Available online at http://www.bretj.com INTERNATIONAL JOURNAL OF CURRENT LIFE SCIENCES RESEARCH ARTICLE ISSN: 2249- 1465 International Journal of Current Life Sciences - Vol. 5, Issue, 3, pp, 464-470,March, 2015 STUDYING THE EFFECTIVE FACTORS ON EXPORT FUNCTION IN AUTOMOBILE COMPANIES CASE-STUDY IN IRAN KHODRO DISEL COMPANY 1Mahmood 1Islamic Nooraie, 2*Hamidreza Mohammadbeigi and 3Solmaz Seyyedi Abhari Azad University Abhar Branch Management 2,3Business AR TIC L E I NF O Article History: th Received 5 , February, 2015 Received in revised form 17th, February, 2015 Accepted 7th, March, 2015 Published online 28th, March, 2015 Key words: Export performance, export commitment, competitive advantage, export marketing strategic capibilites, barriers to export. ABS TR AC T Nowadays, export marketing connoisseurs believe that one of the most important and critical matters for companies in competitive market is "identification of export function's determinative factors" in order to increase this action and getting the desirable level. Also, as the universal business and selling activity in international markets develops, people's attention to the effective factors on companies' export operation increases, too. (Moghaddam et al, 2011). The present research focuses on identification and evaluation of export function's determinative factors in automobile industry. The accomplished studies in this research about export function and some skills of its models were analyzed. The model used for identifying the determinative factors is combined with "Haghighi" and his colleagues' research model in 2008. This integrated model states that export's stimuli and problems, its competitive advantages and commitment and strategic characteristics of export marketing and government's support are the determinative parameters for export function. Iran khodro diesel company's employees form the statistic group of this research. The hypotheses were tested and analyzed by spss18 software and using one-sample T-test's illative statistics after data were collected by questionnaire. Then, the binomial test was applied for confirming the results. Finally, the priority of each variable was assessed by using the "Friedman" ranking test. The results and findings of this research show that the above-mentioned parameters are effective in export operation of automobile industry and they are known as determinative parameters. © Copy Right, IJCLS, 2015, Academic Journals. All rights reserved. INTRODUCTION Export has always been concentrated in oil since a long time ago because of profuse petroleum products and its resulted income. Existence of this petroleum income causes to be neglected or underplayed other categories. (Kamali, Bahrami, 2010). On the other hand, the proper policy-making must be performed about increasing the non-oil export in future by the complete attention to energy and natural resources. More simply, as nonpetroleum export increases, the country's dependence on one-production economy decreases. Our experiences show the vulnerability of some countries to economical and political international conflicts because of their dependence on one-production economy. Therefore, they often have numerous problems. Concentration in export not only acts as a foreign exchange source of income for country, but also increases the productivity of production's parameters, the level of occupation and transferring the technology. Also, automobile industry has mostly invested in last decades in our country that more than 10 *Corresponding author: Hamidreza Mohammadbeigi Business Management percentage of the country's active population are indirectly or directly working in this industry because of its development. Since the automobile industry has communicated with more than sixty industries, it's known as "industries manufacture" or "industries' locomotive". Thus, automobile can be exported into other countries, if the production perpetuates and automobile industry develops, whether qualitatively or quantitatively. As a result, as more people are employed in this industry, the rate of unemployment will be reduced in the society. Moreover, according to this industry's development strategy, automakers must attempt to export one-million automobiles in every kind to universal markets annually until 2024. Research aims are as follows 1) Identifying and determining the affective factors on export development and improvement of automobile industry's function. 2) This research helps to develop the available knowledge in automobile industry's improvement. International Journal of Current Life Sciences - Vol. 5, Issue, 3, pp, 464-470,March, 2015 the export chances. (pressed parameters). (Haghighi et al, Research hypotheses 2008). 