Ijfbvol 2

Volume 2, 2005
ISSN 1550-5812
INTERNATIONAL
JOURNAL OF
FAMILY BUSINESS
Shawn Carraher, Editor

Cameron University
Volume 2, 2005
ISSN 1550-5812
International Journal of Family Business, Volume 2, 2005
The International Journal of Family Business
Shawn M. Carraher, Editor

Cameron University
Samuel Lane, Associate Editor
Florida Atlantic University & U.S. Army
Sponsored by the International Family Business Center & the Special Interest Group in
International Research of the International Division of the U.S. Association for Small Business
& Entrepreneurship
Authors retain copyright for their manuscripts. Any omissions or errors are the sole
responsibility of the individual authors. The Editorial Board is responsible for the selection of
manuscripts for publication from among those submitted for consideration. The Publishers
accept final manuscripts in digital form and make adjustments solely for the purposes of
pagination and organization.
Copyright 2005 by the International Family Business Center
______________________________________________________________________________________
EDITORIAL REVIEW BOARD

Shawn M. Carraher, Editor
Cameron University
Samuel Lane, Associate Editor
Florida Atlantic University & U.S. Army
Zafar U. Ahmed
Texas A & M University
George Puia
Saginaw Valley State University
M. Ronald Buckley
University of Oklahoma
Steve Schwiff
Chester Cotton
Cuthbert Scott
Indiana University, Northwest
Madeline Crocitto
SUNY-Old Westbury
Sherry Sullivan
Bowling Green State University
Johnathon R.B. Halbesleben

University of Missouri
Howard Tu
University of Memphis
Frank Hoy
University of Texas El Paso
Rosalie L. Tung
Simon Fraser University
Terrence Paridon
Cameron University
Dianne Welsh
University of Tampa
John Parnell
University of North Carolina Pembroke
Daniel Wren
University of Oklahoma
iii
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iv
INTERNATIONAL JOURNAL OF
FAMILY BUSINESS
CONTENTS
EDITORIAL REVIEW BOARD...............iii
LETTER FROM THE EDITORvi
EXPLORING NEW FRONTIERS IN WOMENS FAMILY BUSINESS LEADERSHIP: THE
IMPACT OF WOMENS MOTIVATIONS ON FAMILY AND BUSINESS MEASURES OF
SUCCESS.1
Margaret A. Fitzgerald, North Dakota State University
Cathleen Folker, University of Wisconsin - Parkside
PERSONAL SHOPPING VALUE, CONSUMER SELF-CONFIDENCE, AND
INFORMATION SHARING MEASURES FOR RETAILERS: RELIABILITY AND
VALIDITY ASSESSMENT..12
Terrence J. Paridon, Cameron University
DETERMINANTS OF THE SINGAPOREANS CONSUMER BEHAVIOR PERTAINING TO
SHAMPOO BRANDS: AN ASIA PACIFIC MARKETING MANAGEMENT
PERSPECTIVE..24
Thomas Tsu Wee Tan, Singapore Management University
Zafar U. Ahmed, Texas A & M University Commerce
Shawn M. Carraher, Cameron University
Lee Shing, Nanyang Technological University
Tan Lee Ping Linda, Nanyang Technological University
Verani Nikke, Nanyang Technological University
WORLD WIDE WEB PRESENCE AS A STRATGIC TOOL FOR SMALL BUSINESS: AN
EXPLORATORY LOOK AT CURRENT PRACTICES & CHARACTERISTICS..37
Raj Selladurai, Indiana University, Northwest
Cuthbert L. Scott III, Indiana University, Northwest
INTERNET MARKETING IN AN EMERGING COUNTRY: AN INTERNATIONAL
MARKETING PERSPECTIVE.47
Philip Zgheib, American University of Beirut
Zafar U. Ahmed, Texas A & M University - Commerce
Shawn Carraher, Cameron University
Nadine E. Habr, Notre Dame University
______________________________________________________________________________________
MIDDLE EAST AIRLINES: AN ACQUISITION CHALLENGE FOR A FAMILY

BUSINESS62
Imad J. Zbib, American University of Beirut
Yusuf M. Sidani, American University of Beirut
Zafar U. Ahmed, Texas A & M University Commerce
A LEBANESE FAMILY OWNED HILAL STORES ENTRY INTO BAHRAIN.72
CHATEAU KSARA WINE COMPANY OF LEBANON PENETRATING GLOBAL
MARKETS: CHALLENGES AND OPPORTUNITIES.83
Fadi Asrawi, Haigazian University
AN EXAMINTION OF ENTREPRENEURIAL ORIENATION: A VALIDATION STUDY IN
68 COUNTRIES IN AFRICA, ASIA, EUROPE, AND NORTH AMERICA.95
LETTER FROM THE EDITOR

______________________________________________________________________________________
vi
Entrepreneurship, World Wide Web, and Cases

Welcome to the second volume of the International Journal of Family Business. It was in May
of 2002 that the journey towards the creation of this issue began. Hal Langford, the Dean of the
College of Business & Technology at Texas A & M University - Commerce came back from
China and announced that I was to be the Director of the new International Family Business
Center to be created out of a relationship that was created with China University of Geosciences
in beautiful Beijing. The first goal that he set for me was to create a new journal that would
allow researchers to examine international entrepreneurship in Chinese sense [in China all nongovernmentally owned businesses are considered to be "family businesses"]. It is out of this that
the name of the journal was created. The IJFB is a double-blind, peer-refereed journal. The
first issue consisted primarily of articles dealing with business in China however as should be
apparent by flipping through the pages of the current issue we now include articles examining
entrepreneurship from a variety of countries with articles in the second volume dealing with over
70 countries.
In terms of orientation we have a strong bent towards empirical articles - although we also do
consider literature reviews and theoretical papers. For the first volume we had a 25% acceptance
rate while for the second volume we have an acceptance rate of fewer than 25% and plan to
continue to have a rigorous review process. Reviews and paper submissions are done
electronically. In addition to the International Family Business Center we have also received
support from the U.S. Association for Small Business & Entrepreneurship, the SouthWest
Academy of Management, the Academy of Management and the Special Interest Group in
International Research of the International Division of the U.S. Association for Small Business
& Entrepreneurship.
On behalf of the editorial review board and our sponsors we trust that you shall find these
articles to be of value to you and that you may consider submitting some of your work to the
journal in the future.
Shawn M. Carraher, Brewczynski Endowed Chair in Entrepreneurial Studies, Director & Editor
______________________________________________________________________________________
Manuscripts
vii
______________________________________________________________________________________1
EXPLORING NEW FRONTIERS IN WOMENS FAMILY BUSINESS

LEADERSHIP: THE IMPACT OF WOMENS MOTIVATIONS ON
FAMILY AND BUSINESS MEASURES OF SUCCESS
Margaret A. Fitzgerald, North Dakota State University
Cathleen Folker, University of Wisconsin Parkside
A recent qualitative pilot study of women family business owners found that women
display two distinct behavioral patterns in their family firms: family first and business
first (Folker, 2003; 2004). Various studies have found that womens firms tend to be
smaller perhaps focusing more on lifestyle businesses rather than high-growth ventures
(Brush, 1992). It is possible that women will create both lifestyle and high-growth
ventures depending on their motivation: whether they put family first or business first.
Some women will focus more on the family and creating good family relationships. This
in turn will lead to less family tension as well as better family and work relationship
satisfaction. Other women will focus on the business first and this will lead to better
financial outcomes (revenues and profits).
The purpose of this study is to ascertain the influence of a female business owners
orientation towards prioritizing business or family needs first on the success of the
business and the family (n = 189). Data are from the National Family Business Survey1997 panel. Findings indicate that female business owners did differ on their orientation
towards business or family first, and low levels of family/business tension were related to
higher family satisfaction or functionality. Moreover, prioritizing family needs was a
positive and statistically significant predictor of family functionality while prioritizing
business needs was not a significant predictor of business profit. Implications for both
policy makers and family business consultants are outlined and suggestions are made for
future research.
INTRODUCTION
Women in family firms have tended to be invisible and thus the research on their
businesses is still emerging. Some studies have begun to compare women owned family
businesses to male owned family businesses. However, how the women family business
owners differ and how those differences might impact family and business outcomes has
not yet been addressed. This study creates a conceptual framework for different types of
women family business owners and then tests the impact of those differences on both
family and business outcomes.
Literature Review
The focus, motivation or intent to create a high growth venture vs. a smaller "lifestyle"
firm may have interesting ramifications. Longevity of the firm may be associated with a
smaller firm. A recent study by Family Business Magazine (April 21, 2003) identified the
oldest family businesses. The 102 companies that they found that had been owned and
operated by the same family since at least 1865, and were operated by at least five
______________________________________________________________________________________2
generations, had several characteristics in common, most importantly staying small. Half
of the companies had fewer than 15 employees.
Within the literature on women entrepreneurs, the tendency to pursue smaller lifestyle
businesses is one of the few differences from male entrepreneurs. Women entrepreneurs
are similar to male entrepreneurs in psychological characteristics (Sexton & BowmanUpton, 1990; Smith, Smits, & Hoy, 1992); demographics (Hisrich, Brush, Good &
DeSouza, 1997); education (Fischer, Reuber, & Dyke, 1993); business motivations
(Fischer, et al, 1993; Schwartz, 1976; Smith, et al, 1992), and risk-taking propensity
(Masters & Meier, 1988). However, women tend to pursue life-style rather than growthoriented businesses (Sexton & Bowman-Upton, 1990). Women prefer an entrepreneurial
venture that integrates family and career needs (Buttner, 1993) perhaps because they
place a higher value on family obligations (DeMartino & Barbato, 2001). Founding
smaller firms did not appear to be a liability in terms of growth, productivity, and returns
(Fischer, et al., 1993). Women tend to emphasis quality in their firms (Kalleberg &
Leicht, 1991), which may help women's businesses to have steady growth along with an
ability to adapt to market changes (Hisrich & Brush, 1987).
Other differences between male and female entrepreneurs include some firm dynamics.
Women's socialization to nurture (Gilligan, 1982; Belenky, Clinchy, Goldberger &
Tarule, 1986) humanizes the workplace (Edlund, 1992; Salganicoff, 1990). Within the
family firm, women carry the family culture (Hollander & Bukowitz, 1990). Their lives
are organized around their familys needs, while mens lives are organized around their
work (Gillis-Donovan & Moynihan-Bradt, 1990: 156).
THEORETICAL FRAMEWORK
Various studies have found that womens firms tend to be smaller perhaps focusing
more on lifestyle businesses rather than high-growth ventures (Brush, 1992). However,
not all women entrepreneurs are the same. A recent qualitative pilot study of women
family business owners found that women display two distinct behavioral patterns in their
family firms: family first and business first (Folker, 2003; 2004). Several differences
emerged between Lifestyle family-first businesses and Growth-oriented professional
business first firms. In "business first" firms, the woman family business owner
(founder) was willing to remove a family member from the firm and in a couple of cases
the founder fired her own husband. In these firms a level of professionalism, rather than
family-style, was exhibited by the family members in the firm - with the offspring calling
their mother by her first name.
In the family-first businesses, the husband was praised as being supportive and helpful
even though not working in the business. The last difference found was that in the two
growth oriented firms in which the offspring worked fulltime they were also
stockholders (Folker, 2003; 2004). These differences indicate a different intent, focus
and motivation for the business. The differences do not indicate that family or business is
not important to either group. Rather it is the means to the successful end that differs.
Do you put the family first in order for both the family and the business to succeed? Or
______________________________________________________________________________________3
do you put the business first in order for both the family and business to succeed? In this
study we argue that the outcomes (both family and financial) will be impacted by the
direction the family business owner takes in creating and building her business.
This study builds on the above pilot study to test the differences between the family first
and business first firms. This study tests whether women create both lifestyle and highgrowth ventures depending on their motivation: whether they put family first or business
first. Some women will focus more on the family and creating good family relationships.
This in turn will lead to less family tension as well as higher family satisfaction. Other
women will focus on the business first and this will lead to better financial outcomes or
profit. This conceptual model is shown in Figure 1 below.
Figure 1: Conceptual Framework of Women Family Business Owner's Differences
Focus/Intent/Motivation
FAMILY FIRST
Women Family Business

