Brexit – the end of an era? Bachelor thesis

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Brexit – the end of an era?

A study on how Swedish firms prepare during an uncertain business environment

Bachelor thesis

Author: Jonna Sjöö & Sanna Wellmark Supervisor: Heidi Coral Thornton

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Abstract

In 2016 when the United Kingdom voted to leave the European Union a challenging process took place. Brexit has yet not been finalized which has come to effect the Swedish impact on the British market, due to the uncertain business environment. The purpose of this thesis is to fill the research gap regarding Brexit and how Swedish firms prepare their business activities during this uncertain situation. To be able to conduct this thesis, relevant research has been made of the importance of the British market to Swedish economy, including the value of trade between the United Kingdom and Sweden. The chosen research method for this thesis is a qualitative research method. This in order to gather a deeper understanding of how Swedish firms that are operating on the British market will prepare for the uncertain outcome of Brexit. The approach most suitable for the research is the abductive approach, since it is considered to generate an extensive understanding including further information regarding the preparation process for Swedish firms.

The theoretical framework conducted in this thesis identifies four different theories which relates to how companies can prepare their business activities during uncertain environments through different approaches. Based on the theories, a conceptual framework has been designed with the aim to explain the connection between the chosen theories and how they relate to each other.

In addition to this, the theoretical framework has been the foundation to the empirical data, which has been gathered by several case companies. The findings from these cases are demonstrated in the empirical chapter.

The analysis chapter covers the discussion of the differences and the similarities in regards to the theory and the empirics. Additionally, this chapter is based on the conceptual framework that has been established. Lastly, the final chapter of this thesis presents the conclusion of the analysis including the

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answer to the research question. This chapters also contains implications, recommendations, limitations along with a suggestion to further research within this field. The thesis demonstrates that creating scenarios for possible outcomes facilities the overall strategic planning for Swedish firms.

Furthermore, this thesis can be considered valuable to decision makers in organizations who experience uncertainties in the business environment.

Especially to firms who are dependent on export to the British market.

Key words

Brexit, Uncertainty, Scenario planning, Strategies, United Kingdom

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Acknowledgments

We would like to show our gratitude’s towards the respondents that took their time to contribute to our thesis, without them the thesis would have been impossible to complete. To start a big thank you to Angeline Elfström &

Mikael Nordin at Södra Cell, Mats Atterwall at Trimb Healthcare, Ulf Svensson at Röhnisch and lastly, Johnny Jarhall at Yaskawa. We appreciate the time and knowledge that was provided to this thesis.

Furthermore, we would like to thank our supervisor Heidi Coral Thornton, who has guided us through this process and contributed with information.

Along with our examiner Clarinda Rodrigues and the opponents who generated valuable recommendations to improve this thesis.

Kalmar 29 May 2019

Jonna Sjöö Sanna Wellmark

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1 Introduction

This chapter will be the foundation to the chosen research area. It will provide with background information and thereafter a problem discussion will be conducted which will also explain the importance of the research topic. In addition to this, research question and the purpose with the thesis will be presented. At the end of this chapter the delimitation and outline of this thesis will be displayed.

1.1 Background

Brexit is the result of the referendum that took place in the United Kingdom the 23 of June 2016 (BBC, 2019). The referendum concerns whether or not the United Kingdom should stay in the European Union. What happened was that the leaving side received the majority of the votes and therefore, since June 2016 the main topic on the political agenda in the United Kingdom has been about how to leave and when to leave the European Union (BBC, 2019). So far, the process has continuously been delayed due to differences within the United Kingdom but also within the European Union. Both parts struggle with deciding in what way the United Kingdom should leave, some prefer leaving with a partnership deal with the European Union while other want to leave completely, no strings attached (BBC, 2019).

Straight after the referendum, previous prime minister David Cameron resigned and instead Theresa May was elected as the new prime minister.

Cameron had no interest in leaving the European Union but had to take a step back considering the people’s desire to leave (BBC, 2019). May however, realized the people had no intention staying within the union and therefore had to act straight away once she was elected with finding a way to either leave the union completely, or with a contract among both parts. According to May, the

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United Kingdom is capable of coping outside of the European Union as well as within except that is not the point. The people voted for a chance and a chance is what the people shall have, May explains (The Guardian, 2016).

Since the referendum, May has developed a few different partnership agreements with the European Union although, all have been overruled in the United Kingdom Parliament which has come to delay the process furthermore (Consilium, 2019). The European Union has stayed patient with the United Kingdom and understand this movement will take time however, the President of the European Council, Donald Tusk summit the European Council for another meeting to discuss the future of the European Union. The meeting was held on the 10th of April 2019 (Consilium, 2019). Theresa May struggles to find a solution that will benefit both the United Kingdom Parliament as well as the European Union, thus Donald Tusk speaks about there has to be either a “hard Brexit” or no Brexit at all (Consilium, 2019) considering the multiple delays May’s created due to the United Kingdom Parliament voting against her and the options she proposes. However, the European Union is willing to compromise in order to find a partnership deal that will benefit all parts but the United Kingdom also has to take in consideration that the European Union stands by all its member countries and will not act in a way that might harm the national states (Regeringen, 2019). Nevertheless, the European Union values a future relationship with the United Kingdom after Brexit and will not stand in their way when leaving the union. Since May failed to attempt an agreement she therefore chose to resign and leave the office on 7th of June 2019. At this stage, a new candidate for the Prime minister role has not been discussed (BBC, 2019).

