Changes and uncertainties have characterized recent years. Interest in crisis management and building blocks behind resilience has been striking. During times of turbulence firms aim to minimize the negative effects that a sudden disruption could pose to their operations. Persistence and a long-term mindset are required since the desired level of resilience needs to be defined early before the difficult economic times. Most decisions take place in advance during the risk management strategy process.
The COVID-19 pandemic with its restrictions and different phases, followed by the inflation and risk of recession, are not the only challenges that car retailers are facing. Electric vehicles (EVs) are reshaping the market, and digitalization speeds up the technology leap across industries. While the Finnish tradition of investing in property is not seen as lucrative in the future, the strong online presence, and the best attributes of servitization might build the business case 2.0 in car sales. Retailers are to a great extent dependent on the upper supply chain, thus signifying, there is little they can do to prevent the delivery delays of factories. Manufacturers can, however, turn pressure on their webbed supplier network and build buffers instead of only relying on lean thinking management framework.
Based on Erol et al. (2010a), resilience is the capacity to decrease vulnerability, as well as the ability to change, adapt, and recover from a disruption. In exchange for a fast recovery, compromises are to be expected and during good times resilience is not widely associated with efficiency. Thus, resilience requires active promotion within the industry to become established. It does not help that the academic world criticizes the concept due to its multithreaded definition. The width and depth of resilience need to be perceived. A bottom-up approach starting from employee-level and expanding all the way to corporation-level, if that is the case, is required to reach resilience benefits.
This thesis has a practice-oriented approach in building a meaningful bridge between academic research and management of the car retail business sector in Finland. Rather than comparing different firms to each other by a set of metrics, this thesis aims at quantifying the concept of resilience and investigating the possible ways of measuring its effect. Most previous studies on resilience have been qualitative. However, this is a quantitative study, which attempts to define resilience in the car retail industry based on previous literature. To identify the phenomenon, different regressions of change in sales on a set of firm characteristics between 2012 and 2021 are analyzed. Inventory turnover is chosen as initially the most interesting variable due to its wide adoption in the industry as well as the theory that supports it.
Resilient firms do not have a cakewalk when faced with crisis, but with the right capabilities uncertain times can be encountered with determination, while building the competitive advantage. The first finding in this thesis is that more efficient and profitable, as well as larger firms seem to show higher resilient capabilities on the portfolio-level during crises. The second finding is that on the firm-level analysis the economically and statistically strongest effect on a firm’s resilience depends on its profitability.
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