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1_Nistorescu

1_Nistorescu

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Published by Anaam Shafique Rana

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Published by: Anaam Shafique Rana on Dec 03, 2011
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STRATEGIC APPROACHES WITH EFFECTS ONCOMPETITIVENESS AND PROFITABILITY OF TEXTILEMARKET IN IRAQ
Lecturer PhD Thamir Hadi Abod AL-GENABI
Babylon Univesity, Irak 
Professor PhD Tudor NISTORESCUAssociate Professor PhD Sorina GÎRBOVEANU
University of Craiova 
 Abstract:This article contains the results of the research aimed at understanding theeffects of the market strategies the textile organizations follow to increase profitability, considering that this sector is a pillar of the national economy. Inthis respect, 7 hypotheses are stated and verified. This research is anattempt to know how to face competition in this industry.Key words: strategic management, competitive market strategy, offensivestrategy, defensive strategy, rational strategy, competitiveness, profitability 
Introduction
Textiles are one of the longestserving active industries in Iraqi society,having the potential to be turned aroundthrough private sector investment andleasing strategies. A country keeping itstraditional costumes, a reflection of Iraqitechnical skills, aesthetic and politicalideals, moral standards, and religiousvalues, Iraq fights to revigorate its textileindustry, not only for the sake of themembers of Iraqi society, deeplyimmersed in Islamic fundamentalism,not for the traditional outfits reflectingtheir ideals and values, but for thecountry’s circumstantial prosperity.To meet the objective of theresearch, we found it necessary toexplore first of all the theoreticalfoundations of the strategicmanagement process, the marketstrategies, the market segmentation, theconcepts of competitiveness andprofitability, their methods of measurement, their determinants andthe impact that competitive marketstrategies have on the competitivenessand profitability of companies, theresearch focusing towards the end onthe implementation of the offensive,defensive and rational strategies by thetextile companies in Iraq, interferenceand constraints in their implementations, their impact on thereal economy and particularly thechallenges that company managers willhave to face in the future in terms of adopting market strategies adapted totheir company profile, to encouragegrowth and increase profitability.The problem that this researchfaces is that textile industry in Iraq lacksavailability of a clear vision about thesuitable market strategies that arenecessary for organizations to achievetheir aims; among these aims is toincrease profitability and to determinehow a lack of capital impedes on themarket strategies of the textilecompanies in Iraq.
 
 
166
Reference studies, researchmethods and models in thestrategic approach of Irak’s textilemarket
Previous Reference Studies 
 
The investigation involved a reviewof previous reference studies whichtried to assess whether marketstrategies have an effect on firmprofitability, dealing with the relationbetween market share and a group of factors and objectives like the averageinvestment returns, performance andcompany orientation towards the marketplace. Due to the lack of an availablemodel on how market strategies affectthe profitability of companies, acomprehensive literature search provedto be necessary. Initially, it wasunderlined that an important factor indetermining the profit position of anycompany is its ability to increase marketshare. Gaining significant sharerequires careful planning, thoughtful,well-executed market strategies, andspecific account-by-account tacticalplans. Therefore, there is a directrelationship between strategic planningand profit (Slade, M., 2004). Later researches showed the positivecorrelation between market share andreturn on investment (the relationshipbetween profit and investment),showing why a high market share isprofitable, listing as possibleexplanations: the economies of scale,the market power and the quality of management (Thamir Hadi, Al-Janabi,2000). Recent studies show therelationship between market orientationand performance and the important roleof implementation on strategicperformance, respectively the influenceof medium level managers, heavilyinvolved in implementing strategies(Martin, J. A.; K. M. Eisenhardt, 2004).The most influential developmentin strategic management wasconsidering the market share as keyfactor of profitability.Two causalexplanations are usually offered for theobserved link between market shareand profitability. First are the relatedeffects of the experience curve andeconomies of scale. Throughcumulative experience, tasks can beaccomplished more efficiently byimproving methods and procedures or by simple repetition. The desire toachieve cumulative experience effectscan foster capital investment inoperations and product redesign effortsto reduce costs. Scale economies canbe achieved by larger sharebusinesses, as plant and equipmentinvestment and expenses such asmarketing and R&D can be spread over more units (Laurie L. Donald, 2001).
The Research Motivation 
 
