Strategic Risk Management in the Scandinavian Apparel Industry: A Study on Strategic Responses toward Future Uncertainties

Susanne Gerda Kjær & Michelle Hørlück

Studenteropgave: Kandidatafhandlinger

Abstrakt

The apparel industry is known for its social and environmental impacts related to the production and consumption of clothes. Policy makers, consumers, and investors have become increasingly aware of the negative effects of the industry, and this emphasizes the need for apparel firms to embrace the sustainability agenda. Apparel firms are currently faced with the crisis related to the Covid-19 pandemic, and while this currently has negative economic implications, it also surfaces the more fundamental issues related to environmental damage and social inequality of the industry’s global value chains. Instead of focusing solely on today’s crisis, apparel firms should prepare for future uncertainties related to the emerging climate crisis and the increased demand for sustainability to remain relevant in the future. This paper presents ways in which risk management can be applied in the Scandinavian apparel industry when facing future uncertainties in the context of sustainability. The method of scenario planning is applied on an industry level to develop future scenarios in which the uncertainties are present. We introduce six Scandinavian apparel firms to the scenarios using experimental vignette method in order to explore their strategic responses to future uncertainties. Our findings provide relevant knowledge in regard to how Scandinavian apparel firms are likely to respond when facing uncertainties in their business environment. This is relevant for those operating on an industry level and for Scandinavian apparel firms who wish to understand how risk management can be applied and further engage with theories and methods in this regard. We develop three different scenarios: Entering the Virtual World, The Battle of Resources, and Consumer Activism. The scenarios present possible future uncertainties, which are characterized as both general environmental uncertainties and industry-specific uncertainties. All three strategic postures of shaping the future, adapting to the future and reserving the right to play are referred to when the employees are presented with the three scenarios. The employees have different approaches to the uncertainties and their responses vary depending on the scenarios and their perceptions of the uncertainties. When explaining their answers, the employees refer to the specific characteristics of the firm. Other factors impacting the employees’ responses to the uncertainties are their mental models, which include the employees’ microcosms and the firms’ corporate microcosms. Similarities across the responses are found to be a general reluctance toward being frontrunners. The employees indicate that their firms are interested in and attentive toward changes in the market, but they would like for others to lead the way. The strategic postures of adapting to the future and reserving the right to play are therefore considered the most common among the firms included in this research, and they additionally point to the organizational responses of flexibility, cooperation, and imitation. The strategic responses of the employees demonstrate a high degree of flexibility and adaptability, which are important factors when facing changes in the business environment. While some employees refer to this as their approach to get through the current as well as future crises, we argue that further measures should be taken in terms of establishing flexible and adaptive organizations. This is crucial for Scandinavian apparel firms to be able to prepare for and manage future uncertainties and to ensure a strong market position in the future.

UddannelserCand.merc.Business, Language and Culture - Business and Development Studies, (Kandidatuddannelse) Afsluttende afhandling
SprogEngelsk
Udgivelsesdato2021
Antal sider125
VejlederePeter D. Ørberg Jensen