Owners
Family Functionality
Lower Family/Business
Tension
Focus/Intent/Motivation
Higher Profits
BUSINESS FIRST
Based on the previous discussion, we offer the following hypotheses:
H1: Differences will exist between female family business owners on the intent
and focus of their business: family first or business first.
H2: Those businesses in which the female business owner focuses on family first,
as opposed to business first, will have less family/business tension.
H3: Lower family tension will lead to greater family satisfaction as measured
through family functionality.
H4: Those businesses in which the business owner focuses on family first will
promote higher family functionality than those with a business first orientation.
H5: Those businesses in which the business owner focuses on business first will
have higher profits than those with a family first orientation.
______________________________________________________________________________________4
RESEARCH METHODOLOGY AND DATA

Data for this analysis are from the National Family Business Survey (NFBS)-1997 panel.
The methods used to gather the NFBS data are discussed at length in an earlier article
published in Family Business Review (see Winter, Fitzgerald, Heck, Haynes & Danes,
1998). Therefore, only a brief review of the methodology is provided in this paper.
The NFSB used a household sampling frame, which is unique because most studies of
family businesses use a business sampling frame (Winter et al., 1998). The sample was
limited to families who shared a common dwelling unit, in which at least one person
owned or managed a business. Work intensity in the business was included as a criterion
for inclusion in the sample and was assessed by length of time in business (one year or
more) and the number of hours per week of involvement. The owner-manager had to
have worked at least six hours per week year around or a minimum of 312 hours a year in
the business, had to be involved in the day-to-day management, and had to reside with
another family member.
Four instruments were used for data collection. A screening instrument was used to
ascertain whether the household contained a family business. For eligible households,
three other interview schedules were the primary data collection instruments: one
schedule was used for the household manager, one was used for the business manager,
and one combined interview was used if the household manager and the business
manager were the same individual.
The household manager was defined as the person who takes care of most of the meal
preparation, laundry, cleaning, scheduling family activities, and overseeing child care.
Included in the household managers interview schedule were details about management
and functioning of the household; the intrusions of the business into family life; and
family satisfaction (Winter, et al., 1998). The family financial manager (who could be
either the household or the business manager) was asked about the familys finances,
including total income, income from the business, market value of the dwelling , and the
use of personal income to finance the business.
The business manager is the person most involved in the day-to-day management of the
business. The interview schedule administered to the business manager included details
about the business such as type of ownership, number and type of employees, the role of
each household member in the business, business management practices, financial details
of the business including business debt and the use of personal funds for the business,
retirement and succession planning, satisfaction with the business, and the intrusion of
the family into the operations of the business. Both household and business managers
were asked identical questions about family and business goals and tensions about the
family business. The individual who responded to the interview schedule administered
first was asked demographic information about each household member to insure that
basic demographic information about the household was always obtained.
______________________________________________________________________________________5
The sample was purchased from Survey Sampling in Fairfield, Connecticut, and consists
of households with listed telephone numbers from all 50 states in the United States.
Respondents were interviewed during 1997. More than 14,000 U. S. households were
screened resulting in 1,116 eligible family households. The Iowa State University
Statistical Laboratory collected the data. At the completion of the interviewing, the 1997
NFBS consisted of 794 families with a family business, a 71% response rate. Households
with a family business who completed both the business and household interviews
numbered 673, a 60.3% response rate. For the purposes of this study, only the female
business owner/managers were included in the analysis (n = 189). Of the 189 women,
175 functioned as both the business manager and the household manager. In 14 cases the
female was the business manager and someone else in the family, usually the husband,
was the household manager.
Measures and Control Variables
The main predictor variable of interest in this study is whether the female business owner
has more of a business first or family first orientation. Orientation was assessed using the
business owners response to a question on whether as a business person, business needs
come first or family needs come first. Responses were recorded on a continuum from 1
to 5 with 1 representing business first and 5 representing family first.
Family/business tension was measured by scaling the responses to seven questions about
the level of tension that business issues generated in peoples home life. The questions
pertain to who does what in the family business, confusion about decision-making
authority, unequal ownership of the business among family members, unfair
compensation for family members, failure to resolve business conflicts, unfair workloads
among family members due to the business and competition for resources between the
family and the business (see Danes, Zuicker, Kean & Arbuthnot, 1999 for information
related to the development of the instrument). Reliability of the scale using Cronbachs
Alpha as a measure of internal consistency was .69, which is not high but is generally
considered acceptable.
Other predictor variables were used as control variables in the regression models to test
hypotheses 4 and 5. These variables were identified in previous literature on family and
business outcomes. For example, increases in family functionality are associated with
decreases in tension over family and business conflicts (Danes et al., 1999). In addition,
Stafford, Duncan and Zuiker (2003) suggested that income adequacy contributes to
functionality. Characteristics of the business, such as size and whether or not the
business is home-based have also been shown to affect family (Duncan & Stafford,
2000). Family size impacts functionality because functionality is more difficult to
maintain in a larger family (Sung & Stafford, 1995). Characteristics of the owner herself,
such as age, education and marital status may also reflect experience, and the
development of human and resource capital that should influence business and family
outcomes. As noted in the review of literature, longevity and size of the firm are
associated with business outcomes.
______________________________________________________________________________________6
Separate regression models were developed to test the influence of family or business
orientation on the outcome variables of family functionality and business profit. The
family outcome, family functionality, was measured using the Family APGAR scale.
The APGAR is designed to measure the respondents satisfaction with the following 5
areas: Adaptation, Partnership, Growth, Affection and Resolve. The instrument was
developed by Smilkstein (1978) and detailed information regarding validity and
reliability is available (Smilkstein, Ashworth and Montano, 1982; Sawin, Harrigan &
Wong, 1995). Reliability in this study using Cronbachs Alpha as a measure of internal
consistency was .82. The business outcome, profit, was measured using the business
owners response to the question, What was the profit of the business in 1996? The
natural log was used to normalize the distribution of this variable in the regression.
RESULTS
Table 1 shows characteristics of the business owners, their families and their businesses.
Female business owners were approximately 45 years of age, on average, and had
completed 2 years of post-high school study. The majority were married (88%) with an
average of 3.35 people living in their household. Most reported low levels of tension
about the business (with 1 being indicative of no tension at all, and 5 indicating a great
deal of tension). Average family income from all sources was $66,629.63. Most (87.3%)
were satisfied or very satisfied with their role in the family business (percentages are not
shown in tables). The average score on the business vs. family first continuum was 3.63
indicating an orientation toward family first. Respondents scored high on the Family
APGAR instrument (mean of 20.31 out of a possible high score of 25), indicating high
levels of family functionality.
The household managers, most of whom were also the female business owner/manager
(n=175, or 92.6%), were satisfied or very satisfied with their role in the family business
(87.3%). The average age of their firms was 11.74 years, and slightly over 60% were
home-based. The average number of employees, in addition to the business owner, was
3.93, and profits ranged from a loss of $13,750 to a profit of $2 million, with the average
being $26,827.04.
Hypothesis 1, that differences will exist between women family business owners on the
orientations towards their business as business or family first was partially supported.
Over half (54%) expressed a family first orientation, and nearly 15% reported a
business first orientation, but 59% were relatively neutral (not shown in tables).
Hypothesis 2, that in those businesses in which the woman focuses on family first will
have less family tension was supported. Correlational analysis indicated that women
with more of a family orientation experienced less family/business tension (r = -.181, p <
.01), although no control variables were used in examining this relationship.
Hypothesis 3, that lower family/business tension will be associated with greater family
functionality was supported. Results of the multiple regression analysis shown in Table 2
indicate a negative and statistically significant relationship between tension and
functionality ( = -.275, p < .001).
______________________________________________________________________________________7
Table 1: Descriptive Statistics, Characteristics of the Female Business Owners, Their

Families and Their Businesses
________________________________________________________________________
Characteristic Related to the
Business Manager or Family
Mean Range SD
________________________________________________________________________
Age
44.82
26-55
10.61
Education
14.28
8-20
2.27
Marital Status
.88
0-1
.33
Household Size
3.35
2-9
1.42
Household Tension
1.44
1-3.43
.51
Total Household Income
$66,629.63
$6,000- 420,000 $54,028.17
Business or Family 1st
3.63
1-5
1.24
Family APGAR
20.31
10-15
3.55
Characteristics Related to the Business
Satisfaction with Role in the Business 4.38
1-5
.83
Age of the Firm
11.74
1-89
13.56
Homebased Business
.61
0-1
.49
Number of Employees
3.93
0-89
16.07
Profit
$26,827.04
$-13,750.-$2,000,000. 147,089.00
________________________________________________________________________
Table 2: Predictors of Family Functionality for Female Business Owners
Characteristic of the Business
Owner or Family
B
t
Constant
2.619
Age of Business Owner
.064
.920
Education of Business Owner
-.014
-.214
Marital Status
.088
1.372
Business First or Family First Orientation .212
3.269
Household Tension
-.275
-4.081
Household Size
-.105
-1.510
Household Income
.046
.676
Characteristics of the Business
Satisfaction with Role in Business
Age of Firm
Homebased Business
Number of Employees
Model Statistics
F = 8.911 p<.001
.283
.168
.023
.032
r2 = .356
4.292
2.555
.353
.489
p
.010
.359
.831
.172
.001*
.000*
.133
.500
.000*
.011*
.724
.626
______________________________________________________________________________________8
Hypothesis 4, that those businesses in which the female business owner focuses on family
first will have higher family functionality, was supported. The model regressing the
Family APGAR score on business or family orientation and other control variables was
significant (F=8.911, p < .001), and predicts almost 36% of the variance in functionality
scores. The family first orientation is a positive and significant predictor of family
functionality ( = .212, p < .001). Other significant predictors of family functionality
include being satisfied with ones role in the family business ( = .283, p < .001), and
longevity of the firm ( = .168, p <.01).
Hypothesis 5, that those businesses in which the female business owner focuses on
business first will have higher profits was not supported in correlational or regression
analysis. The same predictor variables shown in Table 2, which are measures of human
capital and characteristics of the business, were used as control variables in the analysis
(statistical analysis is not shown in tables). Developing a better model to predict business
profit may be needed to fully assess the relationship between orientation and business
outcomes.
CONCLUSIONS
This study supports the theory that women do differ in their orientation towards business
or family first as suggested by Folker (2003; 2004), and that their orientation will
influence levels of tension and functionality within their families. Results of the study
can be used to inform policy makers and consultants on the importance of family
relationships to female business owners and how those relationships may contribute to
the longevity of the business and the strength and stability of the family. The particular
strengths of female-owned lifestyle businesses (Brush, 1992) can be used as models of
successful businesses and families. The processes through which these families achieve
lower levels of family/business tension and higher levels of functionality warrant further
study.
We have also identified that women with more of a business than family first orientation
face unique challenges related to the functioning of their families and the level of tension
they experience between the family and the business. Future research could examine in
greater depth the business and family outcomes for women with a stronger business first
orientation. Moreover, purposive sampling to insure the inclusion of women with a
business first orientation would allow researchers to garner information about their
unique needs and challenges. Social expectations may make it difficult for women to
pursue a business first orientation given strong socialization toward prescribed gender
roles. Women with a business first orientation may need additional support from
consultants or other advisors, particularly in dealing with family issues related to tensions
and satisfaction.
Additional research is needed to fully articulate the influence of orientation or intent on
business outcomes. The development of multiple indicators to provide a more
sophisticated measure of orientation will lead to a better understanding of the effects of
orientation on business and family outcomes.
______________________________________________________________________________________9
ACKNOWLEDGEMENT
This paper reports results from the Cooperative Regional Research Project, NE-167R,
Family Businesses: Interaction in Work and Family Spheres, partially supported by
the Cooperative States Research, Education and Extension Service (CSREES); U.S.
Department of Agriculture; and the experiment stations at University of Hawaii at
Manoa, University of Illinois, Purdue University (Indiana), Iowa State University,
Michigan State University, University of Minnesota, Montana State University,
University of Nebraska, Cornell University (New York), North Dakota State University,
The Ohio State University, Pennsylvania State University, Texas A & M University, Utah
State University, University of Vermont, and University of Wisconsin-Madison; and the
Social Sciences and Humanities Research Council of Canada (for the University of
Manitoba).
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12
PERSONAL SHOPPING VALUE, CONSUMER SELF-CONFIDENCE,

