Cracking the code: How Finnish food and beverage companies internationalize?

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School of Business | Master's thesis
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International Design Business Management
Food and beverage sector is the largest industry sector in the EU measured by the total revenue. In Finland, increasing amount of food and beverage companies are internationalizing mostly because of the very saturated home market. Because of the small and saturated home market, it is hard for Finnish food and beverage companies to become profitable and therefore they do not have any other options than to expand their business to foreign markets. In recent years, internationalization has become more and more popular in the industry, which has also been of interest for other organizations such as the Finnish government. This thesis focuses on small, Finnish food and beverage companies and their internationalization operations and patters. This study aims to understand how small Finnish food and drink companies internationalize and how these firms choose their target markets. Additionally, this thesis aims to identify the success factors related to the internationalization process that emerged from the empirical data. This thesis builds on the existing internationalization literature and aims to contribute to the existing international business research. The applied methodology is an extensive multiple-case study. The thesis researches five born global companies operating in the Finnish food and drink industry. The primary source of empirical data was the interviews organized with firm representatives and industry professionals. The research basis on nine interviews of which five were organized with case firm representatives and four were organized with industry professionals who had many years’ experience from food and beverage industry and firm internationalization. Interview data was enriched with complementary data collected from the public documents such as media texts and company websites. The analysis indicates that case firms internationalized by using two different strategies. Some of the case firms relayed on intermediaries that operated in the target market and were in charge of sales and logistics there. Some case firms established their own organization that was responsible of all the international operations in the target market. Some of the case firms had combined these two strategies and they worked with intermediaries that usually were responsible of most areas in the target market but they also had established their own organization that had more local approach in the market. The market choice was usually based on the market fit, meaning that firms usually researched which markets were suitable for their products in terms of price, consumer behaviour, available sales channels and other factors. The analysis also indicates that internationalization was most likely to succeed if internationalization is in the core of a firms’ strategy, if a firm has relationships and networks to the foreign country and if a firm has physical presence in the market. Building on the existing internationalization theory, a model that explains the internationalization process of Finnish small food and beverage firms is introduced to contribute to the existing literature and to provide practical advice for the industry professionals.
Thesis advisor
Hilden, Elina
Eloranta, Ville
internationalization, international business, food industry, firm growth
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