1) Export commitment influence on company's export performance. Barrier to export: The existing problems restrict our ability 2) Barrier to export influence on company's export to seek, identify and profit the export market's function. opportunities and they result in low operation of export, in 3) Export commitment influence on company's export turn. (Haghighi et al, 2008). Most of the structural, performance. procedural, functional and behavioral parameters make 4) Competitive advantages influences on company's producers unable to perform export actions, develop them export performance. and also, keep their own export power. Some of the 5) Eexport marketing strategic capability affect on companies' export drawbacks have deeply established, export performance. whereas other barriers result from company's external 6) Government's support influences on company's environment. On the other hand, we can subjectively export performance. divide these drawbacks. So, there will be four categories, called objective internal barriers, subjective internal Variables' theoretical definition drawbacks, objective external obstacles and subjective Export performance: Shoham (1996) has generally defined external barriers. (Albaum, 2004, quoted from Nateq export performance as the result of a firm's actions in Niakan, 2009). export markets. Although, growing body of literature has Competitive advantages: Company's tendency and addressed the issue but still there is no evenly accepted capacity in which they do and continue the regular export conceptual and operational framework (Cavusgil and Zou actions, depends on company's competitive position in (1994); Shoham (1998)). Sousa (2004) has identified target markets. (Albaum, 2004 quoted from Nateq Niakan, about 50 dimensions of export performance measure 2009). As "Porter" says, competitive privileges show the which are classified as subjective and objective measures features and traits that distinguish the exporter company's of export performance. However, Leonidou et. al. (2002), activities from opponent companies, such as distinction, have identified that export proportion of sales or export concentration and costs' leadership. intensity, export sales growth, export profit level , export sales volume, export, market share , and export profit Government's support: Government usually supports the contribution are mostly used measures of export companies' export actions because of the importance of performance.(suhil Nazar, et al ,2010). export. Moreover, they use incentives and protection plans that they are known as "promotion and encouragement Export commitment: Management’s export commitment is plans". The target of these services and efforts is that they one of the key determinants of export performance (Aaby can help active companies in an economical territory in and Slater (1989); Zou and Stan, (1998)). Cavusgil and order to initiate or continue the export's international Zou (1994) found that high management commitment activities. One of these groups provides the export and allows to follow successful export marketing strategies commercial information for companies. Some other that help to enhance export performance which is groups are represented for export in order to create or confirmed by Julian (2003). increase the companies' motivation. In addition, the Export marketing strategic capability: According to important part consists of functional and financial Shamsuddoha and Ali (2006) it is ability of a firm to supports such as export's fiscal provision, export respond to marketing forces to achieve its objectives. insurance, education, export's transportation, export Cavusgil and Zou (1994)) pointed out that the exporting marketing, performing the foreign commercial missions firm’s performance can be measured by its marketing and creating the commercial communications with foreign strategies and her ability to apply them. Export marketing merchants. (Farncis June 2004, et al, quoted from strategy is usually considered as result of firms Hasanqolipoor, et al, 2010). characteristics (Aaby and Slater (1989); Cavusgil and Zou Theoretical bases of research (1994)) but here we take strategic capability as an independent factor. Export marketing strategic capabilities Export include among others the capabilities to adapt marketing Exports means to earn more currency for the country and mix (e.g. Product, Price, Promotion and Placement) and the most traditional way to enter international markets is marketing channel strategies such as channel type and product. Governments are usually favored development channel relationship etc. Zou and Stan (1998). strategy of export. Companies that give a positive Export stimulli: These stimuli concentrate in companies' response to received orders are called exporter of random. efforts about identifying the foreign markets' opportunities But active exporter is company that planning and tries for and their profiteering. Marketing researchers have divided ordering (Farhangi, Lotfi, 2009). Export is vital tool for the export stimuli into two categories, known as effective countries to achieve goals of economic growth and and disconnected categories. The effective stimuli prosperity. Since export help to improve balance of represent the companies' useful behavior and their payments, employment rates and living standards; commitment to researching in order to recognize the therefore, the number of governments seeking to expand export opportunities (tensile factors). Reactive stimuli exports encourage more exports (Doaei, Hassani Robat, show the companies' reaction regarding the happened 2010).Export occasionally is passive method to entry the changes and they reflex the inactive tendency for finding foreign market. In this method, occasionally company