An exploration study to find important factors in market entrance : A case study of truck industry

Article history: Received May 12, 2013 Received in revised format 25 June 2013 Accepted 10 August 2013 Available online August 12 2013 This paper presents an empirical investigation to find important factors influencing market penetration in truck industry. The proposed study designs a questionnaire in Likert scale consists of 51 questions, distributes it among 300 people who worked for different truck industry related units and collects 262 filled ones. Cronbach alpha is calculated as 0.89. In addition, Kaiser-Meyer-Olkin Measure of Sampling Adequacy and Approx. Chi-Square are 0.845 and 3067.443, respectively. The study has implemented principal component analysis and the results have indicated that there were eight factors influencing entering truck making industry including adaptation strategies, new ideas, cost competitiveness, product capabilities, market characteristics, competition threats from external market environment and export accelerators. © 2013 Growing Science Ltd. All rights reserved.


Introduction
One of the most important issues on entering market activities is to find appropriate business product to enter (Javalgi et al., 2011).There are literally various research studies associated with market entrance.Shieh and Wu (2012), for instance, concentrated on equity-based entry mode choices adopted by multinational corporations (MNCs) in the Greater Chinese Economic Area (GCEA) for entering Vietnam as a new growing market.They reported that equity-based entry modes were significant when foreign direct investments (FDI) firms entering Vietnam originate from the GCEA, which includes Mainland China, Hong Kong, Taiwan, and Singapore.However, the interaction results indicated that industry did not have a moderating impact on the relationship between location and entry mode, whereas it was not found that industrial cluster was specific to any one location.The generalized model had implications for the theoretical and managerial perspectives of both the host and the home countries.Xie et al. (2011) adopted the "strategy tripod" perspective, which integrates resource-, industry-, and institution-based perspective to study foreign firms' strategic positioning (i.e.their choice of generalist or specialist strategy) in the U.S. host market.The findings of their study supported the major hypotheses, recommending that: (1) market concentration and foreign firms' heterogeneous resources influence foreign firms' strategic positioning; (2) institutional distance between host and home countries exerts confounding moderating influences on the relationship between firm resources and strategic positioning in the host market.Otto (2008) provided a system dynamics model as a decision help in assessing and communicating complex market entry strategies.Slangen and van Tulder (2009) investigated on two factors of culture and political issues on entry market and reported that cultural distance had no impact on entry mode choice and that political risk had the weakest influence of all aspects of governance quality.Czinkota et al. (2009) concentrated on developing, measuring, and empirically examining a framework of essential factors influencing international market entry mode choice of U.S. business schools by applying primary data from faculty and administrators of U.S. Master of Business Administration (MBA) schools.Chang et al. (2012) hypothesized that governance quality plays a contingent role on market entrance.Chen and Chang (2011) built a panel data set and made a dynamic probit analysis on the mode choice between wholly-owned subsidiaries and joint ventures.They reported that state dependence between current and past modes played an essential role in determining entry mode choice.Zhou (2007) investigated the impacts of entrepreneurial proclivity and foreign market knowledge on early internationalization. Rodríguez-Pinto et al. (2011) examined the role of market entry order as a moderator of the mediating effects of innovation speed and product quality on the MO-NP performance relationship.They reported that the performance of first-to-market products, early entrants, and late movers was associated with the specific implementation that firms make of its MO, whether it was developing high-quality products or accelerating innovation speed.Morschett et al. (2010) investigated the external antecedents of the choice of entry mode by metaanalyzing data from 72 independent primary studies.They concentrated on the decision between wholly owned subsidiaries and cooperative entry modes.They found a strong positive relationship between power distance as a cultural trait of the firm's home country and the propensity to establish a wholly owned subsidiary.Malhotra et al. (2011) performed a comparative analysis of the role of national culture on foreign market acquisitions by US firms and firms from emerging countries.Pehrsson discussed different strategy antecedents of modes of entry into foreign markets.Ellis (2007) investigated whether market distant could be serious problem for market entry or not in terms of penetrating into international market.Quer et al. (2007) provided new empirical evidence that cultural distance could reduce the likelihood of choosing equity entry modes, while firm profitability and internal financial funds availability favour the assumption of greater commitment in the international expansion process.

The proposed study
This paper presents an empirical investigation to find important factors influencing entering truck industry.The proposed study designs a questionnaire in Likert scale consists of 51 questions, distributes it among 300 people who worked for different business units and collects 262 filled ones.Cronbach alpha is calculated as 0.89.In addition, Kaiser-Meyer-Olkin Measure of Sampling Adequacy and Approx.Chi-Square are 0.845 and 3067.443,respectively.During the study, we have decided to remove six questions in order to make sure there is no strong correlation among questions and determinant is not equal to zero.Table 1 summarizes the results of our survey.Next, we need to extract important components from the study of this paper.Fig. 1 demonstrates the summary of Scree plot.As we can observe from the results of Fig. 1 and Table 1, there are 13 components with relative Eigenvalue of greater than one.We have computed the communalities with all 44 and Table 2 demonstrates the summary of our results.Finally, we have extracted eight factors out of 13 factors and they are explained in next section.

The results
In this section, we present details of our findings eight detected factors, which are summarized in Table 3 as follow, As we can observe from the results of Table 3, there are eight factors associated with the proposed study including firm activities, adaptability, new ideas, competitive price, product capabilities, competitive market, threats from foreign firms and market accelerators.

Discussion and conclusion
In this survey, we have performed an investigation on measuring the impact of various factors on market entrance in truck industry in Iran.The study has implemented principal component analysis and the results have indicated that there were eight factors influencing market entrance including, firm activities, adaptability, new ideas, competitive price, product capabilities, competitive market, threats from foreign firms and market accelerators.
In terms of firm activity, there are six sub-components including advertisement density, firm reputation, sales growth, research & development density and risk advertisement density is the most important sub-factor followed by firm reputation.The second factor, adaptability, consists of four factors including commitment to market, product quality, market deregulation and export.In this group commitment to market is the most influential factor.The third factor, new ideas, consists of five factors where new product development is the most important item.The fourth factor is associated with competitive price with four sub-components where price of product is the most important item.Product capabilities is the next item with four items and exclusive product is the most influential one.The other factors are playing essential role and must be considered for market entrance.

Fig. 1 .
Fig. 1.The summary of Scree plot Table 2The summary of communities

Table 1
The summary of principal component analysis

Table 2
The summary of communities

Table 3
The summary of factor analysis