1.1.1 European Union

After the end of the Second World War, an economical union was created in Europe due to the recent wars that have destroyed many countries within the

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area (Cini & Pérez-Solórzano Borragán, 2016). This economic union would make countries dependent on each other and eliminate the risk of another war starting. The union started as the European Coal and Steel Community (Cini

& Pérez-Solórzano Borragán, 2016) and has during multiple treaties come to evolve into what is known as the European Union today. The Union consists of 28 member states (Tallberg, 2016) which all have given parts of their own sovereignty to the unionen and its institutions. The European Union is actively working to facilitate for its member states, especially when it comes to trading.

Through the Single Market (Egan, 2016), which was established by the Union, member countries are capable of trading and working within Europe without any barriers. The European Union has established multiple laws and different guidelines (Cini & Pérez-Solórzano Borragán, 2016) for the member countries to guarantee that all countries within the union operates in similar ways.

1.1.2 Sweden’s Trade with The United Kingdom

Sweden has a long history of trade with the United Kingdom. Reasons for this are that there are close geographically and the culture distance between the two countries are low (Business Sweden, 2019). Another reason why Sweden and the United Kingdom trade with each other significantly is that the two countries have similar principles concerning economics. Both Sweden and the United Kingdom both strive to maximise the export and import opportunities on the global market. Furthermore, the two countries possess great knowledge regarding the financial sector within each respective country (The UK Government, 2018). In 2017 the value of exports from Sweden to the United Kingdom was approximately 74.4 billion SEK (Business Sweden, 2019), which is a increase from past years, in 2016 when the export was approximately 72 billion SEK (Embassy of Sweden, 2019). There are five branches which significantly trade with the United Kingdom and those are within IT, energy, manufacturing industries, retail and consumer products and lastly, health and medical care (Business Sweden, 2019). Due to the single

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market there are no tariffs or regulation when exporting to the United Kingdom, which facilitates for the companies since they do not have to worry about the Board of Customs, with its primary activity to manage the trade and law enforcement (Tullverket, 2017).

1.2 Problem Discussion

1.2.1 Theoretical Problem

Brexit occurred relatively recently and therefore, the scientific studies made regarding this subject are limited. A few studies will be further discussed below. The European Union is going through a large change, the United Kingdom desires to leave. This requires plenty of adaptations for both the United Kingdom and the European Union. Since Brexit is an ongoing process which is full of uncertainty both politically and economically, studies have previously been made and focused on the consequences the United Kingdom faces.

There is one study made by Jafari & Wolfgang (2018) concerning the impacts Brexit will have on Foreign Direct Investment (FDI) and trade. The study demonstrates that the trade between the United Kingdom and the European Union will be reduced due to that the membership has provided free trade and now the trade process will be significantly longer and more expensive. The study also states that the FDI will be affected by Brexit in two ways. Firstly, the United Kingdom is a point-of-access to the single market for companies who are considered to be multinational due to that the costs concerning trade are low. This will be lost if the United Kingdom leaves without a trade deal.

Secondly, Brexit will increase costs for companies who have staff located in different European countries and in the United Kingdom. The companies may need to relocate the employees, which will be an increased cost for the company.

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Research has been made and the majority of the studies have solely focused on what the United Kingdom and the businesses in the United Kingdom will go through during and after Brexit. A contributing reason to why the subject is not extensively studied can be that most of the focus is on how it will affect the United Kingdom, since they are the one going through this extensive and currently unique process. A previous study regarding the national consequences of Brexit (Kierzenkowski et. al 2016) stressed that the country's growth will decrease, Gross Domestic Product (GDP) will decrease, and labor productivity would be held back by the lack of foreign direct investments.

Additionally, higher trade barriers would occur (Kierzenkowski et. al 2016).

These previous studies have demonstrated that there is an unstable business environment within the borders of the United Kingdom which may result in that foreign companies will consider to relocate their employees to other countries with a more beneficial and stable business environment and that the consequences of Brexit will affect the country’s economy.

Therefore, it is augmented that it occurs a strong need for better understanding regarding how Swedish companies prepare for the upcoming Brexit. The results concluded from this thesis could be of great interest for other companies located in Sweden who trades with the United Kingdom, and who also will face the consequences from Brexit and need to prepare their businesses activities for this unpredictable result.

1.2.2 The Practical Problem

After researching the subject of export within the European Union it has been found that the European Union is one of the world´s most trade-oriented economies and in addition to this, the European Union is the world's largest single market (Europa, 2019). Doing business with foreign markets is something Sweden is dependent on. Without the export the Gross Domestic Product (GDP) of Sweden would decrease with 50 % (Ekonomifakta, 2011).

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Countries within the European Union are a part of both a mutual market and mutual custom union which results that services, people, capital and goods can move freely across the country borders of the European Union members. This has been beneficial for exporting companies within the European Union (Verksamt, 2019). The countries who Sweden export mostly to within the European Union is Germany, Italy, Scandinavia, France and the United Kingdom. The United Kingdom is Sweden's sixth largest export market.

Goods and services have been able to move freely across these boarders due to their membership in the European Union (Business Sweden, 2019).

However, if Brexit becomes a reality this will change, goods can no longer be exported across national borders to the United Kingdom freely. Concerning export to a country outside of the European Union the regulations are significantly different. The exporting goods need to be reported to customs and special documents are needed, for instance an export declaration and a document regarding export of excisable goods. Companies need to leave this information about the transfer via Excise Movement and Control System to the Swedish tax authorities (Business Sweden, 2019).

