INTRODUCTION
Non market strategies are used by organizations around the world to form or gain soft power and to achieve competitive advantage in the industry. The Non-market strategy can by defined as the way to pursue the goals of an organization in the best strategic possible manner. Non-market strategy is the use of the political and the social environment to capitalise on the opportunities from these environments (Baron, 1998, p. 2-3). The political and the social factors of an environment are the major factors which determine the accomplishment of the strategic goal which the company aims at achieving.
Traditionally, non-market strategies have been used by public institutions like courts, legislature and other regulatory authorities. However with the passage of time, organizations have been facing different types of challenges particularly from the social and political environment. To cope up with such challenges, organizations have realized that they need to use non-market strategies as well in order to improve their reputation, improve their image and for several other reasons (Baron, and Diermeier, 2007, p. 540). Globalisation has changed how businesses perform over the years. Globally, competition has become intense and this has forced organisations to change their strategies and change the way how they manage their business. So, such changes have also forced businesses to move away from the traditional ways of creating the competitive advantage. Therefore this has further given rise to non-market strategies. Organizations formulate non-market strategies that also include forming groups with competitors to maintain a sustainable position in the industry and to gain competitive advantage (Bach and Allen, 2010, p. 42 - 43). Considering the importance of non-market strategies in the business environment, this research explores the use and effectiveness of such strategies in the Middle East.
RESEARCH QUESTIONS
The research questions of this research study have been discussed below:
- What is the effectiveness of the Non-market Strategy in creating a social impact on the society?
- How effectively firms in the market of Middle East use non-market strategies?
- How is the use of the Non-market Strategy beneficial in developing a competitive edge for companies located in the Middle East?
OBJECTIVES OF THE RESEARCH study
The objectives of this research study are:
LITERATURE REVIEW
Globalization has changed the overall business environment. Businesses now need to give a lot more importance to its external environment which includes socio-cultural factors, political factors, technological factors, environmental factors, economical factors and legal factors(Qin and Wang, 2008, p. 12).Businesses that are able to manage their external environment are more likely to be successful. Bach and Allen (2010, p. 41) have said that businesses that are able formulate strategies to manage their social, political and environmental environment and issues that emerge from these environment would gain sustained competitive advantage.
In today’s business environment, firms need to integrate both the market strategy and the non-market strategy in order to be successful. By appropriately integrating these two strategies, firms are able to capitalize on the opportunities and gain maximum advantage (Baron, 2011, p. 1). The objective of market strategy is to maximize the performance of the firm and to emphasize on not only identifying opportunities but to formulate strategies in order to capitalize these identified opportunities and all this would result in gaining competitive advantage (Baron, 1995, p. 47 – 48). On the other hand, the core objective of non-market strategies is the same which is to increase the profits of the firmand to gain competitive advantage but firms get engaged or involved in different public processes in non-market strategies and the result of such involvement is the resolution of non-market issues (Baron, 1998, p. 1-2).
Moreover, Baron (1998, p. 2-3) has further identified that non-market strategies can also result in giving advantage to the overall industry and therefore all the firms operating in the same industry can gain benefits from the non-market strategy adapted by any one of the firms. So, it is important for firms to identify and understand the results from these strategies as they can negatively influence the firm and its operations at times as it will also be beneficial for other companies in the industry.
According to Baron (1998, p. 4) one of the most important concerns for firms that are formulating non-marketing strategies is about the appropriateness of influencing the public decisions. Firms that face less competition can better manipulate the market and they can use their power to restrict the output in order to gain higher price of the products. However, if the level of competition is high, then such strategies can give advantage to the competitors.
Organizations work hard to obtain competitive edge using non-market strategies. Non-market strategies are helpful in building competitive advantage which the company gains over the passage of time. Therefore these strategies are focused to achieve the objectives in the long run rather than in the short run (Aggarwal, 2001, p. 105 - 106). However, Baron (1998, p. 2 - 3) have said that market strategies can be focused on short term as well as long term objectives.
According to Bach and Allen (2010, p. 42 - 43) businesses have to face issues from social and political environment. Therefore it is imperative that they formulate strategies accordingly to meet these issues and challenges. Non-market strategies formulated by businesses recognize that businesses are also social and political beings and they are not only the economic agents that make money (Bach and Allen, 2010, p. 42 - 43).
