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40<br />
<strong>Kesko's</strong> <strong>year</strong> <strong>2007</strong><br />
Strategic<br />
emphases<br />
BUSINESS<br />
Kesko is a Finnish retail specialist which<br />
provides products and services valued by<br />
consumers in the Nordic and Baltic countries,<br />
Russia, and Belarus in close cooperation with<br />
retailer entrepreneurs and other partners.<br />
Kesko manages retail store chains, develops<br />
store concepts and business models, data<br />
management and logistics services. Kesko’s<br />
operations include food, building and home<br />
improvement, car, department store, home<br />
and speciality goods, agricultural and<br />
machinery trade.<br />
healthy, focused growth<br />
Increasing shareholder value<br />
by improving profit<br />
Kesko’s strategic objective is to strengthen<br />
shareholder value by focusing on increasing<br />
business divisions’ sales and market shares<br />
and improving profitability. The proportion of<br />
international business will be increased. The<br />
target return on invested capital is 16%, while<br />
the target return on equity is 14%. The key<br />
issue in increasing the shareholder value is<br />
achieving customer satisfaction exceeding<br />
that of competitors.<br />
Main divisions are expanding<br />
to high-growth markets<br />
In Kesko’s strategy, the emphasis in investment<br />
and internationalisation is above all on<br />
the food, and building and home improvement<br />
trade. Growth is achieved with considerable<br />
store site investments and business<br />
acquisitions supporting the growth strategy.<br />
Outside Finland, growth is sought particularly<br />
from the high-growth Russian and Baltic<br />
markets.<br />
Kesko’s strategic emphases<br />
healthy,<br />
focused<br />
growth<br />
● We increase the shareholder<br />
value by improving profit<br />
● We expand our main divisions<br />
to the high-growth markets<br />
● We increase our market share<br />
particularly in the domestic<br />
food trade<br />
● We expand our store network<br />
strongly in the food and<br />
building and home improvement<br />
trade<br />
Sales and<br />
services for<br />
consumer-<br />
customers<br />
● Our customer satisfaction<br />
exceeds that of<br />
competitors<br />
● Retailers’ local knowledge<br />
is our competitive<br />
asset<br />
● We leverage customer<br />
information efficiently<br />
● We develop electronic<br />
commerce and<br />
services<br />
The spearhead in Kesko’s growth and<br />
internationalisation process has been the<br />
building and home improvement trade, which<br />
is being expanded in accordance with the<br />
strategy by opening new store sites in Russia,<br />
the Nordic countries and the Baltic states. In<br />
addition to store site investments, business<br />
has also been grown through acquisitions.<br />
The Russian market in particular offers significant<br />
growth potential in the building and<br />
home improvement trade. In addition to St.<br />
Petersburg and Moscow, Rautakesko’s objective<br />
is to open new stores in other large Russian<br />
cities, too. Support for Rautakesko’s<br />
growth is provided by investments in the joint<br />
enterprise resource planning system and centrally<br />
directed logistics network and by leveraging<br />
economies of scale in sourcing and<br />
purchasing.<br />
Kesko Food’s objective is to expand business<br />
to Russia, and the Baltic market is also<br />
being investigated. Expansion to the Baltic<br />
countries in the sports trade is also being<br />
studied. Kesko will also strengthen its position<br />
in the Baltic machinery and furniture<br />
trade.<br />
Responsible<br />
and cost-effi-<br />
cient business<br />
models<br />
● Our operating practices are<br />
responsible<br />
● We combine retailer entrepreneurship<br />
and chain operations<br />
efficiently<br />
● We leverage our economies of<br />
scale to the benefit of customers<br />
● We guide business with efficient<br />
data management<br />
● We have the best practices and<br />
competence in the trading<br />
sector