THE PROCEEDINGS OF
5
th
INTERNATIONAL
STRATEGIC MANAGEMENT
CONFERENCE
Striking the Right Balance Between Existing Strategy and New
Opportunities with Special Emphasis on Turbulent Markets
July 2-4, 2009
5
th.
INTERNATIONAL STRATEGIC
MANAGEMENT CONFERENCE
“Striking the Right Balance Between Existing Strategy and New
Opportunities with Special Emphasis on Turbulent Markets
”
July 2-4, 2009
Stellenbosch, South Africa
Honorary Presidents
Ali AKDEMøR (Ph.D.)
Cuma BAYAT (Ph.D.)
Alinur BÜYÜKAKSOY (Ph.D.)
Russel BOTMAN (Ph.D.)
Chairman
Erol EREN (Ph.D.)
Co-Chair
Oya ERDøL (Ph.D.)
Ali AKDEMøR (Ph.D.)
Johan HOUGH (Ph.D.)
Typesetting
Mehtap ÖZùAHøN
ISBN
978-605-60771-0-4
Organizing Institutions
Beykent University
Gebze Institute of Technology
Canakkale Onsekiz Mart University
Stellenbosch University
Statements of facts or opinions appearing in Proceedings of the 5th International Strategic
Management Conference are solely those of the authors and do not imply endorsement by the Organization Committee or publisher
TABLE OF CONTENTS
CRISIS MANAGEMENT & GOVERNANCE
The Changing’s Of Share Price In The Financial Crisis: A Comparative Study For Auto Makers (EROL EREN,SERDAR ALNIPAK, METIN UYAR)
3
Global Economic Crisis Management From Strategic Management And Marketing Perspectives: The Case Of Textile Industry
(ESIN BARUTÇU, CELALETTIN SERINKAN, SÜLEYMAN BARUTÇU)
15
Nightmare Of Insurance Directors: Effects Of Global Crisis On Turkish Health Insurance
Business (AYÇA TÜKEL, ONUR YARAR, OöUZ ÖZYARAL)
23 Changes In Economy Policies After Global Financial Crisis And Their Effects on Developing
Countries : The Case Of Turkey( ENGIN ERDOöAN, MELIHA ENER)
33
Performance Measures Along The Relational Continuum In A Bilateral Governance Structure(QUAMRUL ISLAM)
41
The Forms Of The EU Governance And Construction Of The EU Borders (FILIZ COBAN) 49
Corporate Governance: Problems And Relationship Between Board Of Directors, The Chief Executive Officer, And Top Management Integration To European Banking Legislation (GÜRAN YAHYAOöLU)
55
STRATEGIC LEADERSHIP &
STRATEGIC ALLIANCES - AMBIDEXTERITY
Hosting Strategic Conversations: Some Alternative Approaches For Leaders (MARIUS UNGERER)
69
The Relationship Between The Strategic Influencing Skill And Intra-Organization Communication In Leadership And A Chain Store Application
(MEHMET TIKICI,SELMA KARATEPE,MEHMET DENIZ,SINEM GÜRAVùAR GÖKÇE)
83
Creativity For Gaining And Sustaining Competitive Advantage: The Role Of Leadership Styles (A Quantitative Research In Turkey’s Top 500 Industrial Enterprises In Iron And Steel, Automotive And Textile Industries)( F. OBEN ÜRÜ,UöUR YOZGAT)
93
The Effects Of Leadership Styles And Organizational Culture On Firm’s Innovativeness (ETHEM DUYGULU, EMIR ÖZEREN)
109
A Qualitative Study Of Key Success Factors For Multinational Corporations Operating In Sub- Saharan Africa (A.C. PARKER, J. HOUGH, E.W. NEULAND)
123
Strategic Alliances And The Impacts Of Star Alliance Network On Turkish Airlines (ÖZLEM ATALIK, ALI HALICI)
135
Attitudes Towards Strategic Supplier Alliances In The Natural Stone Supply Chain: The Case
Of Global Companies (SÜLEYMAN BARUTÇU, MUSTAFA TANYERø, ùÜKRÜ GÖREN)
An Investigation Of Centrality In The South African Company Network (HAMIEDA PARKER, IAN DURBACH)
159
Working With Multiple Partners: Balancing The Efficiency – Flexibility Tension (MARIANA DODOUROVA)
169
Organizational Ambidexterity: An Empirical Examination Of Organizational Factors As Antecedents Of Organizational Ambidexterity
(ùÜKRÜ AKDOöAN, ASUMAN AKDOöAN, AYùE CøNGÖZ)
183
Ambidexterity: The Combination Of Seemingly Conflicting Priorities (LÜTFIHAK ALPKAN, SELIM AREN)
191
RESOURCE BASED VIEW &
CULTURE - STRATEGY
Resource Based View Of Intangibles On ERP Systems Implementation And Organizational Performance In China (JO RHODES, MARY BAMBACAS, PETER LOK)
199
The Effects Of Generic Strategies And Business Capabilities On Business Performance (A.ZAFER ACAR, CEMAL ZEHIR, MEHTAP ÖZùAHIN)
211
Strategic Concerns Of Competence-Based Risk Perception In Service Projects (ZOLTAN VERES)
225
Resource Based Analysis Of The Growth Of The Yacht Building Sector At Antalya Free Trade Zone (FULYA SARVAN, ONUR DIRLIK,EREN DURMUù ARICI,TUöBA GÜRÇAYLILAR YENIDOöAN )
235
The Impact Of Cultural Values On Marketing Of Chinese National Parks: An Exploratory Research For Communication Strategy
(CATHERINE SARLANDIE DE LA ROBERTIE, BAIFANG CHENG)
251
The Importance Of Constructing Effective Corporate Culture For Global Workforce: A National And Organizational Culture Perspective (TIJEN ERSOY HARCAR)
261
The Impact Of Empowerment And Quality Culture On Job Satisfaction (HAKAN KITAPÇI, METIN ATEù, SULTAN SÜLEYMAN ÖKTEN)
271
Re–Discovery Of The Civil Society Organizations In The World, And Turkey: A Fieldwork In
Üsküdar, A District In østanbul (SÜLEYMAN ÖZDEMIR, ZEKI PARLAK)
279
Linking Performance To Strategy In The Public Sector (BILGE TERKEN ATAOöLU) 293
TOTAL QUALITY MANAGEMENT &
SERVICE QUALITY MANAGEMENT
TQM In New Car Dealerships: It May Be Considered Strategic But Is It Practiced? ( KYM FRASER)
307
The Relationship Between The Total Quality Management Practices And Performance: An Empirical Study Of Turkish Firms(ESIN SADIKOGLU, CEMAL ZEHIR)
The Relationship Between Business Process Reengineering And The Performance Measurement Systems :An Empirical Study In Turkey
(ERKUT ALTINDAö,HALUK TANRIVERDI,CEMAL ZEHøR) 337
Effects Of Total Quality Management Practices On Organizational Performance Of
Hospital(CEMAL ZEHøR,ÖZLEM ARACI,ESIN SADIKOöLU, MEHTAP ÖZùAHIN) 347
Measuring The Pre-Flight, In-Flight And Post-Flight Service Quality Of Airlines: A Research
At Domestic Flights (MEHMET ERKAN DURSUN , VILDAN DURMAZ) 361
Value Add Logistics Service Quality In Strategic Logistic Management: Case Study Of Halley
Logistics((PINAR ÖZTÜRK) 367
The Relationship Between The Strategic Planning (Strategic Management System) And Quality
Improvement In Universities (ABDULLAH KARAKAYA) 377
Hospitality Management From A Strategic Perspective (øGE PIRNAR,RUHET GENC) 385
STRATEGIC MARKETING
The Marketing & Instrument Study Of Development Of A Company’s Competitive Tactics In The Turbulent Market Of The Mobile Communication Services
(MOSTOVAY I.V/.,MURAVYOVA N.N., YASKO M.)