Many organizations use non-market strategies to focus on their long term objectives. Such strategies are not only created by the firm, but socio-economic changes play an important role in such strategies (Qin and Wang, 2008, p. 12). Therefore it is critical for firms to continuously analyse their social and political environment as well because these environment can influence the operations and performance of the firm.
According to Yaziji (2011, p. 4), businesses are more connected and concerned with the society today than they used to be 20 years back. Therefore this increased concern and connection have result in higher expectations from the businesses and businesses today are expected to return back to the society. According to Fairbrass, O’Riordan, &Mirza, (2005, p. 4) businesses need to give back something to the society because they are making profits from the society. Yaziji (2011, p.4) believes that businesses cannot ignore the non-market that is surrounding their operations and therefore they not only need to consider these forces while formulating strategies but they need to be more equipped and prepared to face challenges from non-market stakeholders. Businesses that have formulated proper strategies to face such challenges and issues would be able to gain competitive advantage. However, before formulating such non-market strategies, it is important for the managers to understand and recognise how political and social factors can influence the business.Yaziji (2011, p.4) has further said that managers that are able to better understand the non-market dynamics would allow their businesses to prosper and such businesses can gain competitive advantage.
There have been different non-market strategies that have been used by firms and among these techniques and strategies, corporate social responsibility is one of the most important one (Baron, and Diermeier, 2007, p. 540). Today, businesses have realised that need to take responsibility to improve the well-being of the society and for this reason, increasing number of firms have been investing in projects that portray them as socially responsible. Corporate social responsibility is therefore one of the widely used non-market strategy by firms around the world.The Non-market strategies of business also include the corporate political strategies of the firms. This strengthens the political strength of the firms and also increases the influence of the company. In the same way the Corporate Social Responsibility (CSR) of the company increases the social responsiveness of the individuals and uplifts the society. This is an act of goodness which uplifts the society and also increases the value of the company (Aggarwal, 2001, p. 96 - 98).
Research methodology
In order to conduct the research, first the research strategy has been defined by the researcher. Research strategy will act as a roadmap in conducting the overall research. The research study aims to analyse the use and effectiveness of non-market strategies in the market of Middle East. The research aims to explore and describe the impact of the non-market strategies on the performance of the organisations in Middle East, so the research purpose in this case is ‘descripto-explanatory’ (Saunders, Thornhill, & Lewis, 2009, p.140). The concept of ‘descripto-explanatory’ has been emerged by combining the descriptive and explanatory research. The purpose or aim of the descriptive research is to present and explain the prevalent situation or condition which is being investigated in order to provide a detailed overview of the real scenario or picture. In reference to this research study, the researcher will use the descriptive research in order to describe and analyse the current non-market practices like corporate political strategy and CSR, adopted by the companies located in Middle East. On the other hand, the explanatory or explorative research tends to investigate and explore the relationship between the variables under investigation. In reference to this research study, the researcher will use the explorative research in order to investigate the impact of the non-market strategies like corporate political strategy and CSR on the financial performance of the companies.For this the financial profits of the companies will be used.
Hence the dependent variable is the performance of the companies reflected by the financial profits. The two independent variables in this research project will be; CSR and corporate political strategy.
At the same time, there will be two intervening variables which can impact the relationship of the dependent and independent variables, namely, competition in the industry and socio economic environment.
The researcher will adopt scientific research strategy and approach in order to accomplish the research objectives of the research study. It is important to acknowledge here that scientific research strategy is directly related with deduction analysis and is based on the data and information collected through different means and instruments. As the scientific research strategy is also related with the positivism, hence the research study will be developed on the ground of positivism research philosophy. The positivist approach or research philosophy involves the definition of the current situation, elaboration of different theories, and the application of these theories on the data collected in order to come with final results and findings (Jankowicz, 2005, p. 111). In reference to this research study, the researcher will first collect the information through different research instruments like questionnaire and interview survey and then will analyse the data on the basis of the already established theories in order to investigate the impact of the non market strategies in Middle East. For this purpose, the researcher will be collecting data from primary as well as from secondary sources. Primary data is the data that the researcher collects particular for research study (Kumar, 2011, p. 56). However the secondary data is the data that has already been collected and published (Glass, 1976, p. 3). Collection of primary as well as secondary data helps in comparing the findings of the research study with the actual practices.