The companies within Sweden are as mentioned dependent on trade, it is the factor which contributes to the growth of the economy. During 2018, the export was worth approximately 2200 billion SEK which is an increase of seven percent from the previous year. Sweden is a country whose value of export is greater than the value of imports (Statistiska centralbyrån, 2019). The most important exporting countries for Swedish companies are European countries and as mentioned above, the United Kingdom is one of the most important countries (Statistiska centralbyrån, 2012). Historically the single market within the European Union was made to contribute to a beneficial economic growth within the borders of Europe. It also provided with increased competition, larger supply, lower prices and as well as, it also provides with

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economies of scale which has been a great benefit for companies (Kommerskollgium, 2019). No country has ever desired to leave the union until 2016 when United Kingdom first voted to exit the European Union (Sveriges Rikstad, 2019). Due to Sweden's large dependence on trade and that their largest export market desires to leave the single market, results in that Swedish companies face a historical change. This calls for a reorganization which requires new thinking among the companies in order to re-plan. This is a unique situation both for the United Kingdom and for the remaining members within the union. Which is why this makes it an ideal research context for how Swedish companies that are exporting to the United Kingdom will prepare for one of the biggest and until this time, the most unique situation.

The practical outcome of this thesis could possibly contribute to other companies which are not participating in this specific thesis. Through this, they can gain an understanding how to prepare for this situation. This ought to be of great interest for the decision makers within companies located in Sweden that exports to the United Kingdom.

To be able to study the subject four different main theories have been chosen to analyze how companies plan during uncertainties. The theories are Scenario planning, Foresight, Strategic uncertainty & Assumption-based planning.

Scenario planning is when companies create different scenarios in order to prepare for different outcomes during uncertain business environments (Meyerowitz, Lew & Svensson, 2018). In addition to this, four levels of uncertainty is a theory connected to this, which demonstrates how to create these scenarios depending on four different levels of uncertainty that the company is facing (Courtney, 2003). Foresight is the second theory and it demonstrates a process of how companies can prepare and reduce the uncertainty (Amstéus, 2011). Thirdly, Strategic uncertainty is an important

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concept in external analysis in order to examine how a business will be affected by different uncertain situations (Aaker, 2008). Lastly, assumption- based planning help different organizations to prepare for changes in the environment which could disturb the company’s plan (Williams &

Hummelbrunner, 2009) by making assumptions about what might happen.

1.3 Research Question

After a discussion concerning the problem the following research question has been developed:

How do Swedish companies prepare their business activities in the UK during the uncertain situation of Brexit?

1.4 Purpose of Study

The purpose of the thesis is to gain knowledge from Swedish companies to understand how they are preparing for Brexit. By studying this topic, the thesis will hopefully be considered a useful tool to companies preparing for when the United Kingdom leave the European Union. In order to get the information required, interviews with four Swedish companies that are exporting to the United Kingdom will be made.

1.5 Delimitations

The aim of this thesis will be focused solely on how Swedish companies who currently trade considerably with the United Kingdom will prepare for the uncertain outcome of Brexit. This research will exclusively investigate Swedish companies therefore, companies from other European countries will not be investigated in this thesis. The chosen companies are from different industries such as clothing, machinery, healthcare and the forest industry. The thesis will not investigate or analyse every affect that Brexit may bring upon

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Sweden. This is since it is difficult to predict every affect that Brexit may bring until Brexit is finalized and has happened.

1.6 Outline

Chapter 1

• Introduction

In this chapter the background to the topic will be presented which will thereafter be followed by a problem discussion, the research question, purpose of the study and finaly delimitation and outline of report.

Chapter 2

• Theoretical framework This chapter will present theories relevant to the research topic. The theories will thereafter, be used when analysing the emirical data.

Chapter 3

• Methodology This chapter is were the methodolgy will be presented including motivation to why the meothed is chosen and also critisism against the method.

Chapter 4

• Empirical findings This chapter will present emprical data that has been gathered through various interviews with people from different companies that export to the United Kingdom. The chapter will beign with a presentation of the companies involved

Chapter 5

• Analysis In the analysis chapter the emperical findings will be connected with the theories discussed in chapter two.

Chapter 6

• Conclusion

This final chapter will provide a conclusion of the findings and an answer to the research question.

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2 Theoretical Framework

In this upcoming chapter the theoretical framework will be presented, which will be the foundation for on which the thesis is based upon. Four different theories will be discussed and the chapter begins by introducing Scenario planning including Decision-driven scenarios & 4 levels of uncertainty and thereafter Foresight, Strategic uncertainty and lastly, Assumption-based planning.

2.1 Scenario Planning

Scenario planning is a tool which can be used by different businesses in order to visualize the impact future event may have on the company and how to cope with the changes within both the national and international market (Meyerowitz, Lew & Svensson, 2018; Ringland, 2014). By creating numerous scenarios, it will help companies by improving and preparing for what is to come by visualizing several outcomes (Wide & Wagner 2012). This sort of planning will facilitate when creating a strategy for the company’s future (Serrano, Rodrigues, Lacerda & Paraboni, 2018). Scenarios help companies to become involved and more aware of how the organization can change from different uncertain situations (Ogilvy, 2011)

Scenario planning is part of a ten-step process and the steps are (Wade &

Wagner, 2012):

1: Framing the challenge 2: Gathering information 3: Identifying driving forces

4: Defining the future’s uncertainties.

5: Generating the scenarios.

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6: Creating a timeline and creating a further knowledge. The fifth and sixth step will provide several different scenarios and to obtain their value there are four more steps.

7: Locating if there could be further research

8: The assessment of the problems and defining possible responses 9: Signposts need to be located

10: Monitoring and updating the scenarios The steps will be further explained below.

Step 1 Framing the Challenge is when a company face a challenge and need to conduct a scenario planning in order to locate different solutions.

Additionally, the companies need to identify the upcoming challenges which may affect the organization (Miller & Waller, 2003).

Step 2 Information Gathering concerns the importance of the information one can obtains about the challenge. The companies are in need to create a strong understanding of what is going on and what is about to happen and how it might possibly affect the organization. Trends in a situation need to be identified and the search for these and overall information is a long but crucial process for scenario planning (Wade & Wagner, 2012; Miller & Waller, 2003).