AND INFORMATION SHARING MEASURES FOR RETAILERS:
RELIABILITY AND VALIDITY ASSESSMENT
Terrence J. Paridon, Cameron University
Developments in understanding personal shopping value, consumer self-confidence, and
word of mouth communication form the foundation for a presentation of research into
measures of the aforementioned constructs and the extent to which they are interrelated.
Reliable and valid measures of the constructs suggest that word of mouth communication
depends upon social outcomes confidence that depends, in turn, upon a hedonic
orientation towards shopping. Results indicate also that ones task orientation towards
shopping directly affects ones personal confidence in the outcome of the shopping event.
Consideration is given to various analytical techniques and suggestions are offered for
researching these topics.
INTRODUCTION
A sustained stream of research addressing the practice of marketing has produced a
significant body of literature that has improved our knowledge about the effects of
implementing a marketing orientation. To be more specific, findings indicate that
manufacturers or retailers who adopt a marketing orientation experience an increase in
sales as well as enhanced profits and return on investment (Best, 2005; Kara, Spillan, &
DeShields, 2005; Pelham, 2000). Studies involving other retailers focus upon practices
associated with specific marketing variables and report comparable changes in
performance. For example, in research that compares product-focused strategies, a
reactor strategy tends to result in an inferior market position while a prospector strategy
increases the potential for a superior position in the marketplace (McCann, Leon-Guerro,
& Haley, 2001). Research indicates also that loyal customer behavior and the amount of
time spent shopping are associated with pleasurable and task oriented shopping
environments (Babin & Attaway, 2000; Babin, Griffin, & Boles, 1997).
Pleasure or hedonic and task or utilitarian orientations contribute to understanding other
marketing related outcomes. That is, hedonic and utilitarian oriented shopping
environments add to our understanding of word of mouth communication. Working
within the context of the consumer retail search process model (Titus and Everett, 1995)
and consumer self-confidence (Bearden, Hardesty, & Rose, 2001), Paridons (2005b,
2005c) findings indicate that pleasurable shopping environments, operating through
consumer social confidence, contribute to an exchange of shopping related information.
A complement to this pleasure induced effect is also noteworthy. Consumer personal
confidence increases as ones overall satisfaction with the task related dimension of
shopping increases.
Since word of mouth communication is an important outcome for many retailers, the
preceding findings suggest that valid and reliable measures of pleasurable and task
oriented shopping experiences, consumer self confidence, and information sharing
______________________________________________________________________________________
13
behavior should be of interest to retailers. That is, retailers who are interested in assessing
the extent to which their store environment produces a pleasurable shopping experience
should be interested in a reliable and valid hedonic scale. On the other hand, if the
marketing strategy involves emphasizing a task oriented shopping environment,
managers should find a valid and reliable utilitarian scale to be of value. These
conclusions generalize to consumer self confidence as well as information sharing
measures. Accordingly, this work focuses upon the measurement properties of each scale
and incorporates an analysis of the relationships among the scales that enables
retailers/managers to select one or more scales to administer to shoppers.
Conceptual Development
Building upon a number of studies about the availability of product information,
merchandising practices, and store design, Titus and Everett (1995) proposed the
consumer retail search process model. It postulates that the search for product
information may be guided by epistemic and hedonic constructual systems. The
epistemic system, representing the shoppers system of logic, gives rise to a need for the
design of in store information displays and merchandising practices, the sine qua non of
the epistemic system. The emotionally laden hedonic system is the sensate orientation
that accompanies the shopping experience. The retail search model suggests that the
individual and the combined effects of these two constructual systems may lead to an
efficient, pleasurable, and satisfying shopping experience.
Mall and store research supports the aforementioned hedonic and epistemic postulates of
the model. In a mall study, a sensate environmental factor was causally related to the
excitement associated with the shopping trip and a desire to continue shopping
(Wakefield & Baker, 1998). In store research, a positive emotional state explained ones
satisfaction with the shopping experience (Babin & Darden, 1996). In other store
research, shoppers hedonic reaction to and utilitarian orientation towards the shopping
experience were associated with their overall satisfaction with the marketplace offerings
(Babin, Darden & Griffin, 1994; Griffin, Babin, & Modianos, 2000). In a second mall
study, Shim and Eastlick (1998) report a composite measure of product knowledge and
emotional variables contributes to ones overall frequency of shopping and average
monthly mall expenditures. Knowledge based and emotional variables contribute also to
an increase in the amount of time and money spent in shopping (Babin, Griffin, & Boles
1997).
Efficient, pleasurable, and satisfying shopping experiences are thought also to contribute
to the consumers personal and social confidence in decision-making (Bearden, Hardesty
& Rose, 2001). According to the authors, consumer self-confidence is the extent to
which an individual feels capable and assured with respect to his or her marketplace
decisions and behaviors (p. 122).
These feelings of competence characterize the
personal and the social outcomes associated with shopping decisions. Shoppers who
consider themselves capable in and assured of their personal shopping decisions will
experience a minimal level of doubt about those decisions (cf. Folkes & Kiesler, 1991).
Similarly, socially capable and assured shoppers possess a high level of confidence about
______________________________________________________________________________________
14
the social consequences of their personal consumption/shopping related decisions. Stated

somewhat differently, when information about the outcomes of the shopping event are
communicated to ones friends and acquaintances, the comments made by these
significant others influence the shoppers consumption related social self confidence
(Folkes & Kiesler, 1991).
Finally, the consumer retail search process model, in conjunction with other research,
provides also a foundation for the development of additional insight into the nature of
retail word of mouth communication. To be more explicit, when consumers interact
successfully with shopping environments, they acquire personal and social information
that can be passed along to their friends and acquaintances (Titus & Everett, 1995; cf.
Higie, Feick, & Price, 1987). This transmission should not be thought of as automatic.
That is, since the personal and social nature of the shopping experience (Tauber, 1972)
leads to the acquisition of information that will influence ones personal outcomes and
social outcomes self-confidence (Bearden et al., 2001), and since self-confidence
influences word of mouth communication (Reynolds & Darden, 1971; Summers, 1970),
ones personal outcomes and social outcomes self-confidence should influence ones
information sharing behavior (cf. Holbrook & Hirschman, 1982).
In a series of studies, (Paridon, 2005a; 2005b; 2005c) the relationships among the
preceding constructs were researched and two principal findings emerged. First, when
socially confident shoppers enjoy the shopping trip, they are more likely to share that
experience with their friends and acquaintances. Second, when shoppers locate the
products they need, their personal self-confidence increases.
Since retailers are
interested in generating favorable word of mouth communication and in insuring that
their customers are able to locate the items they want, the scales used in the
aforementioned research should be part of a resource base for retail managers when they
evaluate merchandising practices and the effects of these store managed activities. An
analysis of the scales follows.
Research Methodology
Two surveys were designed to study the preceding conceptual relationships. Each study
enabled an assessment of each constructs reliability and validity. Consideration is given
first to a brief description of the data collection process. A discussion of the initial
selection criteria for the construct indicators follows.
Data Collection
For both studies, undergraduate marketing students enrolled in an advanced marketing
course at a southwestern regional university were trained and given instructions in
personal interviewing procedures and techniques. Then, during a two-week period,
students contacted their adult non-student female friends and acquaintances and asked
them to complete a self-administered structured questionnaire about their department
store shopping behaviors. Respondents were asked also to provide a first name and
telephone number for verification purposes. Students were instructed to remain content
______________________________________________________________________________________
15
neutral and to answer only questions about the instructions for completing the
questionnaire. A quota-sampling plan was adopted in an attempt to obtain a
representative demographic cross section of respondents.
An analysis of the
demographic data for study number one (response base 273) revealed that the typical
respondent is white, married with children, employed at least part time, and thirty-eight
years old. She resides in a household with an annual income of $45,000.00 dollars. In
study number two, the demographic profile of the respondents (response base 215)
indicated that she is married with children, white, employed at least part time, and thirty-nine
years old. She has completed at least some college courses and she resides in a household
with an annual income of $38,500. In study number one, a convenience sample of 34
respondents, and in study number two, a convenience sample of 26 respondents, two per
student interviewer, was contacted telephonically and asked to verify their participation.
All interviewees responded that they had completed the questionnaire.
Scale Indicators
A series of studies, building upon initial findings in the areas of personal shopping value
(Babin, Darden & Griffin 1994), consumer self-confidence (Bearden, Rose, & Hardesty
2001), and information sharing (Paridon, 2004), led to the development and testing of an
integrated model of word of mouth communication (Paridon 2005a; 2005b; 2005c). In
the first study (Paridon 2005a), the findings resulted in recommendations to change the
indicator set for each of the preceding constructs. The first recommended change was the
deletion of the gift giving and the agonizing over purchasing measures from the
original personal and social self-confidence scales (Bearden et al., 2001). Accordingly,
four of the original five indicators for each construct were retained (Paridon 2005b;
2005c). In both of the latter studies, responses to the remaining indicators for each
construct were obtained by asking respondents to indicate on a 7- point Likert type scale,
the extent to which they agreed that the statement characterized them.
Similar concerns for validity and reliability of the hedonic and utilitarian constructs
resulted in selecting four scale items for each construct (Babin et al., 1994; Griffin et al.,
2000). Scale items qualified if they demonstrated, by their standardized factor loading,
an acceptable level of construct validity. To be more specific, Paridon (2005a) suggested
deleting a negatively worded hedonic construct indicator in order to improve reliability
and variance extracted values. Paridon (2005a) reported also that research into utilitarian
measurement (Voss, Spangenberg & Grohmann, 2003) suggested an improvement to the
original four indicator utilitarian scale might be realized by adding a direct measure of
satisfaction. In the same study (Paridon 2005a), it was suggested that deleting the
negatively worded utilitarian statement I couldnt buy what I really needed would lead
to improved measurement statistics. Thus, utilitarian value was assessed using three
original utilitarian value indicators and one supplemental indicator of satisfaction. For
these eight personal shopping value measures, respondents were asked to indicate the
extent to which they agreed, using a conventional seven point Likert type format, with the
item.
______________________________________________________________________________________
16
The final set of construct measures emerged from research in retail information sharing
(Paridon, 2004) and word of mouth communication (Feick, Price, & Higie, 1986; Higie et
al., 1987). Three of the 10 indicators from the retail information sharing scale were
adopted and supplemented with one item that explicitly addressed the altruistic nature of
word of mouth communication (Feick et al., 1986; Higie et al., 1987). For each of the
four indicators, participants were asked to indicate the extent to which they agreed, on a
seven point Likert type scale, with the statement. For construct validation purposes, the
questionnaire also contained the complete market maven scale (Feick & Price, 1987), an
accepted measure of ones propensity to engage in general marketplace conversations. In
addition to the standard semantic anchors, the indicators for all five constructs and the
market maven measures contained numeric anchors with one representing the least
favorable interpretation of the statement and seven indicating the most favorable
interpretation of the statement. Standard demographic measuresgender, age, marital
status, employment status, annual household income, education, and ethnicitywere
included also. Finally, the second study included indicator variables that focused upon
measuring the adequacy of assistance from employees and the accessibility of
merchandise (Dabholkar, Thorpe, and Rentz 1996; Kim and Jin, 2001). The statistical
significance of these latter measures has been reported elsewhere (Paridon, 2005c) and
omitting them from the discussion does not materially change the following analysis and
recommendations.
Table 1
Product Moment Correlations
______________________________________________________________________________
Market
Information Social
Personal Hedonic
Utilitarian
Maven
Sharing Confidence Confidence Orientation
Value
______________________________________________________________________________
Market
maven
31.5/31.4
(6.38)/(6.89)
Information
sharing
.60a /.71a 22.9/22.8
(3.88)/(4.35)
Social
confidence
.61a/.67a .55a/.66a 20.4/20.4
(4.47)/(4.63)
Personal
confidence
-.03/-.16 .04/-.10
-.10/-.11 11.7/12.4
(5.90)/(5.90)
Hedonic
20.0/20.2
orientation
.31a/.39a .32a/.42a .34a/.44a -.05/.05
(5.50)/(5.64)
Utilitarian
value
.20a/.43a .21a/.42a .23a/.41a -.36a/-.25a .45a/.41a
23.1/22.5
(4.30)/(4.60)
______________________________________________________________________________
Note: Main diagonal values are means with standard deviations in parentheses. Study one
values/study two values.
a
p < .01, two tail test.
______________________________________________________________________________________
17
Reliability and Validity Analysis

