44
that favourable regulations and consumer stability can enhance firm growth (O'Cass &
Weerawardena, 2010). Hashem and Irshaidat (2014:104) submit that “the political-legal environment is a combination of interrelated elements that influence internal commerce as a whole, counting exports.” Furthermore, some researchers (Keim & Hillman, 2008; Khattab, Yatama, Khattab & Aldehayyat, 2012) have indicated that political-legal environments for example political ideology have an impact on the export performance of a business. For instance, governmental foreign policy can have an impact on trade, especially if there are import tariffs levied on exports; these determine the amount of duty paid on goods purchased from a foreign country (Pride & Ferrel, 2010; Jalali, 2012). These leading researchers argue that import tariffs act as an impediment to international trade as they result in price increases of the product purchased and this in turn affects export performance. Furthermore, quotas and embargoes also act as nontariff constraints which affect export performance through restricting quantities of imported products and the trading of particular products in a certain category respectively (Pride & Ferrel, 2010). In line with the aforementioned, Czinkota and Ronkainen, (2010:n.d) argue that “tax regulations, tax rates, government stability, labour legislation or political interference in the form of bureaucracy and corruption are among the political factors also inhibiting export performance.” Similarly, Khattab et al. (2012) and Sorokina (2012) highlight that “political volatility and negative public attitudes against the exporting country or against the product, have a negative bearing on the export performance of a firm, therefore, they must be considered when formulating a strategy of a firm.” For example, “boycotts are observed to be a vital element that impedes international trade, as institutions refuse to conduct business with international organizations due to certain political reasons” (Hashem & Irshaidat, 2014:106). It becomes imperative that, “managers should constantly monitor political changes and governmental regulations to land at suitable decisions” (Hashem & Irshaidat, 2014:105).
45
Zimbabwe.” Gem (2012) affirms that it is very important for managers to consider a comprehensive scanning of the external environment so as to factor in threats and opportunities posed by the external environment before crafting a marketing strategy for an organisation. Chichoni (2014) asserts that SMEs should know which niche markets to target and to provide product solutions that are difficult to copy. Smit (2010) showed that, SMEs which export in Africa have failed to be successful because they did not consider the importance of marketing.
2.8.1. Niche focus strategy
The majority of SMEs in Zimbabwe have adopted a „niche focus‟ export marketing strategy (Chichoni, 2014). According to Yu and Shen (2011:5) “International niche market occurs where firms become a strong force in a narrow specialized one or two segments across a number of different countries markets.” In the same vein, the researchers highlight that “the segment must be rather small so specialization will not attract the attention of large competitors.” Chichoni (2014) argues that niche strategy is an effective approach because it harnesses the SMEs ability to develop strategic advantages on the basis of flexibility and specialisation. Cooper, Ellram and Poporich (2011:17) confirm that “a „niche focus‟ strategy has helped SMEs to survive from direct competition triggered by large foreign firms.” Yu and Shen (2011:4) have also supported this idea and state that “SMEs should specialize in serving specific niches in foreign markets that do not face the immediate threat of large competitors from developed countries.” Mundum, Alessandro and Stockhett (2000) argue that, although a niche strategy may seem to be appropriate for firms selling their products in international markets, it is also true that, niche focusing may not be an appropriate strategy especially if there is a global firm existing in the same niche, as it may possibly counterbalance poor performances in one particular market, with better performances somewhere else.
2.8.2. SME industrial export clusters
Semnani, Dadfar and Brege (2015:143) highlight that “a cluster is the concentration of an array of interconnected institutions or companies,” and they argue that “clusters are usually extended forward to distribution channels and customers or sideward with complementary products‟ manufacturers and also with companies operating in industries that provide related
46
technologies, skills or have similar inputs with cluster.” Mahuni and Bonga (2016:31) opine that “meaningful clusters activities requires collaboration with various stakeholders” so that organisations can benefit from each other. Figure 2.2 below depicts the major players who are crucial for the success of an industrial cluster programme.
Figure 2.2: Key cluster stakeholders
Source: Adapted from Mahuni & Bonga (2016:31)
As depicted in Figure 2.2, stakeholders such as government, universities, vocational centres have to come together to produce produce the end which is the cluster. Thus, Mahuni and Bonga (2016:31) argue that “the cluster concept is a broader concept requiring bringing in of diverse skills to feed into the overall success of the programme.” To overcome the export marketing challenges resulting from a lack of skills, resources, product knowledge and logistics of international markets, exporting SMEs may capitalise on investing in export clusters in conjunction with their industry competitors (UNCTAD, 2012). Clusters are capable of enhancing productivity, and increasing the rate of innovation and competitive performance of SMEs (UNCTAD, 2012). It is argued that “a single SME in developing countries cannot create competitive advantage alone on the global market, even by increasing efficiency in internal operation but requires the assistance of other firms through export clusters” (Ncube, 2012:11). Furthermore, the Ncube (2012) emphasizes that every SME is already part of a cluster of activities along the global value chain and that the motive for the adoption of clusters as stated in the Zimbabwean Industrial
47
Policy (2012–2016) are the underlying advantages such as economies of scale, global competitiveness, lower production and transaction costs, development of comparative advantages and distinctive competencies.
According to Chugan and Singh (2015:92), “clustering delivers superior economic advantages via help in exchange of knowledge, sharing of skills and technology, and leads to innovation by the firms.” Indistinguishably, these researchers affirm that “firms operating within industrial clusters have higher potential to compete effectively in international markets and are able to achieve superior export performance” (Chugan & Singh, 2015:92).
The adoption of export clusters as an export marketing strategy by SMEs in Zimbabwe is advantageous in that, “the government already has vowed to invest in these strategies through training and facilitating preferential access to trade finances” (Ncube 2012:12). Hamisi (2011) states that, if the idea of export clusters is adopted well and capitalised on, it can lead to efficiency-enhancement and collaboration amongst SMEs exporters. Furthermore, Chugan and Singh (2015:94) highlight that, “SME clusters with higher level of vulnerabilities can develop synergetic associations with each other and contribute to their growth as well as that of the cluster without the apprehension of being taken over by larger firms.” Similarly, Semnani et al. (2015:138) emphasize that “export clusters can have a positive contribution to the growth of export in companies, especially the SMEs as it enables them to gain better and faster access to foreign market information.” A different thought-related to export clusters is that “export clusters sometimes fail to transparently communicate their objectives to their members thus leaving members with vague expectations” (Semnani et al., 2015:143).
Notwithstanding the positive views espoused above, some scholars have however relaxed the importance of export clusters. In this regard, evidence is found inter alia, in Scheer and von Zallinger (2007); Tambunan and Hendrawan (2004); Venkateswara Rao (2002). However, this does not rule out the importance of SME export clusters, since many scholars have provided evidence in support of such an export marketing strategy, notably, Chugan and Singh (2015); Semnani et al. (2015); Chingwaru and Jakata (2015); Yu and Shen (2011).
48