How does Orkla achieve synergies in their multi-local business model?

NHH Forum, 5. September 2011 Iver Bragelien, NHH www.nhh.no

Why Orkla is such a mess?

Social Surplus / Transaction Effectiveness

Based on work by Professor Robert Gibbons, MIT

Firm Market Transaction Difficulty 25.04.2020 [email protected]

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Based on own research

How does Orkla use market and firm coordination to achieve synergies?

Market coordination

• Synergies seen as local responsibility?

• Free negotiations to settle compensations/prices?

• Free to use outside options if negotiations fail?

Firm coordination

• Synergies seen also as central responsibility?

• Common culture development (norms and values)?

• Centrally organized meeting points to discuss synergies?

• Centrally initiated projects & central decision making?

• Central research capacity facilitating synergy projects?

25.04.2020 [email protected]

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Based on own research

How did two Norwegian companies strive for synergies 10 years ago Norske Skog Rieber & Søn

Build culture & Organise meeting points Councils (Production, Sales/Marketing, Supply, IT) Develop and rotate managers Initiate projects & Make decisions Initiate and decide on projects Central project research Councils (1-3 persons working full-time for each council)

25/04/2020 [email protected]

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Some synergies are hard to achieve, but the potential is great...

Exchange tacit know-how Coordinate production 4/25/2020 [email protected]

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Based on own research

Missing links for the most challenging opportunities?

Norske Skog Rieber & Søn

Build culture & Organise meeting points Councils (Production, Sales/Marketing, Supply, IT) Develop and rotate managers Initiate projects & Make decisions Initiate and decide on projects Central project research Councils (1-3 persons working full-time for each council) Make some decisions centrally?

Build up some central capacity to support synergy work?

25.04.2020 [email protected]

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What does Orkla do to achieve the hard-to-get synergies?

Orkla Brands

Build culture & Organise meeting points Rotate managers / Orkla academies Initiate projects & Make decisions Central project research Central functions?

(Corporate Development Marketing & Sales, Orkla Brands Purchasing, Orkla Brands Food Safety) Central functions?

(Corporate Development Marketing & Sales, Orkla Brands Purchasing, Orkla Brands Food Safety) What about joint production?

What about sapa?

25.04.2020 [email protected]

Based on own research

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