or according to his initiative or in response to unsolicited 465 | P a g e International Journal of Current Life Sciences - Vol. 5, Issue, 3, pp, 464-470,March, 2015 orders from abroad, its products are exported abroad. Export's stimuli and stimulators: Actively export occurs when company is committed to We can follow two approaches about studies related to export their goods to particular market. Either the export stimulators that they influence on companies' company will produce the goods in their country or decision about initiating the export actions or keeping produced goods may or may not be applicable to foreign them and their continuity. market. Export requires minimal changes in the production line, the investment and company's The first approach is related to the subject, i.e, if the mission.(Gilaninia,et al ,2013). decision is made by company's internal factors about export or it has a foreign source. (Constantine S, 1996, Two kinds of export quoted from Nateq, Niakan, 2009). 1) Indirect export Export's barriers theory 2) Direct export Most of the structural, procedural, functional and A) Indirect export: This kind of export is mostly behavioral factors make the producers unable to do the common among companies that they recently think export, improve it and also, keep their own export power. about export. Indirect export needs less capital and Some of the companies' export barriers have internal company doesn't need to employ the sellers and train foundations, whereas the other obstacles result from them or there isn't any obligation for performing the company's external environment. Moreover, we can divide various contracts in abroad. Above all, exporters face these barriers, subjectively or objectively. In this case, less risk for their own export. there will be four categories such as objective internal B) Direct export: This kind of export is used by sellers barriers, subjective internal obstacles, objective internal who have increased their export as much as they can barriers and subjective external barriers. (Albaum, 2004, undertake their own export organization's prices. In quoted from Nateq , Niakan, 2009). The companies' most this method, as the investment and risk increases, the important deterrent factors in "Alzandriz" research about possibility of profiteering increases, too. initiating the export activities consist of the available intense external competition, lack of adequate knowledge Export from goods' exit point of view and information about export, inadequate perception of the Export is divided into three groups regarding the goods' methods for export payment and the problems related to exit from country. They are as follows: finding the export markets that they have been recognized. 1) Certain export (Nateq , Niakan, 2009). 2) Temporary export Government’s support theory 3) Renewed export These plans are divided into two groups regarding their 1) Certain export: This kind of export is transmitting roles, in Singer's idea. The first group is related to the the goods outside the country's customs area in order plans that provide the information for companies and the to sell or consume them in foreign countries. second one provides the export's learning opportunity for 2) Temporary export: Temporary export is related to them. (Singer, T.O, 1991, quoted from Hassanqolipour, et goods that are transmitted to abroad in order to repair al, 2009 ). "Harkar, kumcu" have divided the export's or fulfill or participate in exhibitions. Then, they are encouragement plans into three groups. The first one is returned after this major performance. known as financial encouragement plans such as fiscal 3) Renewed export: If foreign goods gotten through exemptions, exportable loans, a justification for replacing customs by doing the formalities related to certain the imported raw materials and export insurance, technical entrance is exported to third country, it will be aids plans, marketing's promotion in target countries, known as renewed export. importable aid to exporters and export transportation supports and other incentives. The second group is International trade theory Boroukrasi's reforming and the third is export rewards. Mercantilism theory: Mercantilism is the first economical (Kumcu, E. et al, 1995, quoted from Hassanqolipour , et academy in which there are statements about foreign al). trade. It has focused on the policy of encouraging export, reducing the imports and increasing the countries' Export commitment theories commercial level. (Haghighi, 2010). Export commitment in a company is the grade allocated to David Ricardo theory: Ricardo represented the relative export activities by institutional and managerial resources. superiority theory 40 years after "Adam Smith" had given (Saberi, 2009). International marketing theoretical his theory known as "absolute advantage". Ricardo's literature suggests that export commitment is a function of theory contains the important part of universal business. In access rate to resources. As the export actions work well, "absolute advantage", the reason of trade is low prices of the public (inside or outside the company) will support the producing goods in some countries rather than other ones. export activity inside the company