As an initial analysis for evaluating multiple indicator scales, Hair, Anderson, Tatham,
and Black (1998) recommend using the Bartlett test of sphericity and the Kaiser-MeyerOlkin (KMO) measure of sampling adequacy. For each of the five constructs in both
studies, the significance level for the Bartlett test was less than .01. In study one (two),
the KMOs were as follows: hedonic orientation, .82 (.81); utilitarian value, .82 (.83);
information sharing, .80 (.79); social confidence, .79 (.77); personal confidence, .73 (.72).
Sets of indicators whose KMO value is .80 or greater are characterized as meritorious
while KMO values that exceed .70 are considered adequate.
Table 2
Factor Structure and Standardized Loadings [study 1 & study 2 values]
_______________________________________________________________________
Hedonic Orientation
Factor Loading
The shopping trip was truly a joy.
.87/.73
The shopping trip truly felt like an escape.
.83/.82
I enjoyed the shopping trip for its own sake,
not just for the items I may have purchased.
.77/.66
I had a good time because I was able to act
on the spur of the moment.
.76/.84
Utilitarian Value
The shopping trip was useful.
I was satisfied with the items I purchased.
I accomplished just what I wanted to on
the shopping trip.
While shopping, I found just the item(s)
I was looking for.
Social Outcomes Confidence
My friends are impressed with my ability
to make satisfying purchases.
I impress people with the purchases I make.
I get compliments from others on my
purchasing decisions.
My neighbors admire my decorating ability.
Personal Outcomes Confidence
I often have doubts about the purchase
decisions I make.
I often wonder if Ive made the right
purchase selection
I never seem to buy the right thing for me.
Too often the things I buy are not satisfying
Information Sharing
.89/.84
.85/.80
.83/.83
.75/.77
.81/.86
.84/.84
.76/.73
.64/.61
.90/.66
.88/.71
.74/.88
.69/.87
______________________________________________________________________________________
18
My friends and I enjoy talking about the styles

and fashions we see on shopping trips
When my friends give me shopping advice
I can use, I usually act on it.
When we find quality service in a store, my
friends and I let each other know
When I help a friend by telling her about my
Shopping experiences, I feel good about myself
.76/.72
.74/.81
.70/.81
.66/.71
__________________________________________________
Table 3
Coefficient Alpha, Construct Reliability and Variance Extracted Estimates
______________________________________________________________________________
Coefficient Alpha Construct Reliability Variance Extracted
______________________________________________________________________________
Information
Sharing
.81/.84
.81/.85
.51/.58
Social
Confidence
.85/.85
.85/.86
.59/.59
Personal
Confidence
.89/.87
.88/.87
.65/.62
Hedonic
Orientation
.88/.85
.85/.85
.65/.59
Utilitarian
Value
.90/.88
.90/.88
.69/.66
______________________________________________________________________________
Note: Study one values/study two values.
The significance levels for the Bartlett tests for the construct validation scale, market
mavenism, were less than .01 (both studies). The KMO values were .82 and .85, study
one and study two, respectively. Accordingly, an initial convergent validity analysis
made use of Pearson product moment correlations between the five constructs of interest
and the market maven scale. The resulting pattern of coefficients, summarized in Table
1, suggests an acceptable level of convergent validity. To be more specific, one would
expect that market mavens would: share information about their shopping experiences;
exhibit social confidence; enjoy shopping; and shop for what they want. The pattern of
decreasing correlations suggests also an acceptable level of discriminant validity. The
lack of statistical significance between mavenism and personal confidence indicates that
mavens are knowledgeable about the market place and their doubts about their own
______________________________________________________________________________________
19
purchases are unrelated to their market place expertise. This latter result underscores the
conclusion that the scales are measuring similar yet distinct characteristics of shoppers.
Each constructs validity and reliability was assessed using the standardized factor
loadings from a LISREL 8 (Joreskog and Sorbom, 2001) structural equation modeling
maximum likelihood factor analysis. To be more specific, current practice for
ascertaining the validity of a construct, emanating in part from Bollens (1989) discussion
of the maximum likelihood standardized validity coefficient, involves an analysis of each
indicators standardized factor loading. Table 2 presents the loadings for each study. All
loadings exceed .60, a value commonly accepted as indicating construct validity. An
internal consistency estimate in the form of coefficient alpha (Nunnally 1967), construct
reliability estimates, and average variance extracted values (Hair et al. 1998) for each
construct of interest were calculated from the raw data and the standardized factor
loadings, respectively. Internal consistency and construct reliability estimates that exceed
.70 are considered acceptable and average variance extracted estimates that exceed .50
are considered acceptable. Table 3 contains the estimatesall values exceed the
accepted minimums. For each constructs set of indicators, a principal components
analysis using the widely available SPSS 13.0 routine generated similar loading patterns.
Given the acceptable patterns of validity coefficients and reliability estimates, additional
insight into the nature of the relationships among the constructs emerged from a
structural equation modeling analysis (Bollen, 1989; Hoyle, 1995) of the standardized
structural equation regression coefficients. In both studies, information sharing was
significantly influenced by social outcomes confidence scores (regression coefficients
equal .57 and .77, study one and study two, respectively, p < .05). In study one only,
personal outcomes confidence was statistically significant (regression coefficient equals
.14, p < .05) in predicting information sharing. While the magnitude of the latter
coefficient attained statistical significance, it should not be considered managerially
significant. Similarly, in both studies, social outcomes confidence depended upon ones
hedonic orientation (coefficients equal .37 and .36, study one and study two, respectively,
p < .05). Ones utilitarian orientation influences personal outcomes confidence only in
study two (gamma coefficient equals -.38, p < .05). In both studies, ones satisfaction
with the task related nature of the shopping experience determined ones personal
outcomes confidence (regression coefficients equal -.49 and -.38, study one and study
two, respectively, p < .05). The negative sign for the coefficients involving personal
outcomes confidence are consistent with the wording of the construct.
Multiple
regression analyses (Cohen, Cohen, West, & Aiken, 2003) of the factor scores from the
principal components analysis generated standardized coefficients whose values were
statistically and managerially similar to the structural equation estimates.
Discussion
The conceptual foundations upon which this research rests, as well as the findings and the
brevity of the indicator sets, suggests that one may confidently and conveniently apply
the aforementioned methodologies to the study of the relationships among retail
merchandising practices, shopper characteristics, and word of mouth communication. For
______________________________________________________________________________________
20
example, if a manager is interested in determining the level of satisfaction with the task
related dimension of the shopping environment, the utilitarian scale should provide
information about such practices. Similarly, the hedonic scale should provide
information about the overall level of customer shopping enjoyment. Furthermore,
whatever level of task related satisfaction and/or shopping enjoyment is attained, the
results suggest these ratings will have a direct effect upon a consumers self-confidence.
The specific nature of these effects upon self-confidence is both apparent and subtle. To
be more specific, enjoyable shopping experiences should bolster ones social outcomes
confidence while satisfaction with the task related nature of shopping should enhance
ones feelings of personal outcomes confidence. In turn, favorable social outcomes
confidence should increase the occurrence of information sharing, a form of word of
mouth communication. Since the relationship involving personal outcomes confidence
and information sharing was not significant, the potential for any task related shopping
successes to influence word of mouth communication depends solely upon the one
finding (study two) of a significant relationship between utilitarian value and social
outcomes confidence. Since the two studies are not in agreement with respect to this task
related effect, managers should not rely on utilitarian value as an initiator of word of
mouth communication. Shopping enjoyment operating through social outcomes
confidence activates word of mouth communication. Success with the task related
dimension of shopping activates personal outcomes confidence.
Accordingly, when managers and researchers are focused upon obtaining information
about the potential for their merchandising practices to activate either word of mouth
communication or personal confidence, they should administer one or more of the
appropriate scales to their customers. Consider single scale options. If the primary
interest involves assessing the pleasure of the shopping experience, the hedonic scale
would be the appropriate choice. Favorable ratings on this scale would suggest that the
shoppers are also high on social confidence and thus likely to engage in favorable word
of mouth communication about the shopping experience. A comparable logic and
conclusion applies to managers who are focused upon assessing their shoppers social
confidence. Similarly, assessments of task related shopping satisfaction might be
considered as a surrogate measure for personal outcomes confidence. The opposing
conclusion holds also: shoppers who manifest confidence in their purchases should
experience a high level of task related shopping satisfaction.
Finally, more confidence in evaluating the effects of merchandising practices may be
obtained if multiple scales are used. If interest revolves principally around the task of
shopping and its effect upon shoppers confidence, the utilitarian and the personal
outcomes confidence scale should be administered. When the objective is to evaluate
the potential for activating word of mouth communication, the hedonic value, social
outcomes confidence, and information sharing scales should be selected. Of course, if
demographic or other market related variables suggest the need for a more thorough
evaluation of ones merchandising practices and their effects, all five scales should be
administered. Irrespective of the combination of scales used, if correlation coefficients
indicate an acceptable pattern, and if internal consistency estimates attain an acceptable
______________________________________________________________________________________
21
level, one may infer the nature of the relationships among merchandising practices,
shopper self-confidence, and word of mouth communication. Alternatively, one may
perform more rigorous statistical analyses using the aforementioned standard factor
analysis routines and regression techniques or structural equation modeling techniques.
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Journal of Marketing Research, 7 (2), 178-185.
Titus, P. A., & Everett, P. B. (1995). The consumer retail search process: A conceptual
model and research agenda. Journal of the Academy of Marketing Science, 23 (2), 106119.
Voss, K. E., Spangenberg, E. R., & Grohmann, B. (2003). Measuring the hedonic and
utilitarian dimensions of consumer attitude. Journal of Marketing Research, 40 (36),
310-320.
Wakefield, K. L., & Baker, J. (1998). Excitement at the mall: Determinants and effects
on shopping response. Journal of Retailing, 74 (4), 515-539.
______________________________________________________________________________________
24
DETERMINANTS OF THE SINGAPOREANS CONSUMER

