Article no 2

Article no 2A Causal Study Of Relationships Between Firm Characteristics, International Marketing Strategies And Export PerformanceAuthor: B. Peter HoangSource: Management International Review, Vol. 38, Challenges and Solutions for International Marketing Management (1998), pp.73-93Published by: SpringerURL: http://www.jstor.org/stable/40228474Presented toMr. Aamir AbaasPresentersHamayun HassanFahad Ahmad KhakwaniFaiq HassanSalman NazirFarhan ButtAbstractThis Study Examines the causal relationship between firm characteristics, international marketing strategies and export performance.Different statistical tools355 Manufacturing Export Firms of New Zealand.Result of this study suggest that export performance is significantly influenced by the choice of international marketing strategies which are determined by a firms characteristics.

IntroductionThis study was written after the change in New Zealands export environment.In the past, Government of New Zealand imposed the stiff regulation which effect the New Zealands export and restrict it on fewer products and markets.Their standard of living declined from top levels to 23rd level which was caused by Governments restriction.After this situation, Government and private sector redesign the policy of trade and implement Open Economic Policy.Cont..

This theory adopted, and market and product diversification become a major objective of New Zealands international trade policy.

This policy create the problems for firms because they have not enough experience to trade internationally.

B. Peter Hoang identified this Situational Gap and written this study which postulates that export performance is affected by the international marketing strategies which are determined by firms characteristics. International Marketing StrategyThere are to many theories on international marketing strategy but are all conflicting with each other.This theory eliminate this conflicting factor by Full Structural Analysis to examine the causal relationship of between international marketing strategies and export performance.

International ExpansionInternational expansion is a critical process in todays business operations. Especially for New Zealand firms because they have small home market size.They have to export sales for growth and survival.Some marketing strategies were discussed including Market Selection, Market Segmentation and Rate of entry.

Product Line StrategyIt has been suggested that if firm have broad product line then it will be perform better in trade rather than others.

Export PromotionIt is suggested that a positive relationship between export performance and the level of promotion activities give success to firm in trade.

Research QuestionsQ1: Identification of factors for enhancement of export performance of any firm?Q2: The impact of promotional strategy of export performance of a firm?Q3: The role of market strategy, product strategy and promotion strategy in the favor of export performance?Determination Of International Marketing Strategies And Export PerformancesThe relationship between firm characteristics and export operations has been studied extensively in past. But..Two school of thoughts.The reason behind divergent result in research finding in past.Delineated firm characteristics is current study.The size of firm The level of business experienceThe intensity of international involvement

Firm Size

Three school of thoughts (1964-1989)Positive correlation between firm size, international marketing strategies and export performance.Little no relationship between firm size, international marketing strategies and export performance.Inverse relationship between firm size, international marketing strategies and export performance.

Reasons of discrepancyConceptual / methodological problems.Only direct relationship was studies.Variations in firm size operationally defined.

High Cost, High Risk and High Profit

International Experience

A firm acquires more international experiences level to become more Physically distant measures because that the number of years in which a firm engage business operations inevitably has some bearing on its strategies and market performance.

Intensity of international involvement

A firm which actually peruse international operations tend to attain better export performance.

Two Dimensions of Activeness

1- Marketing ResearchLacking knowledge of overseas markets is often a major obstacle in the development of international operations by concluding market research, a rational market strategy can be implemented and directs to export success.

2- Marketing Planning ActivitiesSeveral studies developed the importance of planning activities . Market Planning is an incremental process. There is a positive connection between market planning and export performance.Measure Of Export PerformanceThe frequent use of export performance indicators includeExport IntensityExport GrowthExport vs Non ExportExport ProfitabilityIt was generally agreed that multiple indications should be used because they tend to offer a more complete picture of a firms performance in export performance.And to show basic performance of any firm with respect to export. Usually used to measure export performanceExport IntensityExport GrowthOverall Research DesignResearch DesignMultistage research designMultistage research design has been employed in the present study to emphasically substantive the causal relationship between firm characteristics, international marketing strategy and export performance

Firstly, Collect relevant secondary data on different variables.Secondly, Correlation analysis employed to determine which selected variables are likely to be good predictors and good for further data analysis.Thirdly, Factor analysis and variable rotation applied to evaluate the measurement model.Finally, Maximum Like hood (ML) is adopted to test hypothesis.