with more probability. However, if a country produces the cheaper goods, the In other words, the liability of export actions and export trade must not perform. (Takrousta et al, 2009). Ricardo managers decreases by weak operation. As a result, they has stated that even if a country lacks the absolute enjoy the less available resources with high possibility. advantage in both goods' production rather than other This situation is more important and evident in small and country, it can create the trade with the mutual interests medium agencies with short-term strategic cycle. Yet, the for both parties. (Salvatureh, 2010). theoretical literature suggests that understanding the 466 | P a g e International Journal of Current Life Sciences - Vol. 5, Issue, 3, pp, 464-470,March, 2015 success on behalf of different interactional essences with gathered by questionnaire and the second data such as company will be generally improved by company's books, magazines, articles and thesis have been used for internal consistency. Thus, it will result in increasing the expressing the research theoretical basis. Its population managers' export motivation. (Saberi, 2009). includes 5000 employees in Irankhodro Dizel company of Iran in 2014, and sample size measurd with Cochran test Export's strategic theories equl 356 people. and we used simple Random samlling Strategic points theory: Each of the management theorists metod. has enumerated the certain strategic points for organization's success based on his own views. Some of these strategic points are cost reduction (pourter, 1985), quality (Imay, 1986), rate (Stak, Hook, 1990), innovation (Foster, 1986), customers' needs (Ohmayeh, 1988, Piterz, 1987) and nominees (Handerson, 1990) that organization will succeed according to the theorists' opinion who represent them, if they emphasized on each of these points. (Figenbaum, et al, 1996, quoted from Rahnavard, et al, 2012). Even if the organization's productions and services' export is considered as a dynamic process, decision must be made around three basic activities in this process. These subsystems include selecting target market, entrance on international market and mixed subsystem of international market in services' and goods' export process. There are four strategies about the subsystem known as "selecting the export target market". They are as follows: 1)Concentration strategy in homogeneous markets; 2) Concentration strategy in heterogeneous markets; 3) Diversity strategy in homogeneous markets; and 4) Diversity strategy in heterogeneous markets. (Kotler, 2003). LITERATURE REVIEW "Figure 1 Conceptual model of the research (Mixed model with Haghighi et al, 2008)" To achieve the aims of the research, 356 questionnaires were distributed among employees of which 261 questionnaires were analyzed. Questionnaire including 38 items were filled my employees. at the beginning of the questionnaire, items on demographic traits were raised. The questions were on ordinal scale and likert five- rank scale including very low, low, medium, high and very high .they were deviced 6 variable. Since a standard questionnaire is used in this research, used measurement tool had proper validity and its validity was achieved by content method. "Table 1 Summary of research literature in Iran" Number Researcher Date The title of research 1 Haghighi, et al, 2008 Identification of determinative factors about export action in food industry 2 Imankhan ,et al 2009 Studying the effective internal factors on export performance in petrochemical company 4 Tavakkoli& Dehghani 2010 6 Van dijk michie 2002 8 Abay, slater 2006 11 Kastsikeas, et al 1996 Finding Ten factors include; export experience, export stimuli, export problems, competitive advantage, export commitment, production's conformity strategy, price conformity strategy, channels for direct export and the price The research hypotheses indicate that there is a significant relation between the ten factors and the export performance. The effect of three basic variables known as: 1) management characteristics, 2) capabilities; and 3) export strategic marketing evaluates the company's abilities and traits on export operation. The results show the approval of three basic hypotheses in this research on export performance in petrochemical commercial company. Studying the effective parameters on development of textile export One of the most important effective factors on development of and affective factors on textile industry is the quality of production and companies' improvement of export identified by strategic attitude in order to attend in universal markets. using the "AHP" technique. There is a reverse relationship between dimension and The Determants of Export tendency towards export. In this research, the cause of performace in developing employees' skill was studied, too. The results show that as the countries. employees' skill increases, the tendency towards export's improvement increases, too. There is a positive and strong relationship between Managerial influences on Export competition and export action in both homogeneous and performance heterogeneous parts in Japan. Determinants of export performance Management commitment in respect of export and exportable in a European contex stimuli