397
The Impact Of Technology On Competitive Marketing By Banks: A Case Of Standard Bank In King-Williams Town, Eastern Cape Province, South Africa
(REGINALD MASOCHA, NORMAN CHILIYA, STANSLOUS ZINDIYE)
405
Brand Marking Works In Private Hospitals (SELMA SÖYÜK, ONUR YARAR, MELIH EROL) 415
International Market Segmentation Paradox For Strategic Management: Purely Logical Or Highly Intuitive (MELIS ATTAR, EMINE ÖöÜT, METIN KAPLAN)
421
Strategic Brand Management In Hospitality Sector: How To Manage Co-Branding In Hotels And Restaurants (RUHET GENÇ)
427
Investigating Drivers Of Choice Behavior: Corporate Image, Perceived Risk And Trust Interactions Through Reputation Management (HUSEYIN A. KANIBIR, SIMA NART)
435
The Impact Of Green Supply Chain Management Practices On Business Performance: The Case Of Chemical Industry
(ADEM ÖöÜT, D. MEHMET BøÇKES, METIN KAPLAN, EMINE ÖöÜT)
453
Loyalty Exists In Fuel Consumption Or Does Not? ( CEYDA AYSUNA, SAHAVET GÜRDAL, UöUR YOZGAT)
461
The Effect Of Word Of Mouth Communications On Consumers’ Purchasing Decisions: In A Globalized World A Case Study From Turkey (RUZIYE COP, FATIH SEN, NIYAZI GUMUS)
473
Social Responsibility Projects Of The Service Firms Which Are Traded In Istanbul Stock Exchange’s (Ise) Services Index
(NILSUN SARIYER, SERHAT HARMAN, EBRU KANYILMAZ POLAT)
INTERNATIONAL INTEGRATION &
FOREIGN DIRECT INVESTMENT
China-Africa Cooperation In The 21st Century: Analysis Of The Obstacles And Challenges To Good Cooperation (KIERAN E. UCHEHARA)
493
Management Of The Governmental Support Of Russian Agro-Industrial Complex On Entering The World Market
(KUZNETSOV N.G., OVCHINNIKOV V.N., SOLDATOVA I.Y., CHURIKOVA K.S.)
503
Effective International Expansion Strategies Of Developing Countries: Some Preliminary Evidence From The Turkish Manufacture And Export Of Television Sets
(TANSES GÜLSOY, ÖZLEM ÖZKANLI, RICHARD LYNCH)
511
Turkey’s Role In Process Of Eurasian Economic And Strategic Integration (SEFER ùENER, MESUT SAVRUL, CÜNEYT KILIÇ, YEùøM KARADAö)
533
Purchasers’ Involvement In Sustainable Development: Great Expectations And Various Realities (FABIENNE FEL)
545
Policies And Strategies For The Promotion And Attraction FDI In Services (VESNA BABIû-HODOVIû,ELDIN MEHIû)
555
The Relationship between Subsidiary Size And Subsidiary Autonomy In Turkish Outward Foreign Direct Investments (øBRAHIM ANIL,BINALI DOöAN)
567
STRATEGIC HUMAN RESOURCE MANAGEMENT &
ORGANIZATIONAL BEHAVIOR
The Relationship Between Strategic Management, Human Resource Management And Knowledge Management In Higher Education Institutions
(LOGANATHAN NARAYANSAMY GOVENDER)
583
The Employee Satisfaction In Banking Sector: The Differences Between The Employees In Virtual Banking And In The Branches (FATMA ZEHRA SAVI, MÜRTAZA ÖNAL)
597
Strategic Human Resource Information Systems (SIAMAK AZADI) 607
Emotional Human Resource Management (TANJU ÇOLAKOöLU) 613
The Moderating Role Of Formalization In Determining The Effects Of Strategic Flexibility And Perceived Risk On Affective Organizational Commitment (MEHMET ùERIF ùIMùEK, ùEVKI
ÖZGENER, METIN KAPLAN, ASLI KAPLAN, GÖKùEN TOPUZ)
619
Are The Workers And Managers Having Same Level Commitment To Organization? A Research In Organizational Echelons With Logistic Regression Model With Implication Of Quasi Variance(ASLI EKMEKCI, NILAY YUCEL, MURAT KASIMOGLU)
629
The Process Of Cross-Cultural Business Negotiations: A Comparison Of American, Japanese And Turkish Approaches (SIBEL NITELIK)
637
A Research To Determine The Stress Factors On The Employees That Are Dismissed Due To The Downsizing Strategy (BÜNYAMIN AKDEMIR, SINEM GÜRAVùAR GÖKÇE)
SUPPLY CHAIN MANAGEMENT &
INNOVATION MANAGEMENT
Agile Supply Chain: Strategy For Competitive Advantage (INTAHER MARCUS AMBE) 659
The Usage Of Rfid (Radio Frequency Identification) In Supply Chain Management (ESRA ERZENGIN,METIN UYAR, SERDAR ALNIPAK, SUDI APAK)
671
Strategic Approaches To Logistics Management (RUHET GENC, øGE PIRNAR) 683
Lean Philosophy In Strategic Supply Chain Management And Value Creating
(BÜLENT SEZEN,SEMA ERDOöAN)
695
The Relationship Between Firm Intellectual Capital And The Competitive Advantage
(øPEK KOÇOöLU, SALIH ZEKI øMAMOöLU,HÜSEYIN øNCE)
701
The Effects Of Organizational Politics And Strategic Posture On Innovation Performance (SEVKI OZGENER, ADEM OGUT, METIN KAPLAN, D. MEHMET BICKES)
723
The Effects Of Organizational Factors On R&D Capability
(ALI E. AKGÜN, HALIT KESKIN, AYùE GÜNSEL, EVREN ÖZTÜRK)
733
STRATEGIC INTENTIONS –ORIENTATIONS &
STRATEGIC DECISION MAKING
Cognitive Plasticity And Strategic Change (GEOFFREY LEWIS, TATIANA ZALAN) 743
Measuring The Levels Of Strategic Orientations And Their Effects On Firm Performance In Turkish Family Firms : An Empirical Study (CEMAL ZEHIR, ERKUT ALTINDAö)
757
A Study On The Causes Of Strategies’ Not Leading To Success
(MEHMET ALI KÖSEOGLU, MEHMET BARCA,KEMAL KARAYORMUK)
765
A Content Analysis For Vision And Mission Statements Of Turkish Universities (HULUSI DOöAN, HASAN øBICIOöLU)
777
Climate Change As An Important Contemporary Strategic Management Issue (EROL EREN, PINAR BAL)
787
Strategy-Making Approaches For A Changing Environment (RACHEL MARITZ, MARIUS PRETORIUS)
797
Board Composition Of Turkish Listed Companies: Is There Any Difference Between Industries?( øRGE ùENER, MERAL ELÇø)
813
FINANCE, ENTREPRENEURSHIP & SMES
The Stock Market Efficiency And Investment Strategies During Global Financial Crisis: A Comparison Of Developed Countries And Turkey (SUDI APAK, KAMER HAGOP TAùCIYAN)
825
Pension Funds And World Financial Crisis In The OECD Countries (SUDI APAK, KAMER HAGOP TAùCIYAN)
Explanation Of Interaction Of The Assets Of Organizations Which Are Determinant In The Survival And Growth Of Them (ALI SAYILIR, SERKAN DIRLIK)
851
Is Intellectual Capital Antecedent Of Entrepreneurship Orientation (EROL EREN, EBRU BEYZA KOCAPINAR)
863
Social Entrepreneurship: Is It Valid For Corporations?
