Factors Affecting the Selection of Strategies for Entering the Foreign Market of Medicinal Plants

مجله اقتصاد و توسعه کشاورزی

Article 5, Volume 32, Issue 2 - Serial Number 40, July 2018, Pages 185-197   

Document Type: Research Article

DOI: 10.22067/jead2.v32i2.72980

Authors

S.H. Mohammadzadeh; A. Karbasi^* ; H. Mohammadi

Ferdowsi university of Mashhad

Abstract

Introduction: Reducing dependence of the Iranian economy on crude oil exports and turning towards multi-product economy in export should change export policies to export non-oil products including export of agricultural products. Medicinal plants are one of the important items of agricultural exports that in recent years, despite an increase in acreage and production, exports did not grow up with it. Iran's share of the world market for medicinal plants is less than 1%. Khorasan Razavi Province is one of the leading provinces in the production and trading of medicinal plants. Determining the type of strategy to enter the foreign markets according to market conditions is one of the most important factors affecting the development of exports, especially in the agricultural sector. The aim of this study is to investigate the factors affecting the choice of strategy to enter the foreign markets of medicinal plants of exporting companies in Khorasan Razavi province.
Materials and Methods: Khorasan Razavi province is one of the leading provinces in the production and export of medicinal plants. Saffron, Cumin, Thyme and Damask rose are among the most important export items in Khorasan Razavi province. There are 85 active companies in the field of exporting medicinal plants in Khersan Razavi province. Sampling method has been census. After removal of questionnaires and information, 64 questionnaires with complete information were examined. In order to investigate the factors affecting the selection of three types of strategies for entering the foreign markets, medicinal herbs for the period of 2016-2011 were used for the econometric model of multi nomial logit Panel model. The use of the multinomial logit panel model is necessary for the data that is composed of the time series and the sectional, as well as its dependent variable having classes and is not arranged.
Results and Discussion: Before using the model, the test was performed by Hausman test and the results of this test showed that the fixed effect pattern was chosen as the superior model. Export risks include company size, marketing mix, sanctions, export experience of companies in international markets, share of research and development costs in marketing costs, location attraction index including country development target, ease of investment in target country, economic stability. The goal of the country, such as inflation, employment rate, domestic production, labor force, diversification index of export destinations, and the availability of a credible brand, have been introduced from other factors affecting the choice of entry strategy in the study. In this study, after analyzing the static data and the linearity test, the estimated logit model for panel data was employed. The results showed that R & D variables, valid brand and marketing mix increase the probability of choosing an export strategy compared to other two types of foreign market entry strategy. Other variables affecting the model increase the probability of choosing non-export and interstitial strategies for the export strategy. The final effects of explanatory variables were calculated in three modes of change in mean, change in deviation and change of variable from minimum to maximum. The final effect states that if, for example, the size of a firm's size variable changes one unit of its average, the chances of choosing an export strategy would be reduced by 83.1 percent, and the selection of non-exporting and interstitial strategies increased by 31.5 percent and 51.4 percent, respectively. Find out If this variable changes a unit of its standard deviation, the choice of the export strategy will decrease by 76.2%, and the selection of the non-exporting and interstitial strategy will increase by 21.7% and 32.7% respectively. If this variable changes from at least its maximum, the chances of choosing an export strategy will decrease by as much as 35% and the probability of choosing two non-exporting and interstitial strategies will increase by 11.7% and 27.4% respectively. The results of theis study showed that change in two variables of international sanctions and marketing mix increases the chances of choosing export strategy than two other strategies.
Conclusions: Based on the results of this study, it is suggested that exporting companies of medicinal plants of the province with other companies wishing to enter the foreign markets make it necessary to examine a market from different perspectives and according to different criteria so they can decide how to enter the market. The gathering of field information during the research showed the type of company managers' attention to various factors can also is the basis for choosing any kind of strategy. Managers who prefer domestic conditions they are looking for a direct export strategy.

Keywords

export; Medicinal herbs; Strategy

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