Yvonne Brodrechtova

IUFRO Division 5 Conference

5.10.00 Forest Products Marketing & Business Management

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Albert-Ludwigs-University FreiburgInstitute of Forest and Environmental Policy Markets and Marketing SectionTennenbacher Str. 479106 FreiburgGermany

Model of Export Marketing Strategies in Transition Countries – the Case of Slovakia

Yvonne Brodrechtova*,

Michel Becker and Heiner Schanz

European Union

Problem statement

Many countries around the world are more closely integrating their economies into global trade

Challenges are more far-reaching in Europe’s transition economies, which are trying to assimilate themselves into an international economic order

Recent challenges have had effect on all companies including forest products companies and their exporting activities

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Research study justification and aim

Little attention has been given to the driving forces of export marketing strategies

Coherent theoretical elaboration and empirical evidence on export marketing strategies is lacking

Model of export marketing strategies which can still explain and predict the reality when studying transition countries in general and forest products industries in particular

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Slovakia – the geographical center of Europe

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1993 Slovakia founding

2004 EU accession

GDP 47,42 billions US$

5.4 million inhabitants

Case study on Slovakia

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Unlike Hungary and Poland, prior to 1989 Czechoslovakia had no significant experience of any market reforms ‘within a planning system’ and in addition had autocratic and corrupted regimes until 1998

Due to Slovakia’s self-sufficiency in relation to wood resources (40 % forest cover*), even then forest products were considered to be ‘hard currency earning’ commodities

The export of forest products is still an important part of the whole Slovakian forest products sector today, accounting for 80.4 % of the income generated by the sector and as much as 6.6 % of the total national exports*

*The Ministry of Economy of the Slovak Republic, 2006

Quality of products

Technical and other services

Customer relationship

Marketing channels

Efficient marketing

Advantageous price

Freedom in price policy

Market share

Brand name

Export Marketing Strategy*

CustomersProducts Geographical limits of market area Core competencies

Conceptual framework

*Juslin and Hansen, 2003

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Markets-as-network

perspective*

Conventional

business studies*

Institutional theory*

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Resource-based view

of firm*

1. Company goals

2. Organization

structure

3. Production

structure

3. Export motivation

1. Human resources

2. Human capabilities

3. Firm resources

4. Firm capabilities

5. Product related

capabilities

1. Relationship with foreign

customers, suppliers and

competitors

2. Relationship with domestic

customers, supplies and

competitors

3. The role and importance of

the company in the

network

3. Relationship with

technology development

1. Domestic formal and

informal institutions

2. Foreign formal and

informal institutions

Conceptual framework

Transaction cost theory*

*Barney, 2001; Makadok, 2001; Ireland et al., 2003; Williamson, 1999; Johanson & Mattson, 1988; Ritter et al., 2004; North,1991; etc.

Methodology

1. Complete inventory with all exporting forest products companies (254) in Slovakia

2. Enquiry method: Structured phone interviews with individual decision makers*

3. Measurement: 5-Point Likert scale (kNN - nearest neighbor method used to fix the point 6 = I do not know answer)

4. Quantitative data analysis with the help of SPSS 14.0 software: Cluster analysis and Multinomial logistic regression*

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*Schnell et al., 1995; Bacher, 1994; Bühl, 2006; Hosmer and Lemeshow, 2000

Markets-as-network

perspective

Conventional

business studies

Institutional theory

4. Foreign direct investment

5. Financial resources for export

business

6. Entrepreneurial drive and

quality of management

7. Product and/or production

innovation

8. Means of company establishment

(company history)

9. Relationship with

foreign customers

10. Economic situation in

Slovakia

The significant factors and elements

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Resource-based view

of firm

1. Company goals

2. Production type

(sub sectors)

3. Export motivation/

dependence

EXPORT MARKETING STRATEGY1. Product 2. Customer 3. Market area 4. Price 5. Channels of sale 6. Channels of Promotion 7. Market share 8. Quality

EMS types (i=1-5) Influencing factors (k=1-10)

EMS 1 (Product oriented) Company goals

Production type

EMS 2 (Product-Customer- Channels of promotion oriented)

Export motivation and/or dependence

Foreign direct investmentEMS 3 (Price-Channels of sale oriented) Financial resources for export business

Entrepreneurial drive and quality of management

EMS 4 (Price-Quality oriented)

EMS 5 (Product-Customer-Market share)

Product and/or production innovationMeans of company establishment

Relationship with foreign customersEconomic situation in Slovakia

Model of export marketing strategies (EMS)

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kk

kk

XXX

XXX

e

e

...

...

2211

2211

1iY

Where  = the constant of the equation and,  = the coefficient of the predictor variables

Means of company establishment (company history)

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Figure 1: Probabilities plot of “Means of company’s establishment” on the five EMS types

EMS type 1 = Product oriented EMS type 2 = Product-Customer-

Channels of promotion oriented

EMS type 3 = Price-Channels of sale orientedEMS type 4 = Price-Quality orientedEMS type 5 = Product-Customer-

Market share oriented

No Little Neutral StrongVery strong influence

Preliminary conclusions (1/2)

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Model building is more complex compared to marketing strategies

Various export marketing strategy types with distinct focus on ownership and production type

Driving forces more complex compared to driving forces in comparable studies

Institutions and path dependency show the main discrepancy when compared with comparable studies done on developed western countriesRelevant driving forces consist of competitive assets and institutions

Preliminary conclusions (2/2)

The elaboration of a coherent model of export marketing strategy through one theoretical perspective is not possible, particularly in the transition context

Results are valid for transition country like Slovakia, however, they do not have to be valid for all transition countries in general

The potential of this model lies in its ability to shed more light and contribute to the theories

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Further steps

Additional empirical studies and greater scrutiny are required before it will be possible to arrive at a conclusive set of driving forces of export marketing strategies in transition countries in general, and pertaining to the forest products sector in particular

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Thank you!