( SENEM BESLER, AYTÜL A. ÖZDEMøR, MUAMMER SARIKAYA)
875
Strategies For Developing The SMEs Business And Entrepreneur Opportunities In Pakistan (F.M.SHAIKH, M.SALEEM RAHPOTO)
887
Knowledge Transfer (KT) Practices In Small And Medium Enterprises (SMEs) Of Turkish Textile And Apparel Industry (DABABRATA NARAYAN CHOWDHURY, LYNNE BUTEL , I. HAKKI ERASLAN AND ISMAIL BAKAN)
893
Cluster-Based Strategies For Competitive Advantage Of Small And Medium Enterprises (Smes) (ø. HAKKI ERASLAN, MELIH BULU, øSMAIL BAKAN, DABABRATA NARAYAN
CHOWDHURY)
907
Public–Private Partnerships: Theory And Practice In Global Perspective (M. TURAN ÇUHADAR)
ORGANIZING COMMITTEE
x Erol Eren (Chairman, Beykent University, Istanbul-Turkey) x Oya Erdil (Co-Chair, Gebze Institute of Technology, Kocaeli-Turkey) x Ali Akdemir (Canakkale Onsekiz Mart University, Canakkale-Turkey) x Johan Hough (Stellenbosch University, Stellenbosch - South Africa) x Lütfihak Alpkan (Gebze Institute of Technology, Kocaeli-Turkey) x Cemal Zehir (Gebze Institute of Technology, Kocaeli-Turkey) x Ali E. Akgün (Gebze Institute of Technology, Kocaeli-Turkey) x Halit Keskin (Gebze Institute of Technology, Kocaeli-Turkey) x Tanses Gülsoy (Beykent University, Istanbul-Turkey) x Güngör Tuncer (Beykent University, Istanbul-Turkey) x Fuat Oktay (Beykent University, Istanbul-Turkey) x Gülruh Gürbüz (Marmara University, Istanbul-Turkey) x Irem Erdo÷muú (Marmara University, Istanbul-Turkey) x Esin Sadıko÷lu (Gebze Institute of Technology, Kocaeli-Turkey) x Mehtap Özúahin (Gebze Institute of Technology, Kocaeli-Turkey) x Meral Elçi (Gebze Institute of Technology, Kocaeli-Turkey)
ADVISORY BOARD & REVIEW COMMITTTEE
A. Asuman Akdo÷an (Erciyes University, Kayseri-Turkey)
Abdurrahman Benli (Canakkale Onsekiz Mart University, Canakkale-Turkey) Adem Ö÷üt (Selçuk University, Konya - Turkey)
Adnan Çelik (Sütçü ømam University, Kahramanmaraú-Turkey) Adnan Ceylan (Gebze Institute of Technology, Kocaeli-Turkey)
Ahmet Kesik, Ph.D., Associate Professor (President of Strategy Development Unit, Ministry of Finance, Republic of Turkey)
Alain Crochet (University of Sorbonne Nouvelle - Paris 3, France)
Alexander Egorshin (The Nizhny Novgorod Institute of Management and Business, Russia) Ali Akdemir (Canakkale Onsekiz Mart University, Canakkale-Turkey)
Ali Ekber Akgün (Gebze Institute of Technology, Kocaeli-Turkey) Ali Halıcı (Baskent University, Ankara-Turkey)
Alistair M Brown (Curtin University of Technology, Western Australia) Amar KJN Nayak (Xavier Institute of Management, Orrissa-India) Andrei Burenin (Irkutsk State University, Russia)
Andrey Dashkov (Moscow State University, Russia) Asım ùen (St. John Fisher College, USA) Atilla Dicle (Yeditepe University, østanbul-Turkey)
Aurea Helena Puga Ribeiro (Fundacao Dom Cabral, Brazil) Ayten Akatay (Canakkale Onsekiz Mart University, Canakkale-Turkey) Bahadır Akın (Selcuk University, Konya-Turkey)
Birol Bumin (Gazi University, Ankara-Turkey)
Borisas Melnikas (Vilnius Gediminas Technical University, Lithuania) Branko Bucar (Pace University,USA)
Bülent Sezen (Gebze Institute of Technology, Kocaeli-Turkey) Canan Çetin (Marmara University, Istanbul-Turkey)
Catherine Sarlandıe De La Robertıe (l'Association Des Formations Universitaires De Défense, France) Celso ClaudioHildebrand Grisi (University of Sao Paulo,Brazil)
Cemal Zehir (Gebze Institute of Technology, Kocaeli-Turkey) Cengiz Yılmaz (Bogazici University, Istanbul-Turkey) Cevat Gerni (Gebze Institute of Technology, Kocaeli-Turkey) Ceyhan Aldemir (Dokuz Eylül University, øzmir-Turkey) Chien-Chung Nieh (Tamkang University, Taipei Country- Taiwan) Con Korkofingas (Macquarie University,Sydney-Australia) Dursun Bingöl (Atatürk University, Erzurum-Turkey)
Dzevad Sehic (Faculty of EconomicsUniversity of Sarajevo, Bosnia) Ebru Kabadayı (Gebze Institute of Technology, Kocaeli-Turkey) Ekrem Tatoglu (Bahçeúehir University, Istanbul-Turkey) Enver Özkalp (Anadolu University, Eskiúehir-Turkey) Erol Eren (Beykent University, Istanbul-Turkey)
Esin Can Mutlu(Yıldız Technical University, østanbul-Turkey) Esin Sadıkoglu (Gebze Institute of Technology, Kocaeli-Turkey) Eyüp Aktepe (Gazi University, Ankara-Turkey)
Fahri Karakaya (University of Massachusetts, Dartmouth-USA) Feyzullah Ero÷lu (Pamukkale University,Denizli-Turkey) Fuat Oktay (Beykent University, østanbul-Turkey) Garry L. Adams (Auburn University, USA)
Gökhan Özer (Gebze Institute of Technology, Kocaeli-Turkey) Gönül Budak (Dokuz Eylul University, øzmir-Turkey) Gülruh Gürbüz (Marmara University, Istanbul-Turkey) Gültekin Yıldız (Sakarya University, Sakarya-Turkey) Güneú Berbero÷lu (Anadolu University, Eskiúehir-Turkey) Güven Alpay (Bo÷aziçi University, østanbul-Turkey) Güven Murat (Karaelmas University, Zonguldak-Turkey) Hakan Kitapçı (Gebze Institute of Technology, Kocaeli-Turkey) Halil Çivi (ønönü University, Malatya-Turkey)
Halim Kazan (Gebze Institute of Technology, Kocaeli-Turkey) Halit Keskin (Gebze Institute of Technology, Kocaeli-Turkey) Halis Kalmıú (Canakkale Onsekiz Mart University, Canakkale-Turkey) HA-Nguyen (Vietnam National University, Hanoi School of Business, Vietnam)
Hasan øbicio÷lu (Süleyman Demirel University, Isparta-Turkey) Hayat Kabasakal (Bo÷aziçi University, østanbul-Turkey) Hikmet Timur (Hacettepe University, Ankara-Turkey) Hisao Fujimoto (Osaka University of Economics, Japon) Howard Clayton (Auburn University, USA)1
Hüseyin ønce (Gebze Institute of Technology, Kocaeli-Turkey) ønan Özalp (Anadolu University, Eskiúehir-Turkey) Jiri Mezulanik (Silesian University, Opava-Czech Republic) Johan Hough (Stellenbosch University, South Africa) Jungwan Lee (Bang College of Business, Kazakhstan) Kamil Kozan (St. John Fisher College, USA)
Kathleen Marshall Park (Massachusetts Institute of Technology, USA) Lars Ehrengren (Stockholm University, Sweden)
Ljiljana Maurovic (University of Rijeka, Croatia)
Lonnie Strickland (The University of Alabama, Tuscaloosa, Alabama - USA) Lütfihak Alpkan (Gebze Institute of Technology, Kocaeli-Turkey)
M. K. Sharma (Himachal Pradesh University, Shimla-India) Mahmut Özdevecio÷lu (Erciyes University, Kayseri-Turkey) Mariana Dodourova (University Of Hertfordshire, UK) Marius Ungerer (Stellenbosch University, South Africa) Mehmet Barca (Sakarya University, Sakarya-Turkey) Mehmet Sahin (Anadolu University, Eskisehir-Turkey) Mehmet ùahin (Canakkale Onsekiz Mart University, Turkey) Muhsin Halis (Gaziantep University, Gaziantep-Turkey) Murat Azaltun (Beykent University, østanbul-Turkey)
Murat Kasimoglu (Canakkale Onsekiz Mart University, Turkey) Musa Pınar (Valparaiso University, Indiana-USA)
Mustafa Delican (Beykent University, østanbul-Turkey) Mustafa Köksal (Kocaeli University, Kocaeli-Turkey) Mümin Ertürk (Beykent University, østanbul-Turkey) Münevver Çetin (Marmara University, østanbul-Turkey)
