapter 1 The theoretical basis of the concept 8
1.1 General description of the company 8
1.2 Managerial Problem statement 11
1.3 Research methodology 13
Chapter 2 External analysis of the Belarusian market 24
2.1 Introduction before the external analysis of the Belarusian market 24
2.2 PESTEL analysis 24
2.3 Porter's five forcers analysis 35
Chapter 3 Entry strategy for JSC “Smurfit Kappa RUS" onto the market of the Republic of Belarus 43
3.1 Entry strategy 43
3.2 Business Canvas 74
Conclusion 88
List of used sources 90
Application 95
In this final qualification work, I develop a strategy for Smurfit Kappa RUS to enter a new market - the Belarusian market. More precisely, through the online distribution channel, focused on small business segment in Belarus. In 2022, the company's revenues decreased as some customers left the Russian market. Therefore, the company started looking for new markets, and one of the most convenient at the moment is the Belarusian market. Moreover, the company already tried to open an online shop and work through marketplaces in Russia but put this process on hold because it did not bring as much profit. However, the company still needs new customers and additional income, as well as development in new areas, so they decided to consider an online format in Belarus. The paper will also present an analysis of the corrugated cardboard market in Russia and Belarus, as well as a strategy for the company to enter the Belarusian market.
I had a summer internship at Smurfit Kappa for two years in a row. Due to sanctions, the company has lost markets in Finland and Estonia, hence, Smurfit Kappa is looking for ways to increase sales in other possible markets, the most suitable of which is Belarus. I was contacted by Smurfit Kappa RUS, where I did my summer internship, with a request to analyse the Belarusian market to understand whether to enter its online market or not. The company wants to see how cost-effective it is to operate in an online format in the Republic of Belarus if it has not succeeded in Russia.
As a result of sanctions, which led to a ban on corrugated packaging exports to Finland, the company lost all Finnish customers in the spring of 2022. There has also been a ban on the import of corrugated boxes to Estonia since January, which also affected the company's sales in the short term.
Smurfit Kappa RUS includes 4 plants in Russia, 3 of which are located in the Leningrad region and 1 in Moscow. The company is looking for ways to replace current and future customer losses in the Finnish and Baltic markets by acquiring new customers and new geographical markets. In particular, the company is considering increasing sales to the friendly neighboring country of Belarus, to which it has been supplying its products in small volumes for several years, while assessing its sales experience in Belarus as positive.
At the same time, Smurfit Kappa RUS has never analysed the Belarusian online market or set objectives for its development, as there was no shortage of orders to load the existing production capacity until 2022.
At this stage, Smurfit Kappa RUS is not considering investing in new capacity in Belarus, because even when considering BtoB business in Belarus, the company chose not to consider too costly forms of entry into the Belarusian market. The company is thinking about loading Russian production sites, namely exporting its products to the Republic of Belarus. For this purpose, it needs to analyse the market and develop an entry strategy to this previously unexplored market.
In the modern business landscape, it is imperative for companies to ascertain their competitive advantages and devise strategies not just for local market growth, but also to maximize profits through global expansion. With the world constantly changing at a fast pace, it is crucial to select the best approach and formulate a strategy that enables entry into one or more new markets while considering customers' preferences, interests, and purchasing capacity. Moreover, it is essential to evaluate potential risks associated with international operations such as crises, conflicts, pandemics, and domestic legal and political factors.
Smurfit Kappa is one of the leaders in corrugated cardboard packaging. The company is currently interested in entering the market in Belarus through the online channel of distribution, which requires a quality strategy. The economic sanctions imposed by several countries against Russia have led to certain restrictions on trade in goods and services. Smurfit Kappa has lost some customers, some Smurfit Kappa customers themselves have lost their previous sales volumes and now need less corrugated cardboard packaging. Consequently, Smurfit Kappa's sales volume has decreased.
The goal of this paper is to develop a strategy for the company to enter the Belarusian market.
Smurfit Kappa used to supply packaging in Belarus, but now it is interested in expanding its presence. And in this paper, I will describe in detail the development option with entry into the market for small businesses....
I had a summer internship at Smurfit Kappa for two years in a row. Due to sanctions, the company has lost markets in Finland and Estonia, hence, Smurfit Kappa is looking for ways to increase sales in other possible markets, the most suitable of which is Belarus. I was contacted by Smurfit Kappa RUS, where I did my summer internship, with a request to analyse the Belarusian market to understand whether to enter its online market or not. The company wants to see how cost-effective it is to operate in an online format in the Republic of Belarus if it has not succeeded in Russia.
