eThesis - School of Business electronic theses

Strategy literature has mainly focused on studying what kind of strategy provides desirable outcomes for a firm. More valuable knowledge is needed to improve understanding of how to produce the changes that are suggested to be desirable. (Langley et al. 2013). One important part of strategy formation process and strategy work is coordination. The need for the coordination is emphasized in a decentralized organization structure, where the goal setting is decentralized and power is distributed. According to Child (1972) decentralized management requires more impersonal mechanism of control.

This thesis aims to take part of the academic discussion of strategy formation process. The following research question was formulated: "How is a strategy formation process coordinated in a decentralized organization?" The main objective of this study is to explore the coordination in strategy formation process in a decentralized organization.

The methodology of this strategy process study was a longitudinal case study. A unique case company Sokos was selected to context of this study. Sokos is part of a Finnish group of companies called S group. A highly decentralized organizational structure of S group with the combination of independent regional co-operatives and centralized chain development and services at SOK Corporation provided a unique context for this study. The primary data was gathered via semi-structured interviews with directors who are working at different business functions to get different perspectives on the events, actions and decisions of Sokos department store, starting 2010 until spring 2016. The secondary data consisted of archives including annual reports, business idea presentation; and statistics about clothing market and retail sales in Finland, information about Sokos chain profitability, public newspapers etc. Thus, the thesis provides a dataset with multiple perspectives of strategy process.

The findings of the study are in line with existing strategy literature. Realized strategy seems to form of intended, emergent and unrealized strategies. Environment and organizational learning work as a source for emergent strategies. On the other hand, organizational structure but also environment set certain boundaries for how strategy can form in organization. This study suggests that decentralized structure provides more room for emerging strategies, but on the other hand, more coordination is needed both through procedures and collaboration across organization to keep organization to work towards the common goal. This applies especially when the goal of decentralized organization is aiming towards holistic and seamless way of operating in the eyes of customers.