Nazan Yelkikalan (Canakkale Onsekiz Mart University, Canakkale-Turkey) Necdet Timur (Anadolu University, Eskisehir-Turkey)
Neil Bechervause (Swinburne University of Technology, Melbourne- Australia) Nurullah Genç (Kocaeli University, Kocaeli-Turkey)
Oya Erdil (Gebze Institute of Technology, Kocaeli-Turkey) Özlem Özkanlı (Ankara University, Ankara-Turkey) Ömer Adil Atasoy (Osman Gazi University, Eskiúehir-Turkey) Ömer Torlak (Osman Gazi University, Eskiúehir-Turkey) Ömür Özmen (Dokuz Eylül University, øzmir-Turkey) Pauline Magee-Egan (St. John’s University, USA)
Recep ùener (Mu÷la University, Mu÷la-Turkey)
Refik Culpan (Pennsylvania State University, Harrisburg-USA) Refika Bako÷lu (Marmara University, østanbul-Turkey) Rezan Tatlıdil (Ege University, øzmir-Turkey) Richard Lynch (Middlesex University, London-UK) Rıdvan Karalar (Anadolu University, Eskiúehir-Turkey) Riza Atiq Abdullah (Universiti Ke Bangsaan-Malaysia) Sabahat Bayrak (Pamukkale University, Denizli-Turkey) Sadi Can Saruhan (Marmara University, østanbul-Turkey) Sefer ùener (Canakkale Onsekiz Mart University, Turkey) Selen Do÷an (Ni÷de University, Ni÷de-Turkey) Selahattin Sarı (Beykent University, østanbul-Turkey) Selim lter (St. John Fisher College, USA)
Sergei Mordovin (International Management Institute St. Petersburg, Russia) Sevinç Köse (Celal Bayar University, Manisa-Turkey)
Shamsul Nahar Abdullah (Northen University of Malaysia,AmanMalasia) Sharan L. Oswald (Auburn University, USA)
Shaukat Ali (University of Wolverhampton, Shropsire-Great Britain) Sonja Petrovich Lazarevic (Monash University, Victoria-Australia) Süleyman Türkel (Ça÷ University, Mersin - Turkey)
Stanislav Poloucek (Silesian University, Opava-Czech Republic) Subodh Bhat (San Francisco State University,San Francisco - USA) ùerafettin Sevim (Dumlupınar University, Kütahya-Turkey) ùevki Özgener (Erciyes University, Nevúehir-Turkey)
T. Diana A. De Macedo- Soares (Pontifical Catholic University of Rio de Janeiro, Brazil) Tanses Gülsoy (Beykent University, østanbul-Turkey)
Tatiana A. Burenina (State University of Management, Russia) Tijen Harcar (øzmir University of Economics, Turkey) Tu÷ba Karabulut (Istabul Commerce University, Turkey) Tuna Taner (Celal Bayar University, Manisa-Turkey) U÷ur Yozgat (Marmara University, østanbul-Turkey) Ülkü Dicle (Yeditepe University, østanbul-Turkey) V. Dolyatovskiy (The Rostow State University, Russia)
Victor Gnevko (St. Petersburg Institute of Management and Economics, Russia) Vojtech Malatek (Silesian University, Opava-Czech Republic)
Warren J. Keegen (Pace University, USA)
Xavier Richet (University of Sorbonne Nouvelle-Paris 3, France) Yasemin Arbak (Dokuz Eylül University, øzmir-Turkey) Yonca Gürol (Yıldız Technical University, østanbul-Turkey) Yücel Acer (Canakkale Onsekiz Mart University, Canakkale-Turkey) Zeyyat Hatipoglu (Dogus University, Istanbul-Turkey)
FOREWORD
Dear Participants and Colleagues;
Welcome to the International Strategic Management Conference that we hold for the fifth time this year in Stellenbosch City of South Africa. We greet you all with respect and love on behalf of organization committee arranging the conference.
We have organized this conference with the academic cooperation of Beykent University, Gebze High Technology Institute and Çanakkale 18 Mart University again as always. This year; Stallenbosch University of South Africa as the host university as well as the Ministry Finance, Strategy Development Department from Turkey have also attended to this organization and supported us. I would like to thank to those who have had contribution in current attainment of the conference in a successful manner. Especially we would like to express our sincere and distinctive thanks to Prof. Johan HOUGH, our host doing his utmost for organizing the fifth conference in nice university town of this beautiful country at the far end of the world.
123 individuals from 15 different countries of the world are attending 2009 conference with 83 reports. Reports have been generally written by scientists from Europe, Balkan states, Russia, Middle East, Africa, Australia and USA. The countries providing reports are as follows in alphabetical order; Albania, Australia, Bosnia-Herzegovina, Canada, France, Hungary, Iran, Lithuania, Russia, Kuwait, Pakistan, South Africa, Turkey, United Kingdom and USA.
There has been an enormous increase in the number of those who have provided report for but not be able to attend the meeting due to the long distance of the conference place, outbreak of communicable influenza as well as our guests suffering from travel-sickness. For this reason we have reduced the period of the conference, which have been originally planned to last two and a half days, to two days. Therefore, a reasonable time has been provided to some of our guests for traveling around Stellenbosch and Cape Town cities.
After a while 3 dear expert scientists will argue about effects of global crisis on management strategies, one of the actual problems of world as the keynoters in our opening. Thereby we will also have the possibility to handle an actual problem in terms of Strategic Management at all hands.
Dear participants, ladies and gentlemen, while I welcome you again wish for our 5th year conference to be
accomplished and express best regards.
Erol EREN (Ph.D) Conference Chairman
FOREWORD
We are pleased to welcome you to the 5th International Strategic Management Conference in Stellenbosch, South
Africa. This year, the theme is “Striking the Right Balance between Existing Strategy and New Opportunities with Special Emphasis on Turbulent Markets”.
Participants coming from different parts of the world aim to discuss and explore for strategic management issues and approaches to managing global crises. We are going to debate on different topics including industry analysis, innovation, entrepreneurship, marketing and financial aspects of strategies addressing mainly problems and issues in turbulent environments.
Academicians from different countries submitted original papers for conference presentation and for publication in this Proceedings Book. All competitive papers have been subject to a peer review. The results of the evaluation efforts produced 83 empirical, conceptual and methodological papers involving all functional areas of strategic management of strategic management with a specific focus on strategic opportunities in turbulent markets. I would like to express our appreciation to the reviewers for reviewing the papers that were submitted to this conference. We also thank to all those who submitted their work to be considered for presentation in the conference.