Step 3 Identifying Driving Forces concerns the variable which has the potential to be the changing factor however, this is rather unpredictable as the factor is dependent on how other variables act (Bennet, Kadfak & Dearden, 2016). It is important to identify the forces which may have the power to change the direction of the scenario, such as economic and political forces (Ogilvy, 2001).

Step 4 Defining the futures uncertainties is the most important step in scenario planning due to the fact that it is necessary to expose the unthinkable which

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are made from the information from the previous steps (Wade & Wagner, 2012).

Step 5 Generating scenarios concerns the process of creating the different scenarios and identifying the different outcomes of each scenario (Wade &

Wagner, 2012). To have the most effective scenario planning it is important that each scenario is different (Ogilvy, 2011). Furthermore, when generating scenarios, a driving force or key factor should be considered in each scenario (Ogilvy, 2011).

Step 6 Creating a timeline and creating a further knowledge. In this step the companies ask the question what the different scenarios might mean for their organization. Furthermore, the companies investigate what implications might occur and the possible consequences of each scenario (Wade & Wagner, 2012;

Ogilvy, 2011). It is important for the company to create a timeline with an explanation of each step within the timeline. Furthermore, it is important for companies to be aware of evolutionary change within the timeline by for example monitoring the situation continuously (Ogilvy, 2011).

Step 7 Locating if there could be further research concerns the process after the scenarios has been created and thereafter it is needed to search and perhaps identified if further research is necessary. One way to gain more knowledge about the scenarios is to present them to a few stakeholders in order to receive their expertise and previous experience (Wade & Wagner, 2012).

The eight step which as mentioned concerns The assessment of the problems and defining possible responses. This step is when a possible strategic option is created for each established scenario and thereafter evaluated. The best strategy is evidently the one which have the possibility to provide the organization with the most flexibility (Wade & Wagner, 2012).

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Furthermore, the ninth step states that Signposts need to be located. This step in the planning of scenarios state that there need to be signposts which will demonstrate which scenario will become reality (Wade & Wagner, 2012).

The last and tenth step in the planning is as stated above Monitoring and updating the scenarios (Wade & Wagner, 2012). It is argued that the scenarios need to be updated due to as time goes on changes might occur which will affect the developed scenarios (Tyszkiewicz, McCleskey & Miller, 2012).

2.1.1 Decision-driven scenarios & 4 levels of uncertainty

Decision-driven scenarios are focused on a specific uncertainty that drives decisions. In order to prepare for a strategy to cope with uncertainty, different scenarios are tested with the strategy in order to understand the potential outcomes and implications (Randall, 2003). Moreover, these types of scenarios are relying on internal expertise and industry experts (Randall, 2003). Furthermore, decision-driven scenarios are often used to inform a well- prepared strategic choice for times during uncertainty (Randall, 2003). How to create these scenarios is dependent on the four levels of uncertainty that the company is facing (Courtney, 2003).

Level 1 A clear enough future is when there is only a few possible outcomes and the future is relatively clear in consideration to the uncertain situation.

This means that the future is clear enough to form one more dominant strategy to deal with the uncertainty (Courtney, 2003).

Level 2 Alternate future, on this level the decision-makers can define a limited set of outcomes from different analysis. Different strategies have been made to each outcome and the best strategy depends on the final outcome that occurs (Courtney, 2003).

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Level 3 A range of future concerns that a company can identify different future outcomes and scenarios, approximately three to five scenarios. However, no forecast has been established concerning which outcome or scenario that will happen in the future (Courtney, 2003).

Level 4 True ambiguity concerns that different uncertainties are not only unknown but unknowable. This means that one cannot identify different outcomes or even scenarios and it is therefore a situation where it is the most difficult to plan further business activities and strategies (Randall, 2003).

2.2 Foresight

Companies active on the international market will be facing plenty of challenges, several concerning a great uncertainty (Diamantoudi &

Sartzetakis, 2018) and the fundamental purpose of Foresight is to reduce uncertainty within both the national and international business environment (Amstéus, 2011). There are different types of foresights, technology foresight and social foresight concern the micro-level of the firm while strategic foresight investigate political and economic environments, called as the business macro-environment (Vecchiato & Roveda, 2010). Strategic foresight is made in order to become aware of the environment the company operates.

Which will result in better strategic decision when sudden and unpredictable events occur on the markets and thereby uncertainty is reduced (Heger &

Rohrbeck, 2012)

The theory of Foresight has a framework which is demonstrated with the process below:

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Figure 1: The process of Foresight (Voros, 2003)

Step number one Inputs this is the beginning stage where an uncertain situation occurs and the business need to gain an understanding of what is happening within the uncertain situation (Voros, 2003). Furthermore, this step includes a scanning of the environment and the markets the businesses are active in (Crews, 2019).

The second part is the foresight work and includes three steps. The second step in the process and the first step in the foresight work is Analysis. The question that needs to be able to be answered within this step is “What seems to be happening?”. This is when the information which was gathered from the scanning of the environment is analyzed and put in to perspective (Voros, 2003). This step is made to identify trends and determine the key drivers (Cook, Wintle, Aldrich & Wintle, 2014).

Step three Interpretation need to answer the question “What is really happening”. Here the aim is to gain a deeper structure and further insights to the analysis. Furthermore, this step concerns the investigation of the uncertainties and explore what consequences there might be based on what decisions the business make (Cook, Wintle et. al. 2014).

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Fourthly and the last step of the foresight work Prospection. The question that seeks an answer here is “What might happen?”. The business is in need to create further views. In this step a business might develop a map involving different outcomes and how the future might differ depending on how it will unravel and which outcome will thereafter occur (Voros, 2003). This is the part where the companies start to vision what might happen and how it might affect the business and its different activities in the specific market (Griffin &

Danson, 2012).