The research study will be a mix method research as it will involve both: qualitative and quantitative research. For collecting the qualitative data the researcher will use interviews and focus group. On the other hand for quantitative data the researcher will use questionnaires. The sample size for the questionnaires will be 100. At the same time the researcher will conduct two focus group discussion sessions with 5 participants in each focus group. The respondents of the research study will be different employees at managerial level in different organizations in Middle East. This would allow the researcher in collecting information directly about how firms in Middle East use non-market strategies and how effectively they are using non-market strategies. In addition to this, the researcher will be collecting secondary data from a number of sources such as journal articles, published papers, books, newspapers and other already published and reliable sources.
The questionnaire will be developed keeping in mind the research questions and objectives and will be pre tested for reliability and validity.
Analytical technique
The researcher will be analyzingthe collected data using Microsoft Excel. Primary data will be collected using questionnaire and interviews, therefore data from questionnaires will be accumulated and presented in the form of graphs and tables. Findings from the primary data will be compared and analysed with the secondary data. Along with this the researcher will be using some statistical tests like regression analysis and correlation analysis in order to generate thorough and comprehensive research findings.For this purpose, the researcher will code the data generated through questionnaires and will assign different weight-age to questions on the basis of their relevance with the variables under investigation. This in turn will result in the generation of final values of the variables which will be then regressed against the financial profits of the companies. With the help of the regression and correlation analysis the researcher will be able to explore the cause and effect relationship among the non-market strategies like corporate political strategy and CSR and the financial profits of the companies.
DIFFICULTIES
Researcher can face different challenges and difficulties in conducting this research. Some of the most important challenges and difficulties that may arise would be to have access to different firms in the Middle East region. Moreover, as the researcher aims to collect data from managers and this may be a challenging task because managers would have to take out some time from their busy schedule to fill questionnaires and give interviews. Along with this, it will be difficult to generate measurable values for the variables under investigation due to their qualitative nature. The researcher will also have to be considerate about ensuring that the private information and data of the target respondents are not shared with anyone.
TIME SCALE
The research study will be completed in a time period of 13 weeks.
References
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Baron, D. P. (1995). Integrated Strategy. California management review, vol. 37, no. 2, pp. 47.
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Baron, D. P. (2001). Theories of Strategic Nonmarket Participation: Majority‐Rule and Executive Institutions. Journal of Economics & Management Strategy, vol. 10, no. 1, pp. 47-89.
Baron, D. P., &Diermeier, D. (2007). Strategic activism and nonmarket strategy. Journal of Economics & Management Strategy, vol. 16, no. 3, pp. 599-634.
Fairbrass, J., O’Riordan, L., &Mirza, H. (2005). Corporate Social Responsibility: Differing Definitions and Practices?. In Business Strategy and the Environment Conference: Corporate Social Responsibility Track. Available from http://cosmic.rrz.uni-hamburg.de/webcat/hwwa/edok06/f10303g/WP06-05.pdf [Accessed 7 May 2013]
Glass, G. V. (1976). Primary, secondary, and meta-analysis of research. Educational researcher, vol. 5, no. 10, pp. 3-8.
Jankowicz, A.(2005).Business Research Projects.London: Thomson Learning.
Kumar, R. (2011). Research methodology. New Dehli: APH publishing.
Qin, J., & Wang, Y. (2008). Nonmarket Strategy and Firms’ Strategic Change Evidence from the China Telecommunications Industry. International Journal of Business and Management, vol. 3, no. 5, pp. 12.
Saunders, M., Thornhill, A., & Lewis, P.(2009).Research Method for Business Students.London: Financial Times Prentice Hall.
Yaziji, M. (2011). Think Beyond The Market. IMD, Available from http://www.imd.org/research/challenges/upload/TC001-11-THINK-BEYOND-THE-MARKET.pdf [Accessed 7 May 2013]