I would like to thank to the Rectors of Universities for their continuing cooperation. My special thanks go to Alinur Büyükaksoy, Rector of Gebze Institute of Technology for his valuable support and encouragement.
Many people worked very hard for the realization of this organization. The Conference could not have been held without the diligent work of Professor Erol Eren, Faculty Dean and Chairman of the Conference. He made great effort to organize and perfect all arrangements. Special thanks to him for his leadership and execution of 2009
Conference. I want to extend special appreciation to Mehtap Özúahin for her hard work and commitment to the
Conference development. She carefully worked in coordination with us during the all phases of the organization. And finally thanks to Professor Johan Hough from Stellenbosch University for his efforts and cooperation.
We hope that you all will enjoy and benefit from the conference and enjoy your stay in this great and magnificent land, Stellenbosch.
Oya ERDIL, (Ph.D.) Co-Chair of the Conference Gebze Institute of Technology
FOREWORD
Dear Guests, Dear Colleagues and Delegates from all over the world,I would like to welcome you (on behalf of Stellenbosch University) with open arms to our African continent and specifically to this prestigious international event. This fifth annual Strategy conference, which has been made possible by the joint efforts of four leading international recognized universities, has become a major event on the Global Academic Strategy calendar. I think a short introduction to our university will be interesting.
Stellenbosch University is recognized as one of the four top research universities in South Africa. It takes pride in the fact that it has one of the country’s highest proportions of postgraduate students of which almost ten percent are international students. Our University lies in the picturesque Jonkershoek Valley in the heart of the Western Cape Winelands. The earliest roots of the University can be traced back to the 17th century when a beginning was made with regular school instruction. In 1859 the Theological Seminary was founded and in 1866 the Stellenbosch Gymnasium. In 1881, the “Arts Department” of the Stellenbosch Gymnasium became the Stellenbosch College and renamed the Victoria College in 1887. In 1918, Victoria College made way for an independent university and Stellenbosch University opened its doors for some 500 students and 39 lecturers. The University has since then grown into the internationally recognized institution of excellence it is today with more than 25 000 students, 800 lecturers and some 50 research and service bodies.
I want to thank all the people of the Turkish Universities who have collaborated with us for the preparation of this conference on strategic management and sustainable strategies in turbulent and recessionary environments. A word of thanks to Jo Venter and her team from STIAS for preparing this excellent facility for our delegates, everybody at the registration desk and the organizing committee for their efforts. Finally, we acknowledge our sponsors, McGraw-Hill South Africa and Distell Wines for their contributions to make this conference unforgettable! We wish that all the valuable work presented in this conference adds value to the international academic experience but also to improving the lives of ordinary citizens in our global village.
Johan HOUGH (Ph.D.) Co-Chairman of the Conference Stellenbosch University, South Africa
FOREWORD
We are so pleased to have realized the fifth of the Strategic Management Conference series, which has become, I am glad to say, a traditional forum at an international level for theoreticians and practitioners of Strategic Management. It gives me immense pleasure and pride to be a part of this.
When we first started this conference with Prof. Dr. Erol Eren of Beykent University five years ago, this academic event had a narrower scope and did draw attention mostly from within Turkey. But now, we are most happy to see that this conference series can be materialized beyond the borders of Turkey with our new international partners. Stellenbosch University of South Africa, a truly beautiful country which will be the host of Football World Cup Finals of 2010, kindly hosted us, and we do cherish this partnership wholeheartedly.
Strategic Management requires long-term thinking and planning. It is already established that not only commercial companies need and do Strategic planning, but also governments, including its various institutions and sub-branches, universities and even individuals, be it private entrepreneurs or academics who carry out researches on certain subjects, feel the need to draw a road map for their respective careers in the future. In this respect, Strategic Management is designed not only for five or ten years, but for fifty or one-hundred years if necessary. These qualities of Strategic Management impelled us to organize this conference series so that theoreticians and practitioners of this subject can get together and share their findings and ideas with one another. We also hope that the proceedings of the conference will contribute to the field academically and can be a reference book for all interested in the Strategic Management.
Many people contributed to this conference and I am truly thankful to them for their enduring support and effort. Among these, though, some of them deserve particular mention. Prof. Dr. Erol Eren, one of the most distinguished academics in the field of Strategic Management and a close colleague of mine, did his utmost to make this conference a success, and we all should be grateful to him for what he has done for this conference series.
Prof.Dr. Cuma Bayat, the Rector of Beykent University, and Prof. Dr. Alinur Büyükaksoy, the Rector of Gebze Institute of Technology, our longtime partners in this conference, again provided invaluable contribution to the conference, and I would like to thank them for that. I would like to express my gratitude to our new international partner, Prof. H. Russel Botman, the Rector and Vice-Chancellor of the Stellenbosch University, for gracefully hosting us. Assoc. Prof. Dr. Ahmet Kesik, the Head of the Strategy Development Office of the Turkish Public Finance Ministry, has been a continuing supporter of our conference and various other academic activities of our university. Dr. Kesik deserves all praise for his endeavors.
Last but not least, I would like to thank Mehtap Ozsahin and Erdal Aydin, two very diligent workers of our conference, for their relentless effort and impeccable work ethic to make this conference possible.
Ali Akdemir (Ph.D.) Co-Chair of the Conference & Rector of the Çanakkale Onsekiz Mart University
FOREWORD
Since its establishment in 1992 Gebze Institute of Technology (GIT) has concentrated on high quality research in science, engineering and business management. A strong commitment to the continuing expansion of research, inventions and publications is an important feature of our vision and strategy. In the light of our research and science orientation we, as GIT, get involved in conference and colloquial activities in order to increase information
sharing among institutions and academicians. This year, we provide our support for the success of the 5th
International Strategic Management Conference which is held in Stellenbosch.
On behalf of my university and staff members I would like to welcome the delegates of the 5th International Strategic
Management Conference with the theme ‘Striking the right balance between existing strategy and new opportunities, with special emphasis on turbulent markets’ organized by Beykent University, Gebze Institute of Technology, Çanakkale Onsekiz Mart University and with the kind cooperation of the Stellenbosch University of Stellenbosch, South Africa.
I sincerely would like to thank to Cuma Bayat, Rector of Beykent University, Ali Akdemir, Rector of Çanakkale 18 Mart University, who give the excellent example of cooperation to realize this annual international conference in a continuing manner.
My special thanks go to the Chairman Professor Erol Eren for his success and hard work for the organization and realization of the conference. I would like to thank to colleagues and staff of our Faculty of Business Administration for their hard work, sacrifice and talent. I also thank to Johan Hough and the staff of Stellenbosch University for their efforts and cooperation.
Finally, I wish that this conference will contribute to the world of scientific community.
Alinur BÜYÜKAKSOY (Ph.D) Rector-Gebze Institute of Technology
FOREWORD
Dear Participants;
This year, we have held the International Strategic Management Conference being organized on annual basis traditionally with academic cooperation of universities from different countries of the world in South Africa under hosting of Stellenbosch University. I welcome all our guests as myself and as the chancellor of Beykent University with greeting you respectfully.
Beykent University is a foundation university established in 1997. It provides associate, undergraduate, postgraduate and doctorate studies through six faculties, two colleges, a vocational school, two institutes and two research centers included in its organization. Our university has 10000 students approximately and provides service with 4 campuses located in different districts of Istanbul.
Beykent University maintains its student and academic member exchange programs in Turkey with different universities within the Farabi program frame and apart from Turkey with USA universities and particularly Erasmus Program with European countries. Thus, it has achieved the status of a ‘’World University’’.