Furthermore, the fifth step is Outputs and here the question which is in need for an answer is What might we need to do? Companies must consider what they might have to do in order to get through the uncertain time and the effects is might bring upon the companies. The outputs of the work regarding foresights are divided into tangible outputs and intangible outputs (Voros, 2003). Tangible outputs are for instance, all options constructed by the foresight work made previously. Furthermore, intangible outputs include changing in the way of thinking which has been created by the previous steps.

These forms of outputs are considered to be the most important of outputs since it is what will change the strategy development (Cook, Wintle et. al.

2014).

Lastly, the sixth step Strategy, this step seeks to answer two questions “What will we do?” and “How will we do it?”. With this said, one dominant strategy or several different strategies to deal with the uncertain situation that was identified in the early stages of the foresight process. The strategies made by the company that experience the uncertainty is based on the information about the uncertain situation gathered from the previous step and the foresight will be developed (Voros, 2003).

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2.3 Strategic Uncertainty

Uncertainties can and will affect an organization's strategic planning and decision making on the different markets the company is active on (Vecchiato, 2012). Strategic uncertainty is an important concept in external analysis in order to examine how a business will be affected by different uncertain situation (Aaker, 2008). The author argues that different uncertainties require a different amount of resources (Aaker, 2011). An uncertainty can result in an endless search for information and analysis. Therefore, the author created a model which states how business should prepare for uncertainty depending on how they perceive the situation. This is based on the uncertain situations impact on the company and immediacy (Aaker, 2008).

Impacts concerns how the uncertain events will impact the exciting business activities, the number of business involved and how important those businesses are for the company. Immediacy concerns the probability of the uncertain event/situation will occur and affect the business and its activities (Aaker, 2008). If there is a low probability of that the uncertain event will occur, it is not necessary to invest resources in analyzing and monitoring.

Besides, if the uncertain event is said to occur far down the future then the concern of analyzing and monitoring might not be a large concern yet (Aaker, 2008).

The figure below demonstrates a suggestion for how different businesses can categorize the uncertainties and how to prepare in accordance to the impact and immediacy. If the impact is low and the immediacy is low then it might be enough to solely monitor the uncertain situation (Aaker, 2008). However, if the immediacy is low and impact is high, the preparation needs monitoring and analyzing. A few contingent strategies need to be considered, not implemented. Furthermore, if both impact and immediacy are high the

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situation need to be analyzed further in order to prepare and develop strategies and action plans (Aaker, 2008).

Figure 2: Strategic uncertainty categories (Aaker, 2008)

2.4 Assumption-based Planning

This theory helps different organizations to prepare for changes in the environment which could complicate the company’s plan (Williams &

hummelbrunner, 2009). Furthermore, this type of business planning is based on incomplete knowledge and uncertain times (Davis-Mendelow, Baier &

McIlraith, 2003). This sort of planning during uncertain times explores the perspective and boundaries of a plan in order to ensure the viability of it.

Assumption-based planning consists of identifying key assumptions and thereafter monitor them over time. With this method the plan is protected from assumptions failures (Williams & Hummelbrunner, 2009). The method is a five-step process which will be further discussed below.

Step 1 Identify important assumptions

An assumption is important since it can lead to large changes in a plan. If an assumption is important depends on the certainty of the assumptions and if the assumption will influence the plan of actions (Williams & Hummelbrunner,

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2009). However, important assumptions tend to have a high level of influence on existing plans and high uncertainty.

Step 2 Identify vulnerabilities of assumptions

In this step there are three different activities. The first, vulnerability activity sets the planning time horizon. The assumption is only vulnerable over the horizon (e.g. two, three year etc.) and not vulnerable during a decade and the change has already occurred (Williams & Hummelbrunner, 2009). Secondly, the elements of change in the uncertain environment need to be identified. An element of change is an event in which represent a change from today, is plausible within the planning horizon and is related to the uncertain situation.

Thirdly, identify the vulnerabilities. These are the assumptions that become invalid if the elements of change occur (Williams & Hummelbrunner, 2009).

Step 3 Define Signposts

Since this theory contains uncertainties, it is recommended to establish signposts which is made in order to indicate that the status of the assumption if changing. This gives the company an opportunity to change and adapt the assumption in accordance to the signposts. A signpost is for instance an event that will indicate when a change may alter the stated the assumption (Berner

& Flage, 2017)

Step 4 Define Shaping Actions

This step is focusing on the measures that can be taken in order to ensure that the assumptions are correct (Berner & Flage 2017). These actions are created with the intention to help guarantee that the plan and assumption does not change. Furthermore, shaping actions are also created in order to maintain the assumptions such as updating them with current information (Williams &

Hummelbrunner, 2009).

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Step 5 Define hedging actions

Defining hedging actions help organizations to handle a failure of the assumptions. Furthermore, it helps companies to preserve the important options even though the uncertainty of if/how the assumption will fail (Berner

& Flage 2017). The difference between this step and step number four is that this fifth step concerns re-planning the assumptions instead of ensuring that they do not change (Williams & Hummelbrunner, 2009).

2.5 Conceptual Framework

The conceptual framework was designed in order to demonstrate how the theories are connected to each other. The theoretical framework has displayed how an uncertain situation like Brexit requires to overlook possible outcomes before a company chooses to act. As shown in the model of Scenario planning, creating different scenarios for different outcomes can help companies to prepare and thereafter decide the most appropriate strategy. Depending on how the company perceive the uncertain situation, they will create more scenarios which will be demonstrated by the four levels of uncertainty. An uncertain business environment may also trigger companies to use the theory of Foresight in order to predict the outcome and which strategic move will be the most beneficial. Furthermore, the theory of Strategic uncertainty can help a company to realise what resources to use in order to handle the uncertain situation depending on the perceived impact and immediacy. Lastly, instead of creating scenarios companies can assume what might happen and how to act thereafter.