Instruments & SamplesData TypePrimary & SecondaryData Collection InstrumentQuestioner / Mail SurryTestingAcademic stageIndustry stageSample Size755Response rate51%Statistical Tool ApplyNormal Probability / Variance croon Bach alpha etc.

Operational Model & Research HypothesisTo determine the like hood of good export performance predictor the correlation were applied.Group variablesInternational Marketing StrategyFirm CharacteristicsExport PerformanceFactorsCoefficient alphasMarket Expansion Strategy0.8462Product Breadth Strategy0.8934Promotion Strategy0.8384Firm Size0.9462International Experience0.8875Intensity of Involvement0.8982Export Performance0.8533Cronbachs Alphas of Measurement InstrumentsExport PerformanceMarket Expansion StrategyPromotion StrategyProduct Breadth StrategyInternational Business ExperienceIntensity of InvolvementFirm SizeAn Operational Model of Firm Characteristics, International Marketing Strategies and Export PerformanceHypothesisH1: Export Performance is likely to be positively related to a firms:Market expansion strategy:Product breadth strategy:Promotion strategy:Size:Intensity of international involvement:Level of international business experience:

Ho: Export Performance is likely to be inversely/negatively related to a firms:Market expansion strategy:Product breadth strategy:Promotion strategy:Size:Intensity of international involvement:Level of international business experience:

H2: Market expansion strategy is likely to be positively related to:The size of a firm:The intensity of international involvement:The level of international business experience

H0: Market expansion strategy is likely to be inversely/negatively related to:The size of a firm:The intensity of international involvement:The level of international business experience

H3: Product breadth strategy is likely to be positively related to:The size of a firm:The intensity of international involvement:The level of international business experience

Ho: Product breadth strategy is likely to be inversely/negatively related to:The size of a firm:The intensity of international involvement:The level of international business experienceH4: Export promotion strategy is likely to be positively related to:The size of a firm:The intensity of international involvement:The level of international business experience

Ho: Export promotion strategy is likely to be inversely/negatively related to:The size of a firm:The intensity of international involvement:The level of international business experience

DiscussionThe theoretical study verified that export performance can be theoretically linked to international marketing strategies & firm characteristics.Firstly, Export sales and growth can be enhanced by adopting an aggressive market expansion strategy. This includes carefully selecting foreign markets, not only similar markets but physically distant ones too and targeting as many markets as possible. By doing so, firms not only can diversify or reduce risk and stabilize revenue but also increase export sales and growth. In this respect, theories a plenty of room for New Zealand manufacturing firms to improve this export performance.Secondly, the product breadth strategy which is measured by the number of product lines, product width and new product development can also be used to improve export performance. The research result suggests that export sales and growth can be expanded by regularly introducing new product into potential markets and increasing the number of products served in the major markets.The theoretical study verified that export performance can be theoretically linked to international marketing strategies & firm characteristics.Firstly, Export sales and growth can be enhanced by adopting an aggressive market expansion strategy. This includes carefully selecting foreign markets, not only similar markets but physically distant ones too and targeting as many markets as possible. By doing so, firms not only can diversify or reduce risk and stabilize revenue but also increase export sales and growth. In this respect, theories a plenty of room for New Zealand manufacturing firms to improve this export performance.Secondly, the product breadth strategy which is measured by the number of product lines, product width and new product development can also be used to improve export performance. The research result suggests that export sales and growth can be expanded by regularly introducing new product into potential markets and increasing the number of products served in the major markets.