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The Hornbach Companys Challenges in Ukraine
All organizations in the world must be divided into categories. This is done so that when considering a unique opportunity to buy or sell a stake in a company, one can conduct a thoughtful analysis, proper analysis, development strategy, and many other factors. In addition, it is worth considering the companys profitability because it shows its success and makes it possible to attract potential capital investors. There is a pattern in which a company cannot develop without the funds of people who buy shares, and these shares are not sold without the development of the firm. This circle can only be broken by the risk taken by the stakeholders in the hope that it will be justified. The main problem in connection with which this paper is written is what problems the company faces when it refuses to expand its sphere of influence and the lack of desire to expand the franchise outside the country. The problem of invading Ukraine and the possibility of establishing a business there will be taken as an example of increasing its influence.
Referring to what was written earlier, it has already been concluded that several types of companies exist. The two most important are the commercial (those owned by individuals and monetized by their income) and the non-commercial (owned by the state). When considering the problem, the first type will be taken as an example because this firm will not be in the territory of another state, and the profits will not belong to the depositors. In this case, the payback will be minimal, and there is no opportunity to return the funds spent on the construction and adjustment of the production process. Of the commercial firms that should monitor the situation in Ukraine, the first that come to mind are the corporations that sell construction materials.
Any war after a war must renew its infrastructure and rebuild destroyed or damaged buildings. Firms that specialize in this type of activity are best suited for this purpose. Thus, having analyzed the market for possible companies that had not previously been in Ukraine, several candidates were found: Hornbach, Bauhaus, and Knauber. All of them are leaders in their field in Germany and have a spherical specialization in selling materials and providing construction services.
However, it should also be taken into account that working in this region can be stressful for the staff because the post-war period can substantially impact the psyche. Not everyone can withstand this kind of strain and still be an effective employee. The primary mechanism of distress is the method of preventive management. Preventive stress management entails preparing people for their works consequences and disarmament. This will noticeably reduce stress and increase the sense of workaholism, as a sense of responsibility to the people of the region where the war is taking place. The counter dependence on the events taking place will be increased as well the personality hardiness. For motivation, we should also add additional payments when working in a complex region, namely a compensation award.
Hornbach will be taken for further consideration, as it is the most popular in its region and has more detailed statistics on customers and financial statements and directors. Analyzing its strategy for the past few years, it can be seen that this company has moved away from a strategy of expanding its business and focused only on online sales. This strategy was influential during the pandemic when people could not leave their homes and had to spend time locked up. However, this problem has now been solved, and the cycle of launching production facilities can begin.
On the other hand, the company is in no hurry to resume the usual type of business and has found an alternative in the form of online sales. It is less costly. There is no need to pay salespeople and consultants to pay for the companys maintenance. Since there are no local sales centers, there is no possibility of picking up the goods from the stores, and we have to wait for some time for the delivery from the warehouses. The Hornbach chain also receives a percentage of the shipping costs.
On the other hand, however, there are a number of disadvantages to this sales strategy. The important one is customer dissatisfaction with delivery terms, reluctance to pay for it, and the small but increasing price of goods. This significantly affects the number of customers and their potential ability to purchase. In addition, it is also worth mentioning that there are often bugs and crashes on the sites in online sales. This can lead to undesirable consequences, such as server failure and the absence of the possibility of ordering a particular item. However, the most crucial disadvantage is the inability to expand its business outside the country. If we talk about Germany, it should be understood that although Hornbach is a giant in its field, it has no customers from other countries. It is possible to refer to the risk because other countries already have their manufacturers. In some places, creating a new concern may not be appropriate to compete with the domestic manufacturer.
This theory is ruined by the situation that is happening right now in the country, which has already been discussed before. The current building materials companies have slowed down considerably, and the number of stores has decreased due to the shelling. Also quite important is the aspect in which the manufacturer works. For the rebuilding of the new country, the services of Hornbach will be necessary because, without materials, it is impossible to build new production facilities.
The ideas outlined in this paper can be offered to the companys management. Finding a list of directors and who is in charge of which branch of the companys development, we can note that the right person is Susanne Jäger. She is in charge of Product Range and Product-Related Services, Private Labels, Procurement, Quality Assurance, and Store Development (Hornbach Board of Management, 2019). The last department will be most helpful because the goal of our problem is directly related to the development of the trade in another region. First, it is necessary to discuss why the issue of using only electronic stores does not mean moving into the future. On the contrary, it only slows down the company. It is necessary to offer an efficient combination of both sales methods in order to achieve a better profit.
It is also worth remembering that this option will multiply the amount of work because managing stores and electronic commerce requires a lot of effort. To this end, will be created a proposal to create a separate branch of control, which will deal only with the development of local markets. This way, having divided responsibilities, it will be easier to monitor the process of setting up production. In the end, it is also necessary to propose an expansion to other countries, such as Ukraine, where the company does not have its own representative offices. A key point when discussing this idea will be low risk, high demand for the product, the lack of competition, and a large number of potential new customers. Thus, the company can not only return to the market with something that was closed because of the pandemic but also expand its opportunities by entering a new business field.
Assessing all of the above, it can be noted that this idea is theoretically ideal, as minimal risk and high return on investment are very likely. On the other hand, creating a business in Ukraine is also problematic. First of all, an important aspect may be the plot of land on which the Hornbach chain stores will be located. Since the war is not yet over and its duration is uncertain, the term by which the business relationship can be established is also unknown. The aftermath of the war may also be dangerous areas for construction, especially in the eastern regions of the country where there have been hostilities. Referring to the latest news, there is often panic among the population due to the fact that more and more mined areas are being found. The construction of stores in such conditions will be too complex and unpredictable.
Also, among the disadvantages stands out the shortage of qualified employees. In the case of expansion within the country, this should not be a problem, but moving critical employees of the company to another country is almost impossible. Therefore, even before the creation of new sales locations, it is necessary to conduct a thorough selection among potential employees. This process can also take a lot of time and effort. Still, with the right structured approach, it will be possible to hire the best employees, which also affects the reputation of the store and, as a consequence, more confidence among customers, which will upraise the transformational coping.
It is also worth assessing the impact on the companys self-image and over-dependence. Hornbach profoundly appreciates and respects each nationality, and helping people who have been affected by military action by providing the necessary materials with a high degree of probability will be warmly welcomed and perceived as a noble deed. Accordingly, this way of expanding business is economically and reputationally beneficial. It is also worth bearing in mind the cultural peculiarities of the region.
A significant plus is the fact that Ukraine is a European country whose customs are slightly different from the common European ones. It will be easy to agree with the people who live in this territory because such a deal will benefit both parties. Equally important is the factor of communication with new employees. German is one of the most popular foreign languages in Ukraine. It is studied at schools and universities, and many Ukrainians have German descent among their relatives.
As a result, this plan pays off in record time. It is not only profitable in terms of finances but also shows Hornbach as a company that cares about the situation in the world. By raising the profile and promoting the brand further across Europe, it will be possible to expand the number of branches in countries other than the Czech Republic and Belgium, which are close to Germany. So the new business plan will show the companys full potential and attract more investors. It is also worth noting that in spite of a number of disadvantages, which are present in this project, in general, it does not bear any risks because it is profitable for both sides, as the state, which needs help from such companies, and the company itself, which will get superiority in the new region and strong support not only residents of Ukraine but also other countries.
Reference
Hornbach Board of Management. (2019). Member of Board of Management. Web.
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