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Figure 3: Conceptual Framework - created by authors, 2019

3 Methodology Chapter

The methodological framework is used to conduct this thesis and will be further explained. The chapter will present the method used to collect data and how the method has been used. The approach most suitable to the research method and the types of data that have been gathered. Lastly, a presentation of the operationalization, quality discussion and also ethical considerations will be made before finishing the chapter.

3.1 Abductive Approach

The research approach displays the relationship between the empirical findings and theories. Traditionally there are two different approaches, deductive and inductive. The deductive approach is the most common approach, it starts with previous research and existing theories. Thereafter hypothesis is created which by the gathered empirical data will later on reject

Uncertain situation - Brexit

Strategic planning:

- Scenario planning -4 Levels of

uncertainty -Foresight

-Strategic uncertainty - Assumption-based

planning

Company´s action

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or confirm the hypothesis. In this approach the theories are the variable the study is created upon (Azungah, 2018). The difficulties with this approach are that the researcher usually relies on a strict logic concerning the tests of theory.

Another issue with this approach is that it is not clearly stated how to choose the tested theories (Bryman & Bell, 2017). Due to lack of research within this area the deductive approach was therefore not the most suitable approach for this thesis. Secondly, the inductive approach develops from the empirical findings. The inductive approach is reversed, this process begins with observations which later on results in an improvement of the theoretical (Beyazli, aydemir, Öksüz & Özlü,2017). The inductive approach has received criticism stating that no amount of empirical data can enable a theory (Beyazli, aydemir, Öksüz & Özlü, 2017).

Bryman & Bell (2017) argues that in addition to these two traditional approaches a third approach has occurred, and it is an approach which consist of elements from both the deductive approach and inductive approach.

Furthermore, it is said to be an alternative approach which is meant to overcome the mentioned difficulties concerning the traditional approaches mentioned above. The abductive approach begins with the occuring of either a problem or phenomenon that the current existing theory cannot explain and limited research has previously been made (Awuzie & McDermott, 2017). The abductive way of thinking consists of identifying the conditions which would explain the problem or phenomenon (Bryman & Bell, 2017). With this non- traditional approach the researcher chooses the most appropriate explanation among all the explanations and interpretation of the empirical data. This type of approach strives most formally to develop an understanding by examine both the empirical findings and the theoretical findings. This approach focuses on the researcher and its ability to think and make rational decisions (Awuzie

& Mcdermott, 2017). The abductive approach allows the researcher to provide more information by analyzing both theory and empirical findings

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simultaneous (Bryman & Bell, 2017). The abductive approach is therefore the most useful approach to answer the question in the thesis because it will provide deep and further information concerning how companies prepare during uncertainties.

3.2 Qualitative Research

Traditionally research methods are divided into two different categories, quantitative or qualitative research. The two methods use different units of analysis which separates them from the other. Secondly, a qualitative method uses words and is a rather process oriented method while a quantitative method focuses and use numbers and statistics. In addition to this, it is also stated that a quantitative method is far more structured than a qualitative method which focus on providing deeper knowledge concerning a phenomenon (Saldaña, 2011). It is also stated that a qualitative research has a tendency to be significantly more open than a quantitative. Furthermore, the theories concluded from the empirical findings are the answers to the stated thesis (Bryman & Bell, 2017). With this stated it can be concluded that a qualitative research is used when existing research is unable to explain a phenomenon and the aim is to fill the researched gap that occurred. Furthermore, how the collected data is analyzed also differs, in qualitative research the data will be analyzed as it is collected while in a quantitative research it is analyzed after collected (Walle, 2015). The purpose of a qualitative research is to provide knowledge and a description of a phenomena (Saldaña, 2011). This method of research provides rich and descriptive data which needs to be interpreted to be able to reach findings, which later on can fill the existing research gaps and contribute practical use of the findings. In qualitative research the empirical data consists of mainly interviews and observations (Boeije, 2010).

Furthermore, Boeije (2010) argues that it exists three different elements when conducting a qualitative research. The first is to look for the meaning of the

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study which means that there needs to be a purpose with the study. Secondly, to use flexible methods for the research process. This means that it needs to be well-formulated questions and a flexible plan for analysis. Lastly, provide qualitative findings which means that the researcher must provide the reader with a finding and an answer to the thesis not only demonstrate raw data. Since the aim of this thesis is to investigate and provide further knowledge of how Swedish companies prepare for Brexit, it is considered that the qualitative research is the most beneficial method for this thesis. This is since the authors seeks to gain a deeper knowledge concerning a phenomenon. In this thesis the collected data has been collected in Swedish and thereafter transcribed and later on, translated into English.

3.3 Research Design

A research design composes a framework for the collecting process and the analyzing of data, such as interviews, observations and documents. In other words, it demonstrates the completion of the thesis (Bryman & Bell, 2017). A research design is the sequence in which connects the empirical findings to the study’s research question and thereafter connects it to a conclusion (Yin, 2018). When performing a qualitative research there are several appropriate research designs for instance, survey, case study (single or multiple), history study or an experiment (Yin, 2018).

Different research requires different methods to complete the thesis and it is dependent on how the research question is phrased it can demonstrate which method is the most suitable. For this thesis the question is focused on “how”

and for this type of question the most suitable research design is a case study (Yin, 2018). A case study will provide a deep analysis and an elaborate description as well as specifying factors and in what way they might relate to each other (Stewart, 2012). Since the chosen area of research is relatively unexplored, the authors consider that this type of research design is the most

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beneficial. Concerning case studies there are two different types which are single-case studies and multiple studies, this will be further discussed below (Yin, 2018).