has influenced on export performance. RESEARCH’S METHODOLOGY This research is a functional research base on its purpose and it has been performed as a descriptive one and its type is survey and first and second references in this research are the method of data-gathering. The initial data are For more confidence on its validity, some experts and connoisseurs of the field were advised. To compute reliability, internal adaptation and Chronbach's alpha were used and by initial distribution of 30 questionnires, the reliability of the questionnaire was computed as 0.7 which 467 | P a g e International Journal of Current Life Sciences - Vol. 5, Issue, 3, pp, 464-470,March, 2015 shows the plausible reliability of the questionnaire. The (Hypotheses test): The first theorem test: binomial test is applied for describing and testing the First hypothesis: Export stimuli affect on company's hypotheses, illative statistics (one-sample T) and for export performance. certifying the accuracy of results. In addition, the Friedman test has been used for ranking the variables. According to the results to be drawn from above computations represented in table 4 and because the test Table 2 Chronbach's alpha for each aspect of the statistic (24.083) is more than the statistics in this table questionnaire and the number of questions with the error level equal with 0.05 and release grade equal with 260 (1.96) (1.96 ˂ 24.083), so we can surely The quantity Chronbach's Row Variable of questions alpha say that the calculated number is not set in critical range 1 Export stimuli 4 0.820 and the null hypothesis is rejected. Moreover, H1 is 2 Competitive Advantage 8 0.894 confirmed, i.e, export stimuli influence on company's 3 Export Commitment 6 0.795 export performance. Therefore, the findings of this 4 Export Marketing Strategy 7 0.744 5 Barrier to export 5 0.797 research conform with the research performed by 6 Government support 7 0.718 "Haghighi, et al, 2008". Data analysis (hypotheses test) The hypotheses 2-6 have been studied and tested based on There are four basic stages for evaluating the research hypotheses as follows: 1) codifying the statistic assumptions: As the Likert fivechoice spectrum has been applied for testing the hypotheses, it can be noted that if the score's mean for given replies to each question is more than three (3) in this research, so the studied variable will influence on the question and vice versa. As a result, we can formulate the statistics assumptions for all of hypotheses as follows: H0: μ≤ 3 H1: μ > 3 2) Calculation of test statistic: The group's standard deviation in this research is indefinite. However, because the sample's content is more than 30 based on the "central limit" theorem, it can be noted that it has a normal estimation. (Azar, Moemeni, 2004). The statistic formula is as follows: t= x-μ / s/√n 3) Determining the critical amount: As the present research has a test with one rightmost sequence, the critical amount will be extractable by using the related tables. 4) Comparison and decision-making: Decision is made by comparing the critical amount with the test's statistic. So, if the statistic of test is set in H0 range, the "H0" hypothesis will be confirmed. Likewise, the H1 hypothesis will be accepted if this statistic is set in H1 range. The results to be drawn in statistic test of the research hypotheses are represented in table 3. the first hypothesis as follows in order to avoid from extending the material. The results have been represented in Table 5. "Table 5 The statistic output of SPSS software for one-sample T-test in hypotheses 2-6" x2 x3 x4 x5 x6 T df 38.550 25.579 44.118 38.261 34.650 260 260 260 260 260 One-Sample Test Test Value = 3 95% Confidence Interval Sig. Mean of the Difference (2-tailed) Difference Lower Upper 1.1583 .000 1.10201 1.0457 .9594 .000 .89080 .8222 1.2142 .000 1.16236 1.1105 1.2287 .000 1.16858 1.1084 1.1494 .000 1.08758 1.08758 Each of effective factors has been studied by using the binomial test in order to certify and confirm the accuracy of T-test results that the statistic hypothesis in binomial test is as follows: H0: p ≤ 0.6 H1: p > 0.6 The cause of comparison is its proportion with 0.6 that the ratio of three-choice to five-choice equals 0.6 (3/5). As this ratio increases and gets more than 0.6, the effectiveness of the causes increases, too. (Javanmard , Soltanzadeh, 2009). The results obtained from binomial test in each hypothesis will be described in Table 6. Table 3 Statistic test of hypotheses The result Critica test's statistic of test l value suported 1.96 th24.083 suported 1.96 38.550 suported 1.96 25.579 suported 1.96 44.118 Supported 1.96 38.261 suported 1.96 34.65 Sample Research hypotheses 261 261 261 261 261 261 Export stimuli influence on company's export performance Competitive advantage affects on company's export performance. Export commitment influences on company's export performance. Export's marketing strategy affect on company's export performance. Barrier to Export influence on company's export operation. Government's support affects on company's export performance. "Table 4 The statistic output of SPSS software for one-sample T-test in first hypothesis" One-sample test T x1 24.083 df 260 One-Sample Test Test Value = 3 95% Confidence Interval of the Difference Sig. (2-tailed) Mean Difference Lower Upper .000 .96456 .8857 1.0434 468 | P a g e International Journal of Current Life Sciences - Vol. 5, Issue, 3, pp, 464-470,March, 2015 Priority and internal characteristics. As the Table 8 shows, "Table 6 The statistic results of binomial test for the standard of decision (Sig) is less than 0.05 error. Thus, hypotheses 1-6 (x1- x6)" H0 is rejected, i.e, the priorities isn't equal and H1 is Observed Test Asymp. Sig. approved. So, there is a difference between priorities. The Category N Prop. Prop. (1-tailed) priority of each effective factor on export performance is a,b Group 1 <= 3 28 .1 .6 .000 determined in automobile industry regarding the ranking x1 Group 2 >3 233 .9 of SPSS software's output in Table 8. Therefore, export's Total 261 1.0 Group 1 <= 3 3 .0 .6 .000a,b issues and problems and export commitment have the x2 Group 2 >3 258 1.0 highest and lowest priority with 1 and 6 score, Total 261 1.0 respectively among six variables. a,b Group 1 <= 3 19 .1 .6 .000 x3 Group 2 >3 242 .9 Total 261 1.0 Group 1 <= 3 5 .0 .6 .000a,b x4 Group 2 >3 256 1.0 Total 261 1.0 Group 1 <= 3 8 .0 .6 .000a,b x5 Group 2 >3 253 1.0 Total 261 1.0 Group 1 <= 3 3 .0 .6 .000a,b x6 Group 2 >3 258 1.0 Total 261 1.0 a. Alternative hypothesis states that the proportion of cases in the first group < .6. b. Based on Z Approximation. As we describe these results based on the above Table, we find that the standard of decision equals Sig.(2-tailed)= 0.000 and it's less than α= 0.05 (Sig ˂α). Therefore, H0 is rejected in all hypotheses and it indicates the effect of above-mentioned causes on export performance. Conclusion and suggestions The presented suggestions in this section are as follows regarding the results obtained from hypotheses test. Section 1: export stimuli: It's recommended that we can improve the export performance regarding the export stimuli such as surplus production, economic profit acquired by goods' export to abroad and also by considering the export interesting incentives and solving the limited barrier in the target country. Section 2: competitive advantage: As the Table shows, the results obtained from "binomial test" exactly confirm the results in "one-sample T-test". The foreign marketing information system is planed and performed in order to create the competitive advantage and increase the needed information. Moreover, the available technologies are updated in materials' production and some methods are outlined for new production and distinct goods by using raw materials with high quality. Friedman ranking test Section 3: Export commitment: Variables' ranking According to the results and findings, it's suggested that we not only must create an independent export unit but also we have to codify the appropriate marketing for providing the target market's needs and planning its own export activities. That way, company's export performance will be improved towards increasing export and establishing export commitment in all levels of organization. Friedman test has been applied for this research variables' ranking. H0 : the priority of effective causes on company's export performance is equal. H1 : At least, the relationship between two variables of effective causes on export performance is different. The output of SPSS software will be described in Tables 7 and 8 for Friedman test. Table 7 "The output of SPSS software for Friedman test" Ranks Export stimuli Export stimuli Competitive Advantage Export Commitment Export Marketing Strategy Barrier to export Mean Rank 3.24 3.66 2.71 3.82 4.02 3.55 Table 8 "The output of SPSS software for Friedman test" Test Statistics a Test Statisticsa N 261 Chi-square 83.483 Df 5 Asymp. Sig. 0.000 a. Friedman Test At first, we study the null hypothesis (H0) test for giving Section 4: Export Marketing Strategic capobilites: This research shows that the high export performance can be acquired by commitment to performing the adaptive marketing strategies. Export marketing strategies' adaptation is similar to the conformity of export productions with foreign customers' preferences and it allows the exporter not only to meet the foreign customers' needs, but allows him to create the competitive situation in the market. Section 5: barrier to export: According to the results in Friedman test, export issues and problems have the highest effect on company's export performance and because these problems can be official, processing, communicational, legal or informative problems, so it's necessary to solve them by studying and assaying their basic identification. Section 6: Government support: This research highlights the government's vital role for simplifying the companies' performance in export markets. Thus, government can increase the power of this 469 | P a g e International Journal of Current Life Sciences - Vol. 5, Issue, 3, pp, 464-470,March, 2015 industry's export performance by enjoying the long-term 11. "Tavakkoli, Ahmad; Dehqani Sanij, Jalal; (2010), aims and the relative consistency about policies and "Studying the effective parameters on developing procedures and by paying the tax exemption for exporters textile industry's export. 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