BEHAVIOR PERTAINING TO SHAMPOO BRANDS: AN ASIA
PACIFIC MARKETING MANAGEMENT PERSPECTIVE
Thomas Tsu Wee Tan, Singapore Management University
Zafar U. Ahmed, Texas A&M University Commerce,
Lee Shing, Tan Lee Ping Linda, & Verani Nikke, Nanyang Technological University
In the light of the increasingly saturated toiletries market in Singapore, it is crucial for
both manufacturers and marketers of these products to keep abreast of competition by
being more in tune with the desires of the consumers. This study seeks to aid
manufacturers and marketers alike in meeting, and possibly exceeding, the demands that
local female consumers may have on shampoo. With a sample of 200 the findings of this
research indicate that Procter & Gamble (P&G) has a stronghold in the local shampoo
sector and that its product, Pantene Pro-V is the most popular brand of shampoo amongst
young Singaporean women today. Meanwhile the most important features that these
consumers look for in a shampoo are its moisturizing and strengthening abilities. Our
study also shows that the local consumers are generally satisfied with the brands of
shampoo they are presently using. However, this does not necessarily translate into repeat
purchases since many consumers enjoy experimenting with different brands of shampoo.
Therefore, P&G should embark on continuous research and development in this area so
as to come up with new and innovative products in order to remain a force to be
contended with in the local shampoo sector.
Introduction
In recent years, we have witnessed a proliferation of products targeted at women. In
particular, the competition in the local toiletries market is especially intense.
Manufacturers are continuously introducing and aggressively marketing new products in
a bid to have a share of the lucrative market. In order to successfully reach out to the
female consumers, it is critical that the manufacturers know and understand what their
target customers are looking for in various types of toiletries. Therefore, it is imperative
that the purchasing behavior of this increasingly affluent and powerful group of people be
examined so as to allow companies to capitalize on this knowledge and thus better meet
the demands of these consumers.
With this in mind, this project seeks to study the purchasing behavior of Singaporean
females between the age of 18 and 30 in respect of their purchase of toiletries. The
information gathered will give marketers an insight into these consumers motivation for
the purchase of their chosen brand.
Research Objectives
The cosmetics and toiletries industry consists of 10 segments, of which Hair Care, Bath
and Shower Products, Oral Hygiene, Sun Care, Baby Care, Mens Grooming Products,
______________________________________________________________________________________
25
and Deodorants will be referred to as toiletries throughout this paper. Cosmetics on

the other hand will refer to color cosmetics, fragrances and skin care.
Using this representation, the toiletries market in Singapore was valued at S$230.8m in
2000, of which $201.6m (87.3%) was attributed to Hair Care, Bath and Shower Products
and Oral Hygiene. This study will focus on the dominant product of hair care in particular
shampoo. Shampoo products are considered basic necessities and they are used daily in a
womans personal care and grooming routine.
In this project, the manufacturer in focus is P&G, a well-established company in
the toiletries market. P&Gs brand image among the respondents will be evaluated
and to take it a step further, its influence on the consumers purchasing decision
will also be examined. Specifically, the research will:
Find out the brands of shampoo that the respondents are currently using.
Determine if the respondents intend to switch brands in their next
purchase and the reasons behind this intention.
Find out the key attributes of shampoo that the respondents are concerned
with when they are making a purchase decision.
Evaluate the respondents satisfaction with the above-mentioned key
attributes of the current brands of shampoo used.
Established in 1837 by James Procter and William Gamble, P&G is a multi-million dollar
corporation founded and based in the United States. (http://www.pg.com) It started out
as a soap and candle manufacturer in Cincinnati, Ohio, but turned its attention to the
production of soaps as candles declined in popularity with the invention of the electric
light bulb. In 1879, the Ivory soap, arguably P&Gs most famous product, was developed
and by 1890, P&G was selling more than 30 different types of soap.
(http://www.pg.com)
To meet the increasing consumer demand for P&G soaps, the Company began expanding
its operations outside Cincinnati and then outside the United States. Convinced that its
success in new geographic markets required on-the-ground operations in these countries,
P&G began building start-up businesses, first in Mexico in 1948, then in Europe in 1954
and Japan in 1973. (http://www.pg.com) That said, by 1997, P&G markets approximately
250 brands to nearly five billion consumers in over 130 countries. (http://www.pg.com)
These brands include Pampers, Tide, Whisper and Pantene. In particular, P&G entered
the Singapore market in 1986. (http://www.pg.com) With staff strength of under a
hundred, the P&G establishment here serves as the headquarters for its Asia-Pacific
operations. Based at Novena Square, P&G Singapore competes in the following sectors
of the local market: shampoo (eg. Pantene); body wash (eg. Camay); toothpaste (Crest);
skin care (eg. Oil of Olay); cough/cold (eg. Vicks Throat Drops); diapers (Pampers);
feminine care (eg. Whisper).
On a strategic front, P&G's global growth goals include: doubling unit volume in ten
years, achieving share growth in the majority of its categories and delivering total
shareholder return that ranks P&G over time among the top third of its peer group. Most
______________________________________________________________________________________
26
importantly, P&G's goal is to continue to provide products of superior quality and value
to the worlds consumers. (http://www.pg.com)
Research Methodology
Women between the age of 18 and 30 were targeted for this study. This group of young
Singaporean adults has a well-developed sense of fashion, and coupled with a high
literacy rate, they are more in tune with fads and new product launches. Most
importantly, with higher expectation of lifestyles, they are willing to expend cash to
satisfy their increasingly sophisticated needs. (Euromonitor, Consumer Lifestyles in
Singapore, April 2000). All these factors make this segment very attractive to marketers
as they can effectively target this group using demographic-psychographic segmentation.
The sample size for the primary research was set at 200 and the composition of the
surveys respondents was intended to reflect the racial breakdown of Singapores female
population with 77.1 percent Chinese, 13.8 percent Malay, 7.5 Indian and 1.5 percent of
other race. (Singapore Population 2000)
Before the fieldwork, a pre-test was performed to further refine the questionnaire. The
survey was administered using the street intercept method where respondents were
required to fill up the questionnaire. Convenience sampling was used throughout the data
collection. Respondents were also given a pen at the end of the survey as a token of
appreciation.
RESULTS
Table 1 illustrates the respondents selection of shampoos in terms of the brands
previously purchased, currently used and that likely to be selected in their next purchase.
It can be seen from Table 1 that the shampoo sector in Singapore is clearly dominated by
P&G, which currently occupies 47.0 percent of the sector. P&Gs leadership is a result of
its strong portfolio of competing brands, which are targeted at different consumer
segments, in the sector.
Unilever, manufacturer of Dove and Organics, ranks second with a 25.0 percent share of
the market. Previously, Dove and Organics together accounted for 19.0 percent of the
shampoo sector. However, based on our findings, their share of the sector is likely to
increase by 11.0 percent to 30.0 percent. This improvement can be attributed to the
phenomenal increase in the popularity of Dove, which on its own is expected to grow by
92.3 percent, as well as the dynamic growth of 40.0 percent in its best-selling brand,
Organics. Dove shampoo effectively latched on to its well-received body wash, which is
already a household name in the body wash sector, through the employment of a brand
extension strategy. In addition, Unilever re-launched and repackaged Organics as
Organics Bio-Nutrients in February 2000 to cater to the increasingly sophisticated
consumer base. It embarked on a product innovation process with the reengineering of
Organics, incorporating aromatherapy and essential oils in its shampoos to appeal to
consumers who desire relaxation as a balance to their frenzied lifestyles.
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27
Table 1: Brands of Shampoos Purchased
Shampoo Brands
P&G
Pantene Pro-V
Vidal Sassoon
Clairol Herbal Essence
Head & Shoulders
Rejoice
Ascend
Sub-total
Unilever
Organics
Dove
Sub-total
LOreal
LOreal Elseve
Kao
Lavenus
Sifone
Sub-total
Neutrogena
Neutrogena
Others*
Total
Brand purchased
prior to the
current one
(n=200)
No.
%
Brand likely to be
selected in the next
Brand currently using
purchase
(n=200)
(n=200)
No.
%
No.
%
53
22
19
13
7
1
115
26.5
11.0
9.5
6.5
3.5
0.5
57.5
40
22
14
12
5
1
94
20.0
11.0
7.0
6.0
2.5
0.5
47.0
36
23
15
12
5
91
18.0
11.5
7.5
6.0
2.5
45.5
25
13
38
12.5
6.5
19
27
23
50
13.5
11.5
25.0
35
25
60
17.5
12.5
30.0
18
9.0
16
8.0
18
9.0
3
8
11
1.5
4.0
5.5
7
5
12
3.5
2.5
6
4
4
2.0
2.0
2
16
200
1.0
8
100.0
1
27
200
0.5
13.5
100.0
2
25
200
1.0
12.5
100.0
* Others include brands like Paul Mitchell, Body Shop, and TIGI.
Unilevers exceptional performance is in stark contrast to P&Gs, which is likely to lose

ground with a 12.0 percent dive in the shampoo market (57.5% to 45.5%). This may be
explained by the volatile nature of shampoo sector whereby sales are highly influenced
by, among other things, the amount of advertising and promotional activities for
particular brands. P&Gs initial aggressive marketing of Pantene and Vidal Sassoon had
seen the two brands flourish in the shampoo market. Vidal Sassoon had enjoyed
tremendous market support, with a stable sector share of 22.0 percent. However, Pantene,
P&Gs top-performing and sector leading brand, is possibly falling out of favor with
consumers as evident in an 8.5 percent slide (26.5% to 18.0%) in usage, thus contributing
to P&Gs fall in popularity. In response to Unilevers back-to-back Dove/Organics
aggressions, P&G attempted to match competition by repackaging the Pantene and Vidal
Sassoon range of products. On top of these, P&G also introduced Pantene Pro-V Color
Care, a series of products for colored hair, in 2000 to accede to the current trend for
colored hair in Singapore. However, these efforts did not do much to boost Pantenes
flagging popularity. In order to sustain its sector share, P&G introduced Ascend, a
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28
shampoo to appeal Asian womens desire for black hair, in 2001. It also acquired Clairol
Herbal Essences to meet the needs of consumers with inclinations towards nature-based
products.
The shampoo sector in Singapore is highly competitive and it appears that both P&Gs
Pantene and Unilevers Organics will remain strong contenders with approximately 18.0
percent of the market each. Other companies that followed closely behind include Kao
(6.0%) and LOreal (8.0%).
Importance of Product Attributes
Having assessed the purchasing trends of shampoo in Singapore, we seek to identify the
product attributes that consumers deem important in a shampoo. Table 2 reflects a range
of shampoo attributes in order of importance to consumers. The lower the mean, the more
important the attributes are to the consumers.
Table 2: Attributes of Shampoos in Order of Importance to Consumers
Shampoo Attributes
Moisturizing ability
Strengthening ability
Pleasant smelling
Lathering ability
Rinses off easily
Price
Dandruff control ability
User-friendly packaging
Attractive packaging
Nice color
1-very important
Mean
1.65
1.74
2.16
2.21
2.74
2.83
2.94
3.27
3.57
4.15
Standard Deviation
0.99
1.08
1.19
1.36
1.55
1.48
1.81
1.42
1.55
1.67
7-not important at all
The results reveal that many product attributes are being considered by consumers in
their choice of shampoos as almost all of the listed attributes have a mean smaller than 4.
In choosing their shampoo, consumers top concerns are the shampoos moisturizing
(mean of 1.65) and strengthening (1.74) abilities. These attributes are important in our
society where consumers are becoming increasingly particular about their physical
appearance. On a similar note, the smell of a shampoo is also a critical attribute (mean of
2.16) since the use of a nice-smelling shampoo will leave the consumer smelling
pleasant. This in turn has a feel-good or psychological effect on the consumer. In
addition, the abilities of a shampoo to lather well and rinse off easily are reasonably
important (ranked 4th and 5th respectively) to consumers here. This is so possibly because
consumers tend to associate a proper cleansing routine with a full lather that leaves a
residue-free feeling after rinsing. On the other hand, price is less of a concern to the
average Singaporean who is relatively affluent. Hence, they are willing to pay a higher
price for a better quality or more suitable product, which produces the desired results.
Also, superficial factors like the packaging of the shampoo and its color are relatively
unimportant. These attributes may be perceived as having little value adding capability.
______________________________________________________________________________________
29
Consumers Satisfaction with Attributes of Current Shampoo

Table 3 presents the ranking of consumers satisfaction with the various shampoo
attributes. Lower means indicate higher satisfaction levels. Next, Table 4 evaluates
consumer brand-switching behavior with regards to their choice of shampoos. Table 5
then summarizes the respondents reasons for changing brands of shampoo.
Table 3: Consumers Satisfaction with Attributes of Shampoo Used
Shampoo Attributes
Pleasant smell
Moisturizing ability
Lathering ability
Rinses off easily
Strengthening ability
Price
Nice color
Dandruff control ability
User-friendly packaging
Attractive packaging
1-very satisfied
Mean
2.21
2.26
2.30
2.31
2.34
2.63
2.89
2.93
3.00
3.02
Standard Deviation
1.08
1.24
1.21
1.10
1.20
1.18
1.15
1.51
1.24
1.28
No.
88
112
200
%
44.0
56.0
100.0
7-very dissatisfied
Table 4: Changes in Brands of Shampoo Chosen
Changes in Brands
Change brands
No change
Total
Table 5: Reasons for Changing Brands of Shampoo