We are experiencing a fair example of international cooperation with other universities in Strategic Management Conference. Such international collaborations encourage not only universities from all four corners of the world but also researcher academicians for association and interoperability studies. For this reason, I congratulate members of organizing committee throwing the academicians of 15 different countries together.
We, as Beykent University, give great importance to all research and publication studies and act as sponsor for them. Therefore, we attend national and international scientific organizations as a partner by continuing the academic cooperation with institutions supporting morally and materially this research and publication studies as we do. We are in opinion that international conferences can be long-lasting and effective only by the association of different universities.
I would like to express my thanks to all members of organizing committee notably chairman Prof. Dr. Erol EREN holding this conference for 5 years accomplishedly, arbitrators who contributed evaluating the papers and especially Prof. Dr. Johan HOUGH doing the honors for fifth conference.
Cuma BAYAT (Ph.D.) Rector-Beykent University
FOREWORD
Dear Conference Delegates,
It gives me immense pleasure to welcome you to this very important conference on South African soil – moreover because of the timing and value of this conference in one of the most challenging times in the global economy. We are all aware of the turbulence, the international repercussions and the demoralizing impact it has had on people throughout the western world. I trust that the leading edge thinking flowing from this event will enrich global thinking on how to bring hope to entrepreneurs and ordinary citizens alike in otherwise depressing circumstances.
I trust that a conference such as this, flowing from the strategic partnership between our respective Universities, will play an important part in our endeavor to put science behind some of the most pressing needs of our country and the African continent at large. We have embarked on a program of research and knowledge pioneering that we popularly refer to as “science for society”. In this regard our research programs are honed on issues such as alleviating pandemic poverty, the promotion of food security, the promotion of democracy and ensuring sustainable utilization and development of the environment.
These broad trans-disciplinary research areas will lay the foundation for our pedagogy of hope that will be the future hallmark of this university. Incidentally, these crucial themes are strong features of the Millennium Development goals of the United Nations and in this regard Stellenbosch University is positioning itself at the heart of the international development agenda.
I wish you well in your deliberations and I am sure that the ideas and suggestions that will be presented at this conference will form the foundation for a mutually beneficial relationship between our respective institutions -- and that it naturally will deliver on the needs and challenges of a new economy where we can strike the right balance between existing strategy and new opportunities.
H Russel BOTMAN (Ph.D.) Rector and Vice-Chancellor Stellenbosch University
FOREWORD
Rapid changes in the information and communication technologies, globalization, and sharp population increase and increasing needs make the restructuring in the public management compulsory because these changes require public administrations to provide faster and higher quality services and meanwhile to use their resources more efficiently. This urged the public administrations to make long-term plans and to prepare their own road maps in line with the priorities they determined.
In this framework strategic management allows the public administrations to think from a long term perspective and increases efficiency of the public administrations in terms of developing policies and enhancing their administrative capacity. Strategic management refers to the path between the current situation of the institution and the desired situation in a way to include strategic planning, implementation and control processes; and it integrates all other management processes in order to provide a systematic, proper and effective approach to set, discover, audit and update strategic objectives of the institution.
In order to ensure success of the strategic management and to obtain the expected contributions and results, practices within the scope of the strategic management should be monitored and reported at certain intervals; an evaluation mechanism for detection and correction of the failing aspects should be put into effect as well as the top management should believe in the importance and benefit of the strategic thinking and strategic planning.
Due to the rapid changes in the world, it is not enough now to find momentary and temporary solutions for both financial and administrative problems of the public management and also problems in provision of the public services.
In this scope in order to take permanent and institutionalized measures against the problems encountered in the public management and to provide more flexible, faster and higher quality public services, focus of the restructuring in the public management should be the strategic management approach.
I hope that during the annually organized International Strategic Management Conference, presentations and speeches by the distinguished participants will make considerable contributions to the strategic management literature.
Ahmet KESøK, (Ph.D.) Head, Strategy Development Unit Ministry of Finance
CRISIS
MANAGEMENT
&
THE CHANGING’S OF SHARE PRICE IN THE FINANCIAL
CRISIS: A COMPARATIVE STUDY FOR AUTO MAKERS
Erol Eren
Serdar Alnıpak
Metin Uyar
Beykent University, Turkey
ABSTRACT
The current crisis in the global markets, which originated in the US subprime mortgage segment and quickly spread into other market segments and countries, is already seen today as one of the biggest economics crisis in history. The occurrence of market crash or financial crisis is possible key factor of share price inefficiency. This paper empirically investigates the effects of the current financial crisis on the efficiency of the leader auto makers’ share price. The share price, applying the univariate test statistics for the two sub-periods of crisis. The article proceeds in the following manner. Firstly, the study will explain main reasons of global financial crises. Secondly the study will analyze all share price changing’s of 10 leader automotive companies. Finally, crisis strategies will be discussed for adjustment of related ratios of leader auto makers. The automotive industry is selected, because the share of automotive industry is approximately 30% in the global trade and their income decreased 36% in the quarter one of 2009, so that share price is very important for all strategic decision, especially motor industry.
Key Words: Financial Crises, Share Price, Struggle Strategies
1. INTRODUCTION
As we all know by now, the global financial crisis has seriously affected the automotive industry worldwide. Manufactures (GM, Ford, Toyota etc.) have reported a downturn in sales and productions as well as their income. The automotive industry crisis of 2008–2009 is a global financial crisis in the auto industry that began during the latter half of 2008. The crisis is primarily felt in the United States' automobile manufacturing industry and, by extension, Canada, due to the Automotive Products Trade Agreement, but other automobile manufacturers, particularly those in Europe and Japan, are also suffering from the crisis. The automotive sector was first weakened by the substantially more expensive automobile fuels linked to the 2003-2008 oil crisis which, in particular, caused customers to turn away from large sport utility vehicles and pickup trucks, the main market of the American "Big Three" (General Motors, Ford, and Chrysler). The US automakers also suffered from considerably higher wages than their non-unionized counterparts, including salaries, benefits, healthcare, and pensions. In return for labor peace, management granted concessions to its unions that resulted in uncompetitive cost structures and significant legacy costs.
In 2008, the situation became critical because the global financial crisis and the related credit crunch placed pressure on the prices of raw materials. In certain countries, particularly the United States and West European countries have been under heavy criticism since their vehicle offerings were largely fuel inefficient SUVs and light trucks, despite the increase in the price of oil. Accordingly, they suffered both from consumer perception of relatively higher quality models available from abroad — particularly from Japan, Korean and Chinese manufactures.
As of the beginning of 2009, the vehicle companies of the world are being hit hard by the economic slowdown across national boundaries. Car companies from Asia, Europe, North America, and elsewhere have been forced to implement creative marketing strategies to entice reluctant consumers to purchase vehicles, when many firms are experiencing double digit percentage sales declines. Major manufacturers, including the Big Three and Toyota are offering substantial discounts
(http://www.toyota.co.jp/en/ir/index.html 20.01.2009). Hyundai is even offering to allow customers to return their new cars if they lose their jobs (http://worldwide.hyundai.com/ 20.01.2009).
The occurrence of market crash or financial crisis is possible key factor of share and other financial ratios inefficiency. Firstly, the paper explains causes of crises (subprime crisis). Secondly, we discuss to effects of the current financial crisis on the efficiency of the leader auto makers’ share price. Finally, crisis strategies will be discussed for adjustment of leader auto makers.