As a result of sanctions, which led to a ban on corrugated packaging exports to Finland, the company lost all Finnish customers in the spring of 2022. There has also been a ban on the import of corrugated boxes to Estonia since January, which also affected the company's sales in the short term.
Smurfit Kappa RUS includes 4 plants in Russia, 3 of which are located in the Leningrad region and 1 in Moscow. The company is looking for ways to replace current and future customer losses in the Finnish and Baltic markets by acquiring new customers and new geographical markets. In particular, the company is considering increasing sales to the friendly neighboring country of Belarus, to which it has been supplying its products in small volumes for several years, while assessing its sales experience in Belarus as positive.
At the same time, Smurfit Kappa RUS has never analysed the Belarusian online market or set objectives for its development, as there was no shortage of orders to load the existing production capacity until 2022.
At this stage, Smurfit Kappa RUS is not considering investing in new capacity in Belarus, because even when considering BtoB business in Belarus, the company chose not to consider too costly forms of entry into the Belarusian market. The company is thinking about loading Russian production sites, namely exporting its products to the Republic of Belarus. For this purpose, it needs to analyse the market and develop an entry strategy to this previously unexplored market.
In the modern business landscape, it is imperative for companies to ascertain their competitive advantages and devise strategies not just for local market growth, but also to maximize profits through global expansion. With the world constantly changing at a fast pace, it is crucial to select the best approach and formulate a strategy that enables entry into one or more new markets while considering customers' preferences, interests, and purchasing capacity. Moreover, it is essential to evaluate potential risks associated with international operations such as crises, conflicts, pandemics, and domestic legal and political factors.
Smurfit Kappa is one of the leaders in corrugated cardboard packaging. The company is currently interested in entering the market in Belarus through the online channel of distribution, which requires a quality strategy. The economic sanctions imposed by several countries against Russia have led to certain restrictions on trade in goods and services. Smurfit Kappa has lost some customers, some Smurfit Kappa customers themselves have lost their previous sales volumes and now need less corrugated cardboard packaging. Consequently, Smurfit Kappa's sales volume has decreased.
The goal of this paper is to develop a strategy for the company to enter the Belarusian market.
Smurfit Kappa used to supply packaging in Belarus, but now it is interested in expanding its presence. And in this paper, I will describe in detail the development option with entry into the market for small businesses....
Summarizing the consulting work done for Smurfit Kappa RUS, several conclusions can be drawn.
The market in the Republic of Belarus is not the easiest to work with, but it is definitely possible to enter. If you take into account all the risks and problems in the market, and use your strengths, then entry is possible. The company is considering entering the Belarusian corrugated cardboard packaging market through the online channel, as the company wants not only to expand its presence and increase the volume of orders, but also to be present on online platforms, to work not only with large businesses, but also with medium and small ones. To analyse the profitability of entering the Belarusian market, I delved into the reasons why the company wants to enter the Belarusian market, tried to understand if they are really important and have a place, I did a PESTEL analysis, Porter's five forces analysis, I also looked at potential competitors of Smurfit Kappa RUS, then I considered possible forms of market entry and chose the most cost-effective.
In this case, indirect export was the most suitable option.
In the first stage, I interviewed marketing and sales managers and found out the following facts. Smurfit Kappa had already opened an online shop in Poland, by analogy with which the company opened an online shop in Russia, but closed it after a while, as it did not bring in any significant income and therefore had no sense as such, because at that time the company had already high income and there was no point in spending money on working with the online channel. At the moment, the company has lost many foreign clients and is thinking about entering the market of the Republic of Belarus, both offline and online. The offline format is seen by the company's management exclusively as working with large companies, while the online channel provides an opportunity to work with small businesses as well, which is an opportunity for the company to increase its recognition and expand its client targeting. Thus, the company wanted to win on several counts at once: entering a new market, using a new sales channel, a new customer target (small businesses), and an opportunity to once again prove its competence and ability to keep up with the times and trends. Online sales are currently growing and gaining popularity, so this is a good way for Smurfit Kappa RUS to increase brand awareness and gain new sources of revenue.
I also analysed the market in the Republic of Belarus, which showed that the company can enter the market and play on quality, or rather on its value proposition. Belarus has many of its own corrugated packaging companies, which they sell online, but Smurfit Kappa RUS can provide customers with a foreign approach and high quality.