Reasons for Changing Brands
New brand is cheaper
New brand smells better
New brand has more user-friendly packaging
New brand has better dandruff control ability
New brand has better moisturizing ability
New brand has better strengthening ability
New brand is recommended by friends
Advertising, promotions and other sources of information *
Like to change/try new brands
New brand more suitable for chemically treated hair
Current brand not suitable
Others **
Total
No.
6
6
1
2
4
3
13
11
20
1
15
6
88
%
6.8
6.8
1.1
2.3
4.5
3.4
14.8
12.5
22.7
1.1
17.0
6.8
100.0
* Advertising, promotions and other sources of information include friends recommendation, free samples,
discount coupons, magazine reviews, advertisements and expert opinions.
** Some of the reasons cited include new brand of shampoo adds more volume to hair and new brand of shampoo
makes hair softer/ smoother.
______________________________________________________________________________________
30
From Table 3, it is evident that most of the respondents are generally pleased with the
shampoo they are presently using, as all the attributes have means less than 4. In
particular, they are most satisfied with the smell (mean of 2.21) and moisturizing ability
(2.26) of the shampoo, which they felt are very important features of the product.
However, Table 4 shows that 44.0 percent of those polled indicated that they would
choose a different brand of shampoo in their next purchase. We can thus infer that
consumers are generally not brand loyal and have an inclination towards switching
brands.
As indicated in Table 5, the most prevalent reason cited for brand switching is the desire
to experiment with new brands (22.7%). This is especially true of the younger, and
presumably more adventurous, consumers and may explain the numerous product
launches despite the maturity of the shampoo market. Another popular reason for
switching brands is upon friends or familys recommendation of a product (14.8%). This
again highlights the effectiveness of the influence of friends and family in consumer
purchasing behavior. The third most prevalent reason for a change is dissatisfaction with
their current shampoo (17.0%) and this is perfectly understandable. Some respondents are
also successfully persuaded by product advertisements, promotions and other sources of
information to select a different brand of shampoo in their next purchase (12.5%) and this
is reflective of the power of marketing campaigns and sources of information in
influencing consumers purchasing behavior.
Consumers Perception of Shampoo Brands Manufactured by P&G
The results of our study reveals that an average of only 23.5 percent of consumers polled
knew that particular brands of shampoo were manufactured by P&G, while the majority
of the respondents (52.5%) were under the impression that P&G shampoos are produced
by other manufacturers. On the other hand, Sifone, by Kao, is largely misconceived as
being a product of P&G (25.5%). 12.5 percent of the respondents also mistook Dove for a
product of P&G.
Among the 6 brands of shampoo produced by P&G, Pantene has the highest level of
consumer awareness with regard to its manufacturer (48.5%) and it is followed closely by
Head & Shoulders 41.0 percent. This may be due to the occasional flashing of the P&G
slogan at the end of advertising for these brands. Brands like Ascend and Clairol are
highly misconceived with 73.5 percent and 69.5 percent of the respondents, respectively,
under the impression that they are non-P&G products. Such situations could the result of
P&Gs employment of product branding strategies in the promotion of its products, as
opposed to corporate branding strategies in which the companys name is publicized. The
use of product branding strategies allows each brand, with its own distinctive
characteristics, to appeal to different segments of the market.
Conclusions and Marketing Implications

Information gathered from the secondary research and observations from the primary
research have strong implications for P&G. P&G has a commanding presence in the
______________________________________________________________________________________
31
shampoo market, with 6 brands under its wing where Pantene is their star performer.
Unilever is a strong contender with Organics and Dove Cream Shampoo, the latter
showing a remarkable performance.
P&G has to be quick to introduce new and interesting products to arouse consumers
attention and obtain first-mover advantage. Technology developments have made it
possible to create products that offer a multitude of advantages. A lot of what drives the
hair care category is defining the customers' wants, needs and desires before they even
realize that it is a want, need or desire. As Rick Hynes, Vice-President of Alberto-Culver
Company, aptly puts, Beyond the obvious, hair care is driven by news, and if retailers
and suppliers can effectively communicate that to consumers, it will remain a stronghold
in mass and drug. So there's this eternal search for the perfect product that's appropriate
[for that consumer's] hair condition." (Anonymous, 2001)
That said, people would always be conscious of their looks and personal care, despite the
economy. Hair care will persevere in the leading mass channels even in a soft economy
because "for $5 or less, hair care is still a luxurious escape," said Jeremy Cage, hair care
marketing manager from P&G, with reference to the price of a typical shampoo or
conditioner. "I would say in times of economic hardship, hair care is something
consumers can hold on to as their treat." (Anonymous, 2001)
As mentioned previously, P&G needs to constantly think up new ideas to add value to
their products portfolio in each segment. This in turn places greater emphasis on research
and development to formulate new products, as well as to improve and repackage their
existing products in a bid to keep up with the stiff competition. Research and
development is crucial as it can allow rapid counter actions in response to competition. It
also enables manufacturers to make timely responses to the requirements of this volatile
market. Through research, breakthrough efficiencies, which allows cost savings by
simplifying product ranges and standardizing processes globally, can be found. (Mitchell,
1998). Maintaining a constant stream of innovative products is thus a crucial factor
(Chevron, 1998; Davis, 2002). If done correctly, P&G can be largely assured that their
presence in the hair care sector will continue to flourish. At the same time, they may see a
vast improvement in their performance in both the body wash and toothpaste sectors,
which they appeared to be particularly weak in especially in the oral hygiene market.
However, if they are beaten at this game, even the smallest niche player can threaten to
wrench their share of this lucrative industry from right under their nose. (Neff, 1999: 23)
The volatility of the shampoo and body wash markets is clearly seen in the respondents
tendency to switch brands. The most common reason cited is the desire to experiment and
try new brands, a clear indication of their affinity with novel products. It is normally
assumed that satisfaction with products will lead to brand loyalty. However, this trend is
not observed here. As a result, it gets increasingly difficult to establish brand loyalty,
thus, reinforcing the need to constantly innovate.
Although establishing brand loyalty is difficult, it is still essential practice, as loyal
customers constitute a stable consumer base for P&G. Therefore, P&G must look beyond
______________________________________________________________________________________
32
product satisfaction and look into building strong relationships with buyers. One effective
way to build relations is through the Internet. This method is already in use in America,
where P&G has designed comprehensive websites in relation to their products. P&G
launched BeingGirl.com in July 2000, a website offering information on puberty that is
targeted at teenage girls. This launch is in direct relation to its feminine care products,
Always and Tampax. Forums are set up to allow users to speak their mind about which
kinds of products they would like to see, or how improvements can be made to existing
products. A comprehensive website with structured forums and discussion rooms is a
form of high involvement media, as it allows people of the same reference group to
discuss and share experiences (Anonymous, 2001). Such sites should be launched for the
Asian market, as it serves as an efficient and valuable information source for both P&G
and consumers alike. It is also an avenue for products users to communicate with P&G,
making them feel that P&G does value their opinions and this makes them feel important.
In contrast, low involvement media vehicles like television and radio do not facilitate this
2-way transfer of information. As such, there is immense potential for such a venture as
Internet usage is increasing in this region, setting the stage for the new era of ecommerce.
Brand management is also an important aspect. With rapid product development, the
performance of existing brands must constantly be evaluated. Weaker brands with little
potential to grow and improve should be phased out so as to free up resources for the
stronger, more profitable brands. Keeping a streamlined brand portfolio is likely to
produce optimal results for the buzzword now is quality and not quantity. Manufacturers
should also look at focusing their business in sectors where they already have a favorable
position, rather than to cover all sectors, spreading themselves too thin in the process.
They must optimize their resources in this increasingly fragmented and competitive
industry.
There are several guidelines for brand evaluation according to Alex Batchelor, Interbrand
Newell and Sorrell's brand valuation director and ex-Unilever marketer: Firstly, P&G
must consider how big the brand is. This is measured by sales volume and the value these
sales generate. Another indication is the number of users of this particular brand. Once
brands get to a certain size, their resilience is proven when they become self-sustaining.
They might also be used for spin-offs like in the case of Dove Shampoo, which is now
huge after latching onto the success of Dove Shower Cream.
Secondly, P&G should look at the extent of the brand's following and the size of the
demand, even if it was not supported by extensive advertising. As a global player, P&G
also has to note the popularity of the brand in the various markets. Next, P&G should
evaluate the brands potential with regard to growth outside its core audience. The growth
potential for brand extensions should also be considered. If the brand has little to offer in
these aspects, it will be increasingly difficult to sustain this brand in the near future. In
addition, the current trend facing the brand is also an important aspect. For brands that
are losing ground, P&G must decide whether to `go with the flow' or spend time, money
and effort to turn them around. If P&G already has enough strong products in its
portfolio, it may be unnecessary to try to push water uphill. (Campbell, 1999)
______________________________________________________________________________________
33
P&G's personal care marketing director, Nick Hotham, adds that P&G's category
management program now helps the company focus on core competencies by feeding the
strong and starving the weak. Streamlining the portfolio should speed up the traditionally
slow-moving bureaucracy, making P&G a leaner and meaner fighting machine.
(Campbell, 1999) In the past few years, P&G rationalized and ridded itself of brands such
as Insignia and Blue Stratos, to leave a portfolio of around 300 brands, which it supports
heavily. In Singapore, Cover Girl cosmetics are phased out to facilitate the streamlining
of P&Gs product portfolio.
In recent times, P&G has downplayed its corporate brand image in its advertising and
promotions. This point is clearly exemplified in the misconceptions about toiletries
products and their respective manufacturers. An overload of products and brands create
much confusion and most people cannot keep track of the manufacturers and their related
brands. Secondly, consumers do not place value on this information in the purchasing
process. By marketing each brand on its own, P&G can better position its brands to cater
to their target segments. As a result, each branding strategy can be customized to obtain
optimal results. Nonetheless, respondents have a positive perception of P&G, where they
feel that P&G is a reliable and trustworthy company. They also feel that P&G appeals as
a family brand that produces quality products. P&G is also perceived to be a market
leader in the toiletries market. However, relying solely on these factors will not make
consumers buy P&G products. The respondents have expressed that they are not likely to
purchase a merchandise simply because it is manufactured by P&G. Hence, a quality
product must have direction, an aim to satisfy a need that the customer has. P&Gs
corporate image can only assume a supporting role to reduce cognitive dissonance,
serving as some form of assurance that P&G will deliver the promises that is stated on the
product and its advertisements. P&Gs products do not come across as being products
superior to other supermarket brands. This is a consequence of the intense rivalry present
in the toiletries market, where technological advancements have allowed for product
improvements and innovations. Hence, on its own, the effects of a strong corporate image
are not far reaching.
In spite of this, P&G should not neglect its corporate image. Corporate branding also
plays a role in influencing the extent of distribution its products enjoy. A retailer is more
likely to stock a new product brand manufactured by a well-established corporation than
a less known one. The dynamics between the product brand and corporate brand can
bring about synergies that can add significant shareholder value. Further more, a strong
corporate image draws talented people to the company and high quality human resource
is the catalyst for the radical transformation and improvements that propels P&G and its
products to improve and advance.
Limitations of Our Study

Convenience sampling was applied during data collection so that the fieldwork could be
completed within the stipulated time. The population may have been more accurately
______________________________________________________________________________________
34
represented if random sampling was adopted. Although the sample size of 200 is reflective of
the target population, a larger sample size could have provided greater reliability.
This paper focused only on the main product of the dominant sectors in the toiletries market,
namely, shampoo in the hair care sector. For more robust results, future researchers could
encompass the whole range of products in each sector especially body wash in the bath and
shower products sector and toothpaste in the oral hygiene sector hence providing a more
precise representation.
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______________________________________________________________________________________
37
WORLD WIDE WEB PRESENCE AS A STRATEGIC TOOL FOR