3.3.1 Multi-case study design

When performing a case study, it can be through one of the two different case designs; a single-case study or multiple-case study which means that either the case in one company can be studied or in several companies (Yin, 2018). In order to understand how Swedish companies prepare for a unique situation such as Brexit more than one company will be interviewed and studied.

As a result of that several companies and cases are studied in this thesis the chosen research design is a multiple-case study, if only one case i.e. one company would be researched it would be a single-case study. A multiple-case study is often performed in order to do a comparison between the companies involved (Stewart, 2012). Yin (2018) argues that the results from a multiple- case study design will be considered to be more valuable than the results from a single-case design, it is additionally considered to be more robust. If only one company would be studied, it can be argued that it would only represent a small underlying pattern however, the results can only be applied on that case and not on another case and company (Yin, 2018).

3.3.2 Purposive Sampling

When the problem has been identified the unit of analysis which is called a sample. When choosing a sample suitable for the research there are two basic types which are most commonly used, probability and non-probability sampling (Merriam, 2009). Probability sampling a type that provides the researcher to generalize the results from one study to an entire population.

However, considering that generalization is not the goal with a qualitative study this is not the type chosen for this thesis. Non-probability is the most suitable type for this type of research. This type is said to be logical and the

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use of data is used in order to solve qualitative problems (Merriam, 2009). The most normal form of non-probability sampling is purposive sampling which is based on the concept that the researcher desires to discover and understand and therefore select the most suitable sample for the study based on their relevance of the issue (El-Masri & Maher, 2017).

As the aim of this thesis is to get an understanding of how Swedish companies that exports to the United Kingdom will prepare for Brexit, the type most suitable sample to be able to answer the thesis is therefore to use non- probability sample and the form mentioned above, purposive sampling. When beginning with this type of sampling selections of criteria is essential for the process of choosing the right companies (Merriam, 2009). The criteria should reflect the purpose and due to this a few criterias based on this research are established and are needed to be applied by the chosen company:

(1): Companies must be Swedish

(2): The companies must export to the United Kingdom and obtain information concerning the exporting process

3.3.3 Cases

Company Respondent Interview Industry Method of Interview Röhnisch Ulf Svensson

Head of Logistics, Customs &

Warehouse

Date: 24 April 2019

Active- wear

Telephone

Yaskawa Johnny Jarhall

Executive Sales Director

Date: 26 April 2019

Automation Telephone

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Trimb Healthcare

Mats Atterwall Chief Financial Officer

Date: 25 April 2019

Consumer healthcare

Telephone

Södra Cell Angeline

Elfström Customer relations manager &

Michael Nordin Controller

Date: 24 April 2019

Forestry Telephone

Table 1: Cases

3.4 Data Collection

When data contains of words and knowledge received from people through normally interviews it is categorized as qualitative data and data suitable for a quantitative study are usually numbers (Merriam, 2019). Data are parts of gathered information and are considered data simply if the researcher considers the information to be relevant for the study which is about to be conducted. There are two different kinds of data, firstly, empirical data which are primary data which are data gathered by the researcher (Merriam, 2009) and secondary data which are already published books, articles etc. Smith (2008). The thesis will be established mostly on empirical data which will be based on primary data. Secondary data will also be used in order to create a well-established theoretical framework.

3.4.1 Primary Data

According to Merriam (2009) the most common primary data in a qualitative research are gathered through interviews. This type of data can provide with the type of data which are normally difficult to obtain by secondary data, in addition to this there are several other methods of collecting the primary data for a qualitative research which are focus groups and observations (Philips &

Stawariski, 2008). However, Merriam (2009) argue that interviews are normally the primary data when conducting a qualitative study. Furthermore, there are three formats of interviews such as person-to-person encounter which

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is considered the most common form, group interviews and collective interviews (Merriam, 2009). Interviews provide information concerning how people interpret the environment around them and the behavior within the specific environment. Furthermore, it is stated by Merriam (2009) that interviews are the best primary data when conducting a case study with a certain amount of people.

Consequently, the chosen primary data for this thesis is interviews. These interviews will be conducted over the phone due to that the companies are located in different cities across Sweden. By the collection of data from interviews with different companies it will provide a deeper understanding of how as mentioned, the companies prepare for the upcoming Brexit. Therefore, the primary data is the research main source of information due to the chance of gaining detailed information by receiving the chance to ask additional questions in order to gain a more elaborate answer.

3.4.2 Secondary Data

Secondary data is according to Smith (2008) data from previous research- article. In addition to this, secondary data is data created by different institutions, databases and information provided by books. For this thesis secondary data has been collected and used in order to create the introduction chapter and in the methodological chapter. The data which has been used are collected from scientific books, articles and official websites. However, the information used to present the companies will be gathered through their official websites.

3.4.3 Interview Structure

When gathering primary data through interviews it can be collected by three different types of interview structures, such as highly structures (standard), semi-structured and lastly unstructured (informal). A highly structured interview has fixed questions and categories for the response. In addition to

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this, this structure is most beneficial when conducting a quantitative study due to the fact that the respondent has no room to answer elaborately, no further questions can be asked besides the ones created before and therefore, is not the structure which will be used for this thesis (Merriam, 2009).

The informal structure is according to Merriam (2009) similar to a conversation with no prepared questions which is due to that the researcher does not obtain enough knowledge about the subject in order ask the right and relevant questions. Consequently, this will not be chosen structure for the interviews considering that there needs to be prepared questions in order to be able to answer the stated research question. Semi-structured interviews are guided by an interview guide and questions has been made before the interview. This sort of interview structure provides the respondent to speak more freely due the flexibility in the questions (Mcintosh & Morse 2015).

Moreover, semi-structured interviews provide the researcher to ask follow-up questions in order to receive more elaborate answers. The semi-structured can therefore be considered to be the most suitable interview structure to this thesis, according to the authors.