The effects of financial crises had argued various scholar studies, financial crises have alternatively been attributed to monetary policy (e.g., Aghion et al., 2001), coordination problems among investors (e.g., Chang and Velasco, 1999), the activity of large traders and speculators (e.g., Brown et al., 2000; Kaminsky et al., 2003, 2004; Kyle and Xiong, 2001; Kim and Wei, 2002; Kodres and Pritsker, 2002; Corsetti et al., 2004), herding (e.g., Chari and Kehoe, 2004), the interaction of stock and foreign exchange markets (Corsetti et al., 1999).
1.1 Background of The Crisis
The ongoing crisis in the global financial markets, which originated in the US subprime mortgage segment and quickly spread into other market segments and countries, is already seen today as one of the biggest economical crises in history. The current market turbulence, it is useful to recall, was preceded by a period of unusually benign macroeconomic conditions marked by strong growth and low inflation. This translated in equally benign conditions for the global banking system, with low default rates, high profitability, strong capital ratios, rapid growth in business volumes and strong innovations. While these factors combined meant that the global banking system had entered the crisis in a position of unusual strength, the favorable environment may also have contributed to the crisis in that it led to overconfidence and dulled the risk consciousness on the part of at least some actors Ackermann (2008:330).
Underlying the subprime crisis were essentially two interrelated factors: on the one hand, the boom in US real estate markets, and on the other hand, the high liquidity in the global financial markets. The latter was, in turn, fuelled by the significant easing of US monetary policy over an extended period of time and by the additional boost to global liquidity as many emerging markets had tied their exchange rates to the US dollar and therefore had to match the expansive US monetary policy.
1.1.1 The Real Estate’ Price
The price increases in the US real estate markets were partly justified given the demographic developments in the US. But they were certainly fuelled by the accommodative monetary policy environment. At the same time, the boom in the US housing markets would not have been possible had it not been facilitated by innovations in mortgage financing. One of these innovations was the emergence of the subprime mortgage segment, whose share in total new business rose from 6% in 2001 to 15% in 2006. These products allowed borrowers with impaired credit histories and low incomes to buy property, too. Towards the end of the lending boom, however, credit standards deteriorated further with the emergence of teaser rates, “stated income” loans (low documentation loans where mortgage brokers and borrowers simply stated the borrower’s income) as well as “ninja” loans (for borrowers with “no income, no job and no assets”).
1.1.2 Excess Liquidity
For the fundamentals underlying the global subprime crisis, we need look little further than the unprecedented actions of Alan Greenspan, Chair of the Federal Reserve, in lowering the Federal Funds Rate (FFR) from 6.54% in July 2000 to 1.1% by July 2003. This was one of the most dramatic policy interventions up until that time. Greenspan injected huge amounts of liquidity into the US economy and lowered interest rates due to fears of recession stemming from the hi-tech meltdown commencing in 2000 and the 9/11, 2001, assault on the United States. Three years later, in July 2006, the rate was back at 5.24%. The “irrational exuberance” he gave a name to, exemplified his period in office setting monetary policy. Moreover, much of this exuberance seems to have been inspired by the very extreme nature of the policy interventions that he initiated.
2. The Effects of Crisis on Automotive Manufactures
The automotive industry crisis of 2008–2009 is a global financial crisis in the auto industry that began during the latter half of 2008. Most agree that the crisis has occurred mainly as a result of the poor business practices of the Big Three U.S. automakers, since Asian companies that manufacture automobiles in the U.S. are not experiencing similar problems. A December 22, 2008 New York Times article stated (http://www.nytimes.com/pages/business/index.html 22.12.2008), "For the most part, the so-called auto transplants — foreign-owned car companies with major operations in the United States — have deep pockets and ample credit, and they are not facing potential bankruptcy like General Motors and Chrysler." With high oil prices and a declining US economy due to the subprime mortgage crisis, the Big Three are rethinking their strategy, idling or converting light truck plants to make small cars. Due to the declining residual value of their vehicles, Chrysler and GM have stopped offering leases on the majority of their vehicles (http://www.gm.com/corporate/investor_information/cal_events/index.jsp 25.03.2009). The annual capacity of the industry is 17 million cars; sales in 2008 dropped to an annual rate of only 10 million vehicles made in the U.S. and Canada. The crisis has affected auto companies around the world, with large sales decreases experienced by all.
In China, the government reduced taxes related to automobile purchases in order to spur flagging sales in 2008. In January 2009, Chinese auto-manufacturer Cherry (http://www.cheryinternational.com/news 22.03.2005) reported unprecedented monthly sales. In Japan, The Toyota Prius is one of Toyota's Hybrid Fuel efficient vehicles which are in short supply With high gas prices and a weak US economy in the summer of 2008, Toyota reported a double-digit decline in sales for the month of June, similar to figures reported by the Detroit Big Three (http://www.toyota.co.jp/en/ir/financial_results/2009/semi/summary.pdf 25.12.2008). For Toyota, these were attributed mainly to slow sales of its Tundra pickup, as well as shortages of its fuel-efficient vehicles such as the Prius, Corolla and Yaris. In response, the company has announced plans to idle its truck plants, while shifting production at other facilities to manufacture in-demand vehicles. On December 22, 2008, Toyota declared that it expected the first time loss in 70 years in its core vehicle-making business. Loss of $1.7 billion, in its group operating revenue, would be its first operating loss since 1938 (Company was founded in 1937). Toyota saw its sales drop 33.9 percent and Honda Motor by 31.6 percent. On 5 December 2008 Honda Motor Company announced that it would be exiting Formula One race with immediate effect due to the 2008 economic crisis and are looking to sell the team. Honda has predicted that there may be reductions among part-time and contract staff (http://world.honda.com/news/2009/c090306Honda-Racing-F1-Team/ 06.03.2009). Upper management bonuses would also be reassessed and directors in the company will take a 10 percent pay cut effective January 2009. Nissan, another leading Japanese car manufacturer, announced that it also would be slashing production and will reduce its output by 80,000 vehicles in the first few months of 2009 (http://www.nissan-global.com/EN/DOCUMENT/PDF/FINANCIAL/TSE/2008/20083rd_tsefiling_243_e.pdf 28.03.2009). Toyota recently announced on Dec 22, 2008, it expects to barely break even this year and slashes profit forecasts amid sales slump (http://www.toyota.co.jp/en/ir/financial_results/2009/semi/summary.pdf 25.12.2008). The Japanese automaker, often held up with Honda as a success story for the rest of the auto industry to follow, said it expects a slim profit margin of US$555 million for the year ending in March 2009. Toyota had originally been projecting a massive profit of $13.9 billion for that period. Their sales in the United States were down 34 per cent last month and were down 34 per cent in Europe as well. They are expecting a loss which would be the equivalent of about $2 billion . Facing its first loss in nearly sixty years, Toyota is seeking loans from the Japanese government.
South Korean automakers have been generally much more profitable than their US and Japanese counterparts, recording strong growth even in depressed markets such as the United States. Despite a global economic slowdown, Hyundai-Kia successfully managed to overtake Honda Motor in Summer 2008 as the world's 5th largest automaker, climbing eight rankings in less than a decade. Nonetheless, South Korean automakers were not immune to this automotive crisis and in December 2008 Hyundai Motor Company had begun reducing production at plants in the U.S., China, Slovakia, India and Turkey because of sluggish demand (http://worldwide.hyundai.com/ 20.03.2009). The company missed an earlier projection of 4.8 million units for 2008 and announced a freeze of wages for administrative workers and shortened factory operations as demand weakens amid a global financial crisis.