SMALL BUSINESS: AN EXPLORATORY LOOK AT CURRENT
PRACTICES & CHARACTERISTICS
Raj Selladurai, Indiana University Northwest
Cuthbert L. Scott III, Indiana University Northwest
Today, the Internet is maturing as a marketing/communication tool. As it matures
increasing numbers of consumers are migrating from more traditional media to online
media to gain product information. The Internet is now the preferred information source
for 64% of consumers. Most large, brick and mortar organizations use the Internet as an
integral part of their marketing and customer relationship management strategies. This
trend is becoming problematic for small and family-owned businesses that wish to
compete, many of which wish to target narrow market segments. This paper explores the
use of website as a part of the strategy for 100 small and family-owned businesses, how
they are approaching such use, characteristics practices associated with these sites, and
implications for small and family-owned businesses.
INTRODUCTION
The Internet has for some time been the fundamental medium for transferring
information, and has been growing at astounding rates for the last decade. According to a
recent study by Nielson/NetRatings (Fan, 2005) the online marketing environment is
reaching a mature state, as evidenced by February 2005 data indicating that Year-overYear Growth in Time Spent Online at home declined 2% in the United States, and there
was 0% Sessions Growth. These data are early indicators that growth in time spent on
the Internet and number of sessions is stabilizing in the United States market, the largest
B2C market in the world. Nielson also concludes that as online marketing becomes
mainstream, more and more people are switching from traditional media to online media
as their preferred method of consumer information (Buchwalter, 2005).
Where small and family businesses were once limited to storefronts and local advertising,
the Internet has opened a communication medium to them to establish relationships
between buyers and sellers who were otherwise unreachable. A well-designed website
by a small or family business can be just as effective as one operated by large-scale
corporations. A small or family business that ignores this medium will be at a distinct
competitive disadvantage. As the medium matures, content is becoming more important
than mere presence.
Also, businesses are frequently using the website as a competitive strategy. Corporate
websites have become more sophisticated and multifunctional over the years (Campbell
& Beck, 2003). They have gone beyond merely offering electronic versions of reports
and publications such as accounting reports to presenting a more interactive environment
where broad, comprehensive types of information may be transferred to a wide range of
stakeholders. Websites have been used for different reasons such as marketing and
______________________________________________________________________________________
38
selling (Lymer, 1999), reporting of information (Marston, 2003), for reputation

management, and testing of website responses to specific public issues (Campbell &
Beck, 2003). Further, organizations often set up websites in response to competitive
pressures of other companies presence on the web. They would like to benefit from the
perceived advantages of a market presence on the web, and want to avoid the risk of
being left out and lose some potential advantages or competitive edge in the
marketspace.
Although organizations seem to be using websites more frequently, the effectiveness of
such a strategy for small and family-owned businesses is not very clear. This paper
attempts to explore the implications of using the web as a strategy by analyzing some
factors such as the attributes of businesses and determining the reasons for using the
website as a strategy. It discusses the findings of a survey of website characteristics and
practices of 100 small and family-owned businesses that use websites as a strategy. Also,
it focuses on evaluating the effectiveness of using the website as a competitive strategy
for small and family businesses.
REVIEW OF LITERATURE
All types of organizations are using the Internet and the website strategy to compete
effectively in the marketplace. However, small and family businesses especially should
find the use of the Internet and the website strategy more beneficial and effective to use.
The website strategy provides small and family businesses a special tool or niche that
they may use to better compete with even the larger organizations in a global market. By
using such a strategy, these smaller organizations can improve their activities and expand
operations in a highly competitive global environment (Stuart & Jones, 2004). Although
companies that need a personal client servicing may not find the Internet as useful
(Rasian, 2001), yet many customer-oriented service companies including business giants,
such as Wal-Mart, Sears, J.C. Penney, McDonalds, Coca Cola, Kodak, Ford Motor
Company, and others all maintain creative and attractive websites to interact with their
customers and consumers. Also, Zineldin (2000) contended that many companies that do
not use the Internet technology are facing tremendous competitive pressures from those
that adapted by adopting the Internet and website technology. So, many companies are
developing websites increasingly to merely keep up with their competition.
Often, many companies seem to overlook the value of strong branding perceptions when
trying to compete by switching from the marketplace to the marketspace. Stuart &
Jones (2004) found that such a transition demands complex planning and managing of the
brand strategy, and in some cases a separate corporate brand or an extension may be the
best alternative for the company. Hence, a different corporate strategy customized for the
Internet may be necessary when a company wants to compete in the currently expanding
marketspace. As Dell Computers has dramatically shown from its unprecedented
success over the last few years, using a mass customization strategy to compete over the
Internet is perhaps the best way to do business worldwide (Selladurai & Scott, 2004).
Also, the web may be used to build stronger relationships with the customers. One study
found that the stronger the relational bonds between the organization and its customers,
______________________________________________________________________________________
39
the higher the customers trust and commitment toward the organization; and the use of
the corporate website enhanced this relationship between relational bonds and customer
relational performance (Lin, Weng, & Hsieh, 2003).
Further, the use of a website also seems to enhance export marketing. Export companies
are realizing the benefits of using online marketing for their business either to expand
existing export activities or to find new and more customers. For example, EBusiness
Co., a small Chinese garlic exporting company, has experienced tremendous sales
revenue and growth through using its website that it now has translated its website
content into nine different languages to meet the needs of various international customers
(Dou, et. al., 2002). Exporters may use the website as a gateway to the global market for
companies interested in exporting (Hamill, 1997), especially those businesses in the small
and medium markets and global niche markets. Also, Yeoh (2000) stated that for small
businesses that lack financial and human resources to do effective marketing research, the
Internet offers opportunities to support marketing intelligence for exporting strategies.
These smaller companies may use the website and Internet for global communications
and online marketing and export activities at relatively lower costs. For example, many
small export companies in the Ohio area use the internet for researching competition,
buying activities, and reaching newer customers and markets (Dandridge & Levenburg,
2000).
Further, the Internet may be used as a business strategy specifically focused on market
penetration and market development. Companies may use the website to market their
existing products and services to reach potentially a wider range of stakeholders in a
global market. They could also use the Internet as a new, additional channel of
distribution and market their existing and new products to new customers in the
worldwide markets. For small and family businesses especially, the economies of scale
usually associated with larger companies are now tipping in their favor allowing them to
compete more effectively in the global marketspace. Therefore, the use of the website
as a marketing strategy for todays small and family businesses seems to be necessary
and valid, and perhaps the most effective method to compete in a global environment.
METHODOLOGY, RESULTS, AND DISCUSSION
This exploratory study focused on a sample of 100 small businesses including some
family-owned businesses in the U.S that used a website as a part of their marketing
strategy. The organizations were randomly selected by the companies URL addresses
on the web using 3 popular search engines. These companies websites were reviewed
thoroughly to elicit some general information about the companies. Of these 100
companies, 50 were then randomly selected and surveyed by telephone to obtain more
specific information about their use of the website.
Descriptive data from the study are presented in the following tables of this section. Table
1 provides a breakdown of the companies according to their industry or nature of
business activity. As Table 1 indicates, 20 different professions/industries are represented
and each category consisted of five (5) businesses or five (5) percent of the total number
______________________________________________________________________________________
40
of businesses. Industries were selected that are dominated by small and family
businesses, including antique dealers, business consultants, business services, restaurants,
travel agencies, and others. Table 2 shows the number of companies that presented some
general company information about themselves on their websites.
Table 1 Type of Business/Activity
Type of Organization
Antique dealer
Business Consultants
Caterers
Child Care
Certified Public Acct
Financial Services
Hair/Beauty Salon
Health Fitness Clubs
Home Construction
Home Repair Contractors
Legal Services
Medical Transcription
Restaurants
Travel Agency
Business Services
Computer Mainten.
Florists
Heating/AC
Landscape/Lawn Serv
Radiation Services
Table 2 Number of companies showing general company information on website

Company Information
Number/%
Yes
100
No
0
Total
100
Table 2 shows that all the companies, or 100 percent of them, presented some form of
general company information about themselves on their websites. Obviously, all the
companies thought it important to present general company information such as hours of
operation, travel directions/map, picture of location, pictures of employees, site map, etc.
Table 3 presents companies that displayed their business philosophy on the website.
Table 3 Number of companies showing business philosophy on website
Business Philosophy
Number/%
Yes
22
No
78
Total
100
Table 3 shows that 22 percent of the companies displayed their business philosophy
statements on their website whereas 78 percent of them did not show any such statement.
It appears that a majority of the companies did not believe it was important to display
their business philosophy statements on the website. Table 4 presents the number of
companies that included moving graphics, video clips, and slide shows on their websites.
Table 4 Use of graphics, video, and slide shows
Graphics, video clips, slide shows
Number/%
Yes
35
No
65
Total
100
______________________________________________________________________________________
41
As Table 4 shows, at least 35 of the companies had some form of graphics on their
websites. However, a majority (65%) of the small and family businesses appeared to be
less technologically current and did not seem to be using the latest web technology
available to enhance their websites. Table 5 displays the use and offering of a catalog on
the company website.
Table 5 Use and offering of a catalog
Offering of catalog
Number/%
Yes
11
No
89
Total
100
As Table 5 shows, a majority of the business websites do not offer a catalog; only 11
(11%) of them do offer a catalog for their target audience. Perhaps, this reflects the
current trends in marketing where the use of a catalog and print/publications is
diminishing, and the use of more electronic sources, storage, and displays of information
via websites seems to be increasing. Table 6 presents the product related information on
the company websites; it includes product or service descriptions, product pictures, and
pricing information.
Table 6 Use of product related information
Product information
Number/%
Product or service
41
description
Product pictures
21
Product pricing
27
One or more of the above
11
Total
100
Table 6 shows that all the company websites had some form of product information
including descriptions, pictures, and prices. This would indicate that most businesses
seem to believe that the major purpose of their website was to provide product related
information to their users, customers, and consumers. Table 7 shows the email link to
company representative offered on the website.
Table 7 Email link to company representative
Email link to company representative
Number/%
Yes
86
No
24
Total
100
As Table 7 displays, a majority of the companies offered an email link to the company
representative. This indicates that the companies believed in the need for communication
to be established between the company and the website users. It could also indicate that
the companies were trying to possibly build a database of the users of the website through
this communication channel for potential customer-oriented relationship and targeted
______________________________________________________________________________________
42
marketing purposes. Table 8 indicates the reasons for starting a website as reported by
the companies.
Table 8 Reasons for hosting a website
Reasons for website
Number
Advertising/sales tool
15
Communication/information
19
Keep up with competition
11
Other
5
Total
50
Percent
30
38
22
10
100
As seen in Table 8, the use of the website as an information/communication tool (38%)

and an advertising/sales tool (30%) seem to be the major purposes behind this strategy.
Also, 22% indicated that they used the website to keep up with the competition. Table 9
displays the websites positive effect on sales as reported by the companies.
Table 9 Websites positive effect on sales
Increased sales
Number
Yes
28
No
22
Total
50
Percent
56
44
100
As shown by Table 9, a majority (56%) of the companies indicated that the website
increased the sales for them. The remaining 44% did not report any effect on sales.
Table 10 shows the percentage increase in sales for the companies using the website.
Table 10 Percentage increase in sales
Percentage increase
Number
15
5
6 -10
10
11 20
6
>20
2
Non-response
5
Total
28
Percent
18
36
21
7
18
100
As seen in Table 10, of the 28 companies that indicated an increase in sales (Table 9), the
majority (36%) of them indicated about 6 to 10 percent increase in sales; eighteen (18)
percent of them reported one (1) to five (5) percent increase in sales; and 21% of the
businesses reported 11 to 20 percent increase in sales. Table 11 shows the biggest
perceived benefits/advantages of using and maintaining a website as reported by the
businesses.
______________________________________________________________________________________
43
Table 11 Perceived benefits of using a website