Methodology

Exploratory phase Problem identification Development of the research concept: exploratory interviews with 13

informants and 3 experts

Qualitative phase 30 semi-structured in-depth personal interviews with individual decision

makers of exporting forest products companies (FDC) Verification of proposed conceptual framework Identification of influencing factors and elements of export marketing strategy

Quantitative phase 138 structured phone interviews with individual decision makers of FDC Taxonomy of export marketing strategy types as a medium for the implications

of influencing factors Construction of model of export marketing strategy

Summary of findings

Qualitative phase (deductively derived factors):

13 identified elements of export marketing strategy thematically reduced to 845 identified influencing factors statistically reduced to 19 17 values thematically coupled into 4 new influencing factors

Quantitative phase (taxonomy and model building):

 8 elements describing export marketing strategies further statistically tested: Taxonomy resulted in five strategy types, which served as a medium for identification of most significant influencing factors

23 influencing factors further statistically tested: The majority of the ten factors derived are of the internal character (business studies & resource-based view); however, relationships (market-as-network perspective), and domestic institutions (institutional theory) are relevantly significant

Methodology (Qualitative phase)

1. Stratified sampling and random selection of 34 exporting forest products companies

2. Enquiry method: Semi-structured problem centered interviews with open questions

3. Qualitative data analysis with MAXqDA2 software: Content analysis: Content structuring technique and Summarization technique, Thematic coding

4. Quantitative data analysis with SPSS 14.0 software: Contingency tables with χ2, Cramers‘ V

* Thomson, 1992; Schnell, et al., 1995; Lammnek, 1995; Mayering, 2002; Flick, 2002; Everitt, 1992 ; Norusis, 2005

Markets-as-network

perspective

Business studies Institutional theory

4. Foreign direct investment

5. Financial resources for

export business

6. Entrepreneurial drive and

Quality of management*

7. Product and/or production

innovation

8. Way of company

establishment*

9. Physical resources

10. Market knowledge

11. Export experience

12. Market orientation

13. Foreign language

knowledge

14. Perceived export success

15. Relationship with

foreign customers

16. Relationship with

domestic customers

17. Role among

competitors

18. Economic situation in

Slovakia

19. Political situation in

Slovakia

20. EU accession

21. Current development in

state forest enterprise

22. Governmental support of

sector*

23. Activities of professional

and industry associations*

The relevant factors (results of qualitative phase)

Resource-based view

of firm

* Factors based on inductive thematically coupled values

1. Company goals

2. Production type-

industry sub sectors

3. Export motivation/

dependence

Results (Quantitative phase – the most significant factors)

Model Fitting Criteria Likelihood Ratio Tests

AIC of BIC of -2 Log LikelihoodReduced Mode Reduced Model of Reduced Model

Chi-Square df Sig.Intercept 461,601 730,908 277,601 4,766 4 ,312RBV140 459,942 729,249 275,942 3,107 4 ,540 Foreign language knowledgeRBV150 463,602 732,909 279,602 6,767 4 ,149 Market orientation RBV190 470,859 740,166 286,859 14,024 4 ,007 Financial resources for export support RBV200 461,272 730,579 277,272 4,437 4 ,350 Physical resourcesRBV220 459,015 728,323 275,015 2,180 4 ,703 Market knowledgeRBV230 458,429 727,736 274,429 1,594 4 ,810 Export experienceRBV240 465,346 734,653 281,346 8,511 4 ,075 Product and production innovationCCH260 467,419 736,726 283,419 10,584 4 ,032 Foreign direct investment SG320 466,916 736,224 282,916 10,081 4 ,039 Export motivation/dependenceMN520 464,805 734,112 280,805 7,970 4 ,093 Relationship with foreign customers MN530 457,216 726,523 273,216 ,381 4 ,984 Relationship with domestic customersMN570 457,958 727,265 273,958 1,123 4 ,891 Role among competitionSG340 465,942 735,250 281,942 9,107 4 ,058 Company goalI610 457,307 726,614 273,307 ,472 4 ,976 EU accessionI630 460,784 730,091 276,784 3,949 4 ,413 Political situation in SlovakiaI640 466,519 735,827 282,519 9,684 4 ,046 Economic situation in Slovakia I650 463,201 732,508 279,201 6,366 4 ,173 Current developments in state owned enterpriseEMS390CON 482,211 751,519 298,211 25,377 4 ,000 Product/Production typeNEW100 467,226 736,533 283,226 10,391 4 ,034 Entrepreneurial drive and quality of managementNEW200 478,965 748,272 294,965 22,130 4 ,000 Means of company’s establishment NEW300 464,342 733,649 280,342 7,507 4 ,111 Governmental supportNEW400 462,140 731,448 278,140 5,305 4 ,257 Professional and industry associationsCCH310 462,372 731,680 278,372 5,537 4 ,236 Perceived export success

p<=0,05 Significant (Bühl, 2006)

Multinominal Regression Analysis: Likelihood Ratio Tests

Probabilities plots of influencing factors from the model on the five EMS types

EMS type 1 = Product oriented EMS type 2 = Product-Customer-Channels of promotionEMS type 3 = Price-Channels of sale orientedEMS type 4 = Price-Quality orientedEMS type 5 = Product-Customer-Market share oriented