In choosing the form of entry into the Belarusian market, I considered five forms and two platforms. I chose indirect export with the help of Sint Pak. Between the marketplaces and the online shop, I chose the marketplaces, as it comes out cheaper, less resource-intensive and requires less time to organise, especially as the distributor company will do it, because Smurfit Kappa RUS is only responsible for manufacturing the products and supplying them to the Republic of Belarus.
Focusing on the experience of Poland, the managers of the marketing department and I came up with approximately such a plan.
Forecast: 500 orders/month, average check €50, 1m2/year.
• The outsourcing company is responsible for: receiving payments, courier delivery, storage of goods and packaging before shipment.
• 2 reports at the end of each month: sales report and stock report. They work in the VMS accounting system.
• An order is possible so far only for small businesses with a TIN, if the volume of the order is large, then the transition to the page of the SK website is carried out. (B2B sector)
• The product is divided into 4 categories, 20 items. The size of the order is a multiple of packs of 20 or 25/30 pieces, in which the boxes are tied when leaving the machines.
• Delivery to the client the next day, at the expense of SK, but the order is for db boxes. from PLN 600 and more. To order printed boxes, you must fill out an online form (customer service is responsible for this).
The market in the Republic of Belarus is not the easiest to work with, but it is definitely possible to enter. If you take into account all the risks and problems in the market, and use your strengths, then entry is possible. The company is considering entering the Belarusian corrugated cardboard packaging market through the online channel, as the company wants not only to expand its presence and increase the volume of orders, but also to be present on online platforms, to work not only with large businesses, but also with medium and small ones. To analyse the profitability of entering the Belarusian market, I delved into the reasons why the company wants to enter the Belarusian market, tried to understand if they are really important and have a place, I did a PESTEL analysis, Porter's five forces analysis, I also looked at potential competitors of Smurfit Kappa RUS, then I considered possible forms of market entry and chose the most cost-effective.
In this case, indirect export was the most suitable option.
In the first stage, I interviewed marketing and sales managers and found out the following facts. Smurfit Kappa had already opened an online shop in Poland, by analogy with which the company opened an online shop in Russia, but closed it after a while, as it did not bring in any significant income and therefore had no sense as such, because at that time the company had already high income and there was no point in spending money on working with the online channel. At the moment, the company has lost many foreign clients and is thinking about entering the market of the Republic of Belarus, both offline and online. The offline format is seen by the company's management exclusively as working with large companies, while the online channel provides an opportunity to work with small businesses as well, which is an opportunity for the company to increase its recognition and expand its client targeting. Thus, the company wanted to win on several counts at once: entering a new market, using a new sales channel, a new customer target (small businesses), and an opportunity to once again prove its competence and ability to keep up with the times and trends. Online sales are currently growing and gaining popularity, so this is a good way for Smurfit Kappa RUS to increase brand awareness and gain new sources of revenue.
I also analysed the market in the Republic of Belarus, which showed that the company can enter the market and play on quality, or rather on its value proposition. Belarus has many of its own corrugated packaging companies, which they sell online, but Smurfit Kappa RUS can provide customers with a foreign approach and high quality.
In choosing the form of entry into the Belarusian market, I considered five forms and two platforms. I chose indirect export with the help of Sint Pak. Between the marketplaces and the online shop, I chose the marketplaces, as it comes out cheaper, less resource-intensive and requires less time to organise, especially as the distributor company will do it, because Smurfit Kappa RUS is only responsible for manufacturing the products and supplying them to the Republic of Belarus.
Focusing on the experience of Poland, the managers of the marketing department and I came up with approximately such a plan.
Forecast: 500 orders/month, average check €50, 1m2/year.
• The outsourcing company is responsible for: receiving payments, courier delivery, storage of goods and packaging before shipment.
• 2 reports at the end of each month: sales report and stock report. They work in the VMS accounting system.
• An order is possible so far only for small businesses with a TIN, if the volume of the order is large, then the transition to the page of the SK website is carried out. (B2B sector)
• The product is divided into 4 categories, 20 items. The size of the order is a multiple of packs of 20 or 25/30 pieces, in which the boxes are tied when leaving the machines.
• Delivery to the client the next day, at the expense of SK, but the order is for db boxes. from PLN 600 and more. To order printed boxes, you must fill out an online form (customer service is responsible for this).