In Europe where car sales had also drastically decreased, consideration was being given to financial support for the automotive industry, particularly in France, Germany and Italy. On November 20, 2008, French automobile manufacturer PSA Peugeot Citroen predicted sales volumes would fall by at least 10% in 2009,
following a 17% drop in the current quarter. As a result, it planned to cut 2,700 jobs. On the 11 February 2009, PSA announced it would cut 11,000 jobs world wide, however none of these are expected to be in France (http://www.psa-peugeot-citroen.com/en/news/ 20.02.2009). Renault announced a net profit for 2008 of 599 million Euros for the 2008 financial year. This was a 78% drop in profits from the 2007 financial year. European sales fell 4% and world wide sales 7%, forcing Renault to abandon their 2009 growth targets
(http://www.renault.com/en/Lists/ArchivesDocuments/Renault%20-%202008%20Interactive%20Annual%20Report.pdf 25.03.2009). This however made Renault one of the few car makers to return a profit. Renault consistently struggled to return profits in the 1990s.
Fiat in Italy announced that it will extend its temporary plant closures in Italy by a month; the Pomigliano d'Arco, the main plant for its Alfa Romeo cars will be shut for four weeks. However, on February 20, 2009, reacting to actions by the Italian government to stimulate the automotive sector, Fiat said its plant closures would be curtailed. The company also forecast that sales in Europe will drop by 14 percent in 2009 (http://www.fiatgroup.com/en-us/shai/banns/3/pages/default.aspx 25.03.2009).
2.1 Changing’s of Share Price of Automotive Companies
In this section, changing’s of share prices are discussed for sub-two period that pre-crisis and during crisis. For this aim, employed daily data NYSE, Tokyo Nikei with other global stock market indicates and global web sites of automotive manufacturers especially investor relations tabs covering the period January 1, 2006 –March 31, 2009. All data had used in univariate statistics analysis. There is a main hypothesis in article. Testing for hypothesis used to Paired-Samples T test.
H1: There is very important difference in share price of automotive companies for pre-crisis and crisis timing.
2.2 Data and Analyze
All data gathered web sites of auto manufacturers’ investor relations tab that shows share price and other financial indicators. A Table 1 shows changing’s of share prices of leader’s auto makers for two sub periods. While the most change share is GM (-92%), least change share of Toyota (-26%) for 1 Jan. 2006-1 Apr. 2009. Average change is approximately -17%. Americans auto maker’ share price decreased than European and other regions manufactures’ share price. Same information being given Figure 1.
Table 1 Changing’s Share Price (%)
1 Jan. 06-1 Jan. 08 1 Jan. 06- 1 Apr. 09 1 Jan. 07- 1 Apr. 09 1 Jan. 08- 1 Apr. 09 1 Jan. 08- 1 Jan. 09 1 Jul. 08- 1 Apr. 09 1 Jan. 09-1 April 09 GM 17 -92 -94 -93 -89 -82 -36 Ford -23 -80 -79 -74 -72 -64 -7 Toyota 4 -26 -42 -29 -41 -11 20 Honda 12 -28 -28 -11 -28 -12 24 Renault -2 -72 -77 -71 -80 -60 43 Fiat 77 -58 -78 -76 -75 -68 -3 VW 210 385 177 56 65 16 -5 Hyundai -44 -88 -82 -78 -70 -71 -27 Nissan -32 -79 -80 -69 -63 -61 -16 PSA 3 -63 -64 -64 -73 -44 34 Average Share Price 22 -17 -45 -51 -53 -46 2Average Share Price 01. 0 1 .0 6 01. 0 3 .0 6 01. 0 5 .0 6 01. 0 7 .0 6 01. 0 9 .0 6 01. 1 1 .0 6 01. 0 1 .0 7 01. 0 3 .0 7 01. 0 5 .0 7 01. 0 7 .0 7 01. 0 9 .0 7 01. 1 1 .0 7 01. 0 1 .0 8 01. 0 3 .0 8 01. 0 5 .0 8 01. 0 7 .0 8 01. 0 9 .0 8 01. 1 1 .0 8 01. 0 1 .0 9 01. 0 3 .0 9
Figure 1. Average Share Price of Automotive Industry
Testing for hypothesis used to Paired-Samples T test. This test utilize to compare two differ time. For example pre crisis and after crisis.While the first period (pre-crisis) is come into existence 01.01.2006-01.07.07 for 7 quarter, second period (crisis timing) is consist of 01.01.2006-01.07.07-01.04.09 for 7 quarter. The Table 2 reflects results of paired samples test for leader auto makers.
Table 2. Analyze Results
According to T test, there is very important difference for two sub periods. The Sig (signifance) level is small than 0,005, so that H1 accepted. Now therefore share prices of leaders automakers are affected by financial crisis. Especially, financial crisis had effected automotive industry after July 2008 (-%46).
CONCLUSION
The automotive industry designs, develops, manufactures, markets, and sells the world's motor vehicles. In 2007 and 2008, more than 140 million motor vehicles, including cars and commercial vehicles were produced and sold worldwide. But, as of the beginning of 2008, the vehicle companies of the world are being hit hard by the economic slowdown across national boundaries. Car companies from Asia, Europe, North America, and elsewhere have been forced to implement creative marketing strategies to entice reluctant consumers to purchase vehicles, when many firms are experiencing double digit percentage sales declines. A. The industry has already reacted swiftly and responsibly within the boundaries of existing instruments and economic viability and continues to do so:
Paired Samples Test Paired Differences 95% Confidence Interval of the Difference Mean Std. Deviation Std. Error
Mean Lower Upper t df
Sig. (2-tailed) Pair 1 PreCrisis - CrisisTiming -4,06429 14,94837 5,64995 -17,88922 9,76065 -5,719 6 ,009
Crisis Line
1. Production Strategy : Manufacturers have and are adapting their output to the anticipated significant decrease in demand for vehicles
2. Employment Strategy: Manufacturers are readjusting their employment base in an as socially
responsible way as possible, using the flexibility agreements at their disposal (extended vacations, taking weeks out of production, shortening working weeks, non-renewal of short-term contracts and non-filling in of vacancies), and in close contact with unions and governments
3. Cost Strategy: Manufacturers are cutting all discretionary costs by limiting travel and meetings,
downsizing advertising and sponsorships, by in sourcing activities, and much more
4. Investments & R&D Strategy: As much as manufacturers want and need to keep up investments in
strategic projects, they are forced to review their expenditures on new product programs and R&D
5. Marketing & Sales Strategy: Manufacturers are adjusting their products and marketing to the new
constraints and demands of their customers
6. Support for Suppliers Strategy: Whose access to credit is even more critical, manufacturers scrutinize
the situation of their key suppliers on a daily basis and provide support to the extent they can.
Finally: manufacturers are doing what they have to do to come out of the current crisis in a strong way, ready to take on future challenges. To make sure that we do not enter a prolonged period of recession, with the inevitability of wider and more permanent loss of employment and competitive strength, governments and institutions need to act urgently.
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Appendix 1
Changing’s Share Price of Automotive Manufacturers
GM 01. 01. 06 01. 04. 06 01. 07. 06 01. 10. 06 01. 01. 07 01. 04. 07 01. 07. 07 01. 10. 07 01. 01. 08 01. 04. 08 01. 07. 08 01. 10. 08 01. 01. 09 01. 04. 09 GM Ford 0 1 .01. 06 0 1 .04. 06 0 1 .07. 06 0 1 .10. 06 0 1 .01. 07 0 1 .04. 07 0 1 .07. 07 0 1 .10. 07 0 1 .01. 08 0 1 .04. 08 0 1 .07. 08 0 1 .10. 08 0 1 .01. 09 0 1 .04. 09 Ford Toyota 01 .0 1 .06 01 .0 4 .06 01 .0 7 .06 01 .1 0 .06 01 .0 1 .07 01 .0 4 .07 01 .0 7 .07 01 .1 0 .07 01 .0 1 .08 01 .0 4 .08 01 .0 7 .08 01 .1 0 .08 01 .0 1 .09 01 .0 4 .09 Toyota