To ensure that the interviewee will provide the valuable information needed for this thesis, a brief insight of the purpose of the thesis will be presented in writing. However, a more detailed guide will be used when performing the interview in order to guide the researcher through the interview.

3.5 Operationalization

The theories mentioned above needs be connected to the real world by an operationalization and thereafter these have been the foundation for the interview questions (Saunders, Sim, el al., 2018).

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Concept Interview questions

Reasoning

Business Operations

1 - 6 To receive an understanding of the company’s operations. Questions were asked concerning the company, products and the relationship with the UK as a market.

Scenario planning

7 - 14 This segment strives to investigate if the companies prepare for one outcome or if several outcomes are considered and how the outcomes/scenarios are made.

Foresight 15 - 17 This will generate an idea of what the future might look like and how they can prepare for this.

Strategic

uncertainty 18 - 20 By asking questions about the impact and immediacy we receive an understanding concerning how they should prepare for uncertain situations according to this theory.

Assumption- based planning

21 - 23 This part will provide knowledge about whether or not the companies have made assumption about how the Brexit will affect them.

Other 24 If they wish to add or further develop something.

Table 2: Operationalization

3.6 Method of Data Analysis

When conducting a qualitative research, a tremendous amount of data is collected and the challenge of analyzing the gathered data is to interpret it and to make sense of the data. The goal with analyzing the data is to be able to answer the stated research question (Seers, 2012). The process of analyzing the empirical data starts with the identification of different segments/units

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which have the possibility to be a potential answer to the stated question (Merriam, 2009). Thereafter, the units should individually reveal a certain information about the study and then it will be compared with each other located units in order to examine the differences and similarities in the empirical data (Merriam, 2009).

The process of analyzing the data starts with reading each interview transcript and locating units and valuable information concerning the purpose of the study. Secondly, the focus is on analyzing how the interviewed people are experiencing the phenomenon (Merriam, 2009). Thirdly, the differences and similarities are as mentioned examined and thereafter the findings are analyzed with the theoretical framework which results to a conclusion and an answer to the research question (Merriam, 2009).

3.7 Quality of Research

When conducting a research, it is important for the further use of the research results that each finding is considered to be reliable and valid (Boeiji, 2010).

The quality of a research is displayed through two approaches and criteria which are Validity and Reliability (Yin, 2018).

3.7.1 Validity

Validity concerns the credibility of the interpretations made during the research, whether the conclusions which are made have valid supports from the data that has been collected during the research process. In other words, validity also concerns whether a method investigates what is meant to be investigated and most importantly, that the findings are relevant for the study.

There are two common strategies to improve the studies validity, the strategies are Respondent validation and Triangulation. (Silverman, 2013).

According to Bryman & Bell (2017) triangulation is used when a researcher uses more than one method or source to study when conducting interviews.

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Triangulation is currently used within both qualitative and quantitative research. One way of performing this strategy is by analyzing each interview or other primary data separately and thereafter gaining a thorough understanding of the phenomenon or problem. Thereafter, when reaching a conclusion and an answer to the stated thesis it will be considered more valid (Bryman & Bell, 2017). Triangulation will therefore be used in order to increase validity further (Rahmani & Leifels, 2018). Respondent validation can be viewed as sort of confirmation of the validity in the individual interviews. To use this strategy in order to increase the validity the researcher can provide the interviewed person with the transcription and the interviewed can see that no misunderstandings have occurred in the provided answers or that something has been lost within the translation process (Bryman & Bell, 2017). To be able to increase the validity of this specific thesis, respondent validation will be applied in order to ensure that misconceptions and misunderstandings are eliminated. This is the chosen strategy due to the fact that as mentioned this is not a largely studied area and therefore it does not exist plenty of previous research and the situation is new and not to forget, unique.

3.7.2 Reliability

Reliability refers to whether the method of the research will provide similar or the same findings when being replicated. Although, in qualitative research it is problematic due to the fact that the behavior of a human is not constantly the same (Merriam, 2009). The author also argues that a qualitative research is not replicable if one were to replicate this study with different people it would be a difference in the result due to the human behavior.

However, this does not undermine studies result (Merriam, 2009). In addition to this, the interpretation of the primary data is also a factor to why it is hard to replicate the study and receive similar results. However, one can enhance

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the reliability in a qualitative research simply by performing a thorough demonstration step by step of how the results in the study were found and how the study was made in order to obtain an answer to the stated thesis (Merriam, 2009).

The authors of this thesis desires to enhance the reliability is the research and will do so simply by demonstrating a detailed documentation concerning the methodological process which is performed throughout this thesis. An interview guide has been established which both provides an insight for the reader concerning what was asked and it facilitates for a replication to be made (see appendix A). As a result of that the companies are Swedish, and the respondents are Swedish, the interviews will therefore be held in Swedish which later on will be translated into English and presented further below. The interviews are recorded and thereafter transcribed word by word.

3.8 Method Criticism

There are of course both advantages and disadvantages of conducting this sort of research. Bryman & Bell (2017) argues that one disadvantage is that this method of research is subjective which means that the results of the study often rely on the impressions and interpretations of the researcher. Furthermore, problems of generalization also occur with the qualitative method. Bryman &

Bell (2017) argues that it is difficult to apply the result on several companies and environments since the people interviewed for the study are chosen and can therefore not be seen as representatives. Furthermore, it is stated by Bryman & Bell (2017) that the qualitative method includes plenty of flexibility.

As mentioned, generalization is a constant problem however, there are different types of generalization in a qualitative research and by applying an analytic generalization the problems will be significantly reduced (Flick, Scott

& Metzer, 2014). This means that when an already developed and established

Brexit – the end of an era? Bachelor thesis