Kron International
Background
Stockholms Borstbinderi AB was founded by Johan Peter Ahlberg in 1871. In 1909 the company was appointed to supply brushes to His Majesty, Gustav V. In 1927 the company moved its production from Stockholm to Vinslov in Skane in order to be closer to the beech forest. The Kron Tradename was introduced in 1945. About ten years later Kron started to produce plastic products and the following ten years the company replaced all its semi-automatic punching machines with fully automatic ones. In 1966 the company relocated its main office from Stockholm to Vinslov and changed its name to AB Kronborsten. Later AB Kronborsten became Kron International.
Interview at Kron International
We interviewed one of the three owners, Mr. Peter Ahlberg of Kron International.
Markets
The degree of internationalisation of the company is low since 20 % of the revenue comes from abroad, and the degree of internationalisation of the market is also low. This industry consists of a couple of main competitors and many small competitors around the Nordic and European countries. The main market for Kron is Sweden and the main market abroad is Scandinavia. In Sweden Kron exports through wholesalers in order to keep distribution costs low. The strategy of Kron is to enter large chains of stores, such as ICA, Axfood and Coop. The market on Iceland is supplied through an old brush facility that delivers Kron's products to the entire market. Export is the only mode of internationalisation for Kron International and all production is made in Vinslov. However, some products are imported from Malaysia and China, such as rubber gloves. Mr. Ahlberg states that production in other countries would make Kron less flexible, since production abroad requires control and a constant need to search for low cost production countries. Kron started to export in the 1950s. The first export was to the nearby markets of Norway and then Finland. Further export was made to Denmark and Iceland. Kron also has some export to Germany and this is a market of interest for further expansion. According to Mr. Ahlberg it is an advantage to have customers in the nearby market, since Kron can send sales agents to control and help the customers to promote the products in a correct way.
Problems and Possibilities Connected to Market Entries
Mr. Ahlberg finds it difficult to find new potential customers and to enter new markets. He states that Kron is mainly trying to find new customers in Scandinavia. In order to do so Kron participates in Ambiente in Frankfurt, which is the largest trade fair in Europe when it comes to household supplies. The participation in this trade fair led to a Japanese customer. Kron does not purchase any market information, nor do the company send out sales agents to examine the markets due to lack of resources. Instead the company get in touch with potential customers through mail and telephone. Sometimes customers call Kron to find out where the products are available. Sometimes Kron's products are sold through another brush factory.
Psychic Distance
Mr. Ahlberg tells us about the many cultural differences between different markets when it comes to their products. In Scandinavia dish brushes are commonly used while they are not used in the U.S. and Asia. In Scandinavia products are very ergonomically shaped while this is not as developed outside Scandinavia. There are even differences between Sweden, Denmark and Norway, for instance the material cloths are made of and the mix of straw in the brushes. People in Norway and Denmark still like to use the old fashioned materials, or so we call them. Further there are major differences between Sweden and the Mediterranean countries. Japan could have been a potential market since the already established contact, but too many differences create a need for adaptations that are too costly for Kron. An example is that Kron's toilet brush is impossible to use in Asian bathrooms. An obstacle for entering new markets could be that Kron does not sell products separately as only the whole assortment is sold. Kron does indeed use the knowledge from the home market when entering a new market. A small part of Kron's export goes to Qatar and Gran Canada. The psychic distance is passed as Kron exports to a Swedish retailer in Qatar and to tourists in Gran Canada.
Networks
Kron's main competitive advantage is quality, good service and distribution system. According to Mr. Ahlberg Kron is not engaged in any formal networks. Kron lets ICA provkok test the products; the main reason is that it is easier to sell the products if it is labelled by ICA. Kron's informal and social network consists of designers and "Hassleholms samarbetsgrupp".
Mr. Ahlberg tells us that Kron would like to expand in Northern Germany but it is a difficult market to establish in, with many competitors, and Kron does not possess the resources to send an agent to Germany.