The part referring to the researchmotivation tackles aspects such as theimportance of the study, its mainobjectives, to drafting a conceptualmodel to follow, and finishing with thestatement of the hypotheses weproposed to demonstrate.The problems that this researchraise can be stated as follows:insufficient attention is paid to offensive,defensive and rational strategies, andtheir role in achieving the textilemanufacturing companies’ aims (ScottW. Richard, Davis F. Gerald, 2007);firms operating in the textile industry donot give priority to increasing profitabilityas a strategic objective, by supportingthe company on he market; neither inIraq nor in the Arab world in general,there haven’t been conducted anystudies trying to demonstrate the role of market strategies and their directinfluence on the objectives of textileindustry firms or to determine therelationship between market strategiesand profitability on the textile market inIraq (
BTI 2010 — Iraq Country Report.
Bertelsmann Stiftung, 2009).The study aims to investigate theinfluence of general market strategies toassess the profitability of companies
 
 
167
operating in this sector. Hence, theimportance of the research is attachedto: the issue of general marketstrategies influence in specifying theprofitability is one of the most importantsubjects in textile industries sector; thestudy is the first one in the researchfield in Iraq; the study included all thefactors related to general marketstrategies that affect the achievement of the company objectives.Starting from the problem stated,the research objectives are as follows:the recognition of the extent in whichgeneral market strategies influence theprofitability size of businesses, whichhas a big role in achieving the companyobjectives; to ascertain whether managers of textile businesses in Iraqadopt market strategies that maximizetheir profitability and hence ownerswealth; to determine how a lack of capital impedes on the marketstrategies of the textile companies inIraq.Problem analysis and researchobjectives led us to a hypotheticalmodel consisting of three marketstrategies (offensive, defensive andrational strategies), which act asinfluence factors on companies’profitability.Based on the hypothetical model,the main hypotheses that arise from theproblem already stated, and whichsimultaneously helps to achieve theobjective of the study, are formulatedlike this:H
1
:
There is a relationship betweenthe offensive strategy followed by thecompany and profitability 
H
2
:
There is a relationship betweenthe defensive strategy followed by thecompany and profitability 
 H
3
:
There is a relationship betweenthe rational strategy followed by thecompany and profitability 
 H
4
:
There are differences among the textile sector companies withrespect to the effect of the researchvariables
 H
5
:
Offensive strategies have alimiting effect on the profitability of textile industry companies, which isdetermined by the market share
 H
6
:
Defensive strategies have alimiting effect on the profitability of textile industry companies, which isdetermined by the market share
 H
7
:
Rational strategies have alimiting effect on the profitability of textile industry companies, which isdetermined by the market share
Research Methodology 
 
As for the research methodology,we developed the following issues: theanalysis of Iraq industrial textile sector in the context of the national businessenvironment; the data collectioninstruments; the population delimitationprocess and establishment of thesample; the validity and reliability of thescale; measurable indicators used in thestudy; assumptions and limitationsregarding the research.We considered it absolutelynecessary to begin the research with acomplete profile of the textile industry inIraq, integrated in the national businesscontext. Textile sector is an establishedsector in Iraq producing apparel,medical cotton, handmade rugs,machine-made rugs, leather works, andfabrics. Although it comprises 31production facilities, this sector beneficiated from a bad managementand outdated equipment, up to now, buthas a real potential for recovery in caseof identification of adequate sources of funding ((
Iraq, Business ForecastReport. Includes 10-year Forecast to2019
,
www.businessmonitor.com).Because of frequent interruptions insupply of electricity, the productioncapacities are not reached. Leather workers employed in three factoriesconducted last year one of the longeststrike in the history of the Iraqi workers’movement. The workers made manydemands over the course of their strike:the repeal of 
self-funding
, seeing it as

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