Benefits
Number
Increase sales/advertising,
18
marketing tool
Create awareness, exposure
28
Keep up with competition
6
Show credibility, expertise
3
Offer catalog online
1
Little or no benefit
4
Total
60*
* Multiple responses by some companies
** More than 100 because of rounding
Percent
30
47
10
5
2
7
101**
Table 11 indicates that the biggest perceived benefits of using a website included creating
awareness and exposure to the millions of users surfing the web in cyberspace (47%), and
increasing sales/advertising and marketing tool (30%). About ten (10) percent used a
website just to keep up with the competition. And seven (7) percent of the respondents
perceived little or no benefit from using the website. Table 12 shows the biggest
perceived costs/disadvantages of maintaining a website.
Table 12 Perceived costs of using the website
Perceived costs
Number
Start-up costs, financial
21
costs, waste of money
Design costs
7
Time
5
Maintenance
11
Nothing
10
Labor
2
Total
56*
* Multiple responses by some companies
**More than 100 because of rounding
Percent
38
13
9
20
18
4
102**
Table 12 displays the biggest perceived costs/disadvantages of using a website. About

38% indicated that financial cost of hosting a website was the biggest disadvantage and
some even thought it was a waste of money. Twenty (20) percent indicated that the
maintenance of a website was a major cost, and 18% perceived the website as costing
them nothing. Table 13 indicates the use of online ordering feature, shopping cart order
system feature, and security for credit card transactions.
Table 13: Use of online purchasing features
Online Purchasing features
Number/% % did not use
Online ordering
13
87
Shopping cart
8
92
Security
4
96
______________________________________________________________________________________
44
As seen from Table 13, only a small percentage of small and family businesses were
using the online features. Perhaps, this confirms their lack of use of the latest available
technology as seen in Table 4 as well as the communication/information tool as being the
major reason for the website. However, the use of the website as also a sales/marketing
tool (Table 11) would mean small and family businesses would need to use more of the
purchasing options and features to enhance their sales/marketing objective.
CONCLUSION AND SUGGESTIONS FOR RESEARCH
This study provides some interesting information on using a website as a competitive
strategy for small and family businesses, including its perceived benefits and costs. As
seen in Table 1, companies from a wide range of industries including business consulting,
child care services, financial services, health fitness clubs, home construction and repairs,
and restaurants are all using the website. Most of the businesses are using the website for
providing product related information to their existing and potential customers (Table 6).
It appears also from Table 7 that they would like to use the website as a marketing tool of
eliciting information from their users to build a database for potential customer-oriented
relationship and target marketing purposes.
Also, as Table 8 reveals, companies stated that the major reasons for using the website as
a strategy included the website as being a communication/information tool and an
advertising/sales tool. Further, a majority of the small and family businesses believed
that the website had positive effects on sales (Table 9). They reported as seen in Table 10
that the website helped provide an increase in sales on an average of six (6) to ten (10)
percent. Therefore, it may be inferred that the businesses perceive the use of the website
strategy as an information/communication tool, and as a marketing tool to attract and
maintain existing and especially new potential customers.
In examining the benefits and costs of using the website strategy, companies perceived
the communication and marketing benefits of the website as the primary advantages. This
corroborates their intended purposes for using the website. So, it appears that the website
strategy is indeed an effective one for small and family businesses to use especially for
communication and marketing purposes. The website strategy may be also used to
effectively increase sales by as much as six (6) to ten (10 percent which would be an
extremely attractive incentive for any small business. Especially as the financial costs for
hosting and maintaining the website appear small when compared to the positive benefits
realized from the strategy, the use of the website as a strategy for small and family
businesses seems to be an effective one.
However, further research may need to examine the cause-effect relationship of the
website strategy and its positive effect on sales. Future research could focus on
establishing a significant relationship, if any, between the two factors and also examine if
any other factors such as successful traditional marketing, brand image, business image
and identity, company name and reputation, consumer need and convenience, etc. affect
or moderate this relationship. Websites of different designs may be evaluated to
determine which specific types, if any, have more impact on the success of the business.
______________________________________________________________________________________
45
IMPLICATIONS
The use of the website as a competitive strategy seems to be extremely useful for
business, especially small and family-owned businesses. To compete effectively in a
highly dynamic and competitive business environment today, small and familyowned
businesses would have to find creative niche strategies to help them survive and succeed.
One such attractive niche strategy is the use of the website. As seen in this study, small
and family businesses could use the website as a target marketing strategy to increase
their sales and thereby improve their overall performance. They may also use the website
as a communication tool to improve their corporate image and exposure in a growing
global market. They can effectively compete using the website as a niche strategy with
larger and more established organizations.
As Dell has shown from its remarkable success over the last few years, using the mass
customization approach along with the website as a marketing strategy helped Dell
overtake bigger and stronger competitors to become the leader in the personal computer
industry (Selladurai & Scott, 2002). Perhaps small and family businesses would have to
experiment with, and implement, different website designs in order to tailor their
purpose, content, and marketing techniques to specific customized target audiences in a
global marketspace. Also, businesses may use the website strategy to develop and
establish long term relationships, customer loyalty, and commitment with their
customers, existing and new, in an ever-increasing global environment as part of their
relationship marketing efforts. As the Internet is here to stay, using the website as a
marketing strategy would be a wonderful tool for small and family businesses to use
effectively and continue benefiting from it.
Further, the Internet may be used as a business strategy specifically focused on market
penetration and market development. Companies may use the website to market their
existing products and services to reach potentially a wider range of stakeholders in a
global market. They could also use the Internet as a new, additional channel of
distribution and market their existing and new products to new customers in the
worldwide markets. For small and family businesses especially, the economies of scale
usually associated with larger companies are now tipping in their favor allowing them to
compete more effectively in the global marketspace. Therefore, the use of the website as
a marketing strategy for todays small and family businesses seems to be necessary and
valid, and perhaps the most effective method to compete in a global environment.
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perspective. 5th ed. McGraw Hill: New York, NY.
Buchwalter, C. (2005), Integrated Interactive Marketing: Quantifying the Evolution of
Online Engagement, Nielson/NetRatings White Paper, April 2005,
______________________________________________________________________________________
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Campbell, D. & Beck, C. (2004). Answering allegations: The use of the corporate
website for restorative ethical and social disclosure. Business Ethics: A European
Review, 13 (2/3), 100-116.
Dandridge, T. & Levenburg, N. (2000). High-tech potential? An exploratory study of
very small firms usage of the internet. International Small Business Journal,
18 (2), 81-91.
Dou, W., Wenyu, N., Ulrik, O., & Tan C. (2002). Using corporate websites for export
marketing. Journal of Advertising Research, 42 (5), 105-116.
Fan, J. (2005). Low-Hanging Fruit Lies in Global Markets. Nielsen/NetRatings, March
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Hamill, J. (1997). The internet and international marketing. International Marketing
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Lin, N., Weng, J., & Hseih, Y. (2003). Relational bonds and customers trust and
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Selladurai, R. & Scott, C. (2004). Mass customization strategy in management and its
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47
INTERNET MARKETING IN AN EMERGING COUNTRY:

AN INTERNATIONAL MARKETING PERSPECTIVE
Philip Zgheib, American University of Beirut
Zafar U. Ahmed, Texas A&M University at Commerce
Nadine E. Habr, Notre Dame University
Introduction
New technologies periodically provoke major shifts in the way we do business. The
telegraph, the telephone, and the fax machine have all left their marks on commerce. It is
impossible to imagine doing business without any one of these mechanisms. Today, the
Internet is the latest technology to alter the way business is conducted. It is remarkably
simple in how it works and extremely exciting in its usefulness and effectiveness.
People and businesses are finding new ways to use the Internet every day. At least, one
value of the Internet is certain: improved communication.
Advent of the Internet in Lebanon: Situational Analysis
The Lebanese are well known for their interest in the most recent technologies, as well as
for their high cultural standards. This may be an introductory explanation for the success
of the Internet in Lebanon. In the summer of 1995, Internet was first introduced in
Lebanon. After the fourth year of local Internet history, there were more than thirty
thousand Lebanese Internet users. We should not underestimate that number, bearing in
mind that Internet users are increasing, at a high rate, day after day. Whether
professionals, students, commercial companies, banks, or hotels, all are becoming more
aware of the importance of the Internet.
In August 1995, the Internet was introduced in Lebanon by Data Management. A few
months later, Inconet became a second powerful Internet Service Provider (ISP). In
1996, due to the astonishing success of the Internet, three other companies entered the
business: Cyberia, Sodetel, and Destination (Naufal, 1996, 40). A high demand for
Internet access attracted other Internet Service Providers market such as Bignet, X-net,
Arabnet, Netgate and Data-Net to enter the market. Later, eight more companies went
into the business: Lubnan, Intracom, City, 4Com, Networking, Geganet, Liban Net and
LibanCom. Lately, five more Internet Service Providers are enjoying the Internet boom,
Cnet, Lunet, Terranet, Lynx, and Inter. So far there are about 23 Internet Service
Providers in Lebanon. (appendix A)
A large number of new companies went into the business of Web designing and hosting,
including Book Inn, Arachnea, Cybernet, Danynet 3d, Fiorbal Internet solutions, Grey
Matter, Integral Solutions, Internet Web Development & Design, Kleudge, Mardel, The
Page, Wonder Web, and WebSet s.a.r.l..
______________________________________________________________________________________
48
Many Lebanese on-line companies exist already on the net. There are many types of
businesses that use the Internet more than others. A detailed study will follow
concerning the type of business which uses the Internet medium, and then the description
of the reasons why they maintain a business presence on the Net will be conducted.
The question is will the Lebanese benefit from the Internet medium? and if marketing
strategies could be improved through Internet, would this be a motive for companies to
get connected?
Identification of Marketing Strategies
Companies who want to improve their marketing effectiveness and efficiency must learn
how to create and implement marketing plans with a product/market focus that consist of
detailed marketing strategies and programs for achieving the products or services
objectives in a target market. Internet might add a charismatic appeal to the traditional
marketing strategies which originally focus on the following actions: researching and
selecting target markets; differentiating and positioning strategy; setting the price;
selecting and managing distribution channels; salesforce strategy; service strategy;
advertising; sales promotion; research and development; and marketing research
(Breitenbach, C. & Van Doren, Doren, 1998; McQuitty & Peterson, 2000; Prabhaker,
2000).
The firm needs to measure and forecast the attractiveness of any given market. This
requires estimating the markets overall size, growth, and profitability. The market
measure and forecasts become key inputs into deciding which markets and new products
to focus on (Chittenden & Ruth, 2003). Any company needs to define how it will differ
from its most significant competitors, and how it wants to come across to its target
buyers. Through positioning, the company will design its offer and image so that the
target market understands and appreciates what the company stands for in relation to its
competitors. (Kotler, 1991, 67). It also needs to study carefully the positions taken by its
major competitors in the same target market. Suppose companies position themselves in
terms of product quality and price. For this purpose, the firms should develop a productpositioning map to describe the positions of a determined number of competitors
currently selling to this market. It will study the available options, then it will decide on
its product positioning, companies should not only choose their consumer targets but also
their competitors targets (Naquin & Paulson, 2003). This is particulally important in an
emerging market (Bandyopadhyay, 2001).
Setting the Price
Another step in the marketing strategy of a firm is setting the price. Price setting is a
procedure which includes selecting the pricing objective, determining demand, estimating
costs, analyzing competitors' prices and offers, selecting a pricing method, and selecting
the proper price.
Selecting and Managing Distribution Channels
______________________________________________________________________________________
49
Selecting and managing distribution channels is among the most complex and challenging
decisions facing a firm. Distribution channels perform the work of moving goods from
producers to consumers, whether wholesalers or retailers, brokers or sales agent. All are
middlemen who participate in the following marketing flows: collection of information
about potential and current customers, promotion, negotiation, ordering, financing, risk
taking, physical possession, payment and title or transfer of ownership from one
organization to the other.
Salesforce Strategy
Companies compete with each other to get orders from customers. They must organize
their salesforce strategically so that they call on the right customers at the right time in
the right way. Sales representatives can reach customers in several ways, for example, a
sales representative may talk to a customer in person or over the phone, he may make a
sales presentation to a buying group, he may bring qualified people from the company to
meet with one or more buyers to discuss opportunities, or he may prepare seminars.
Service Strategy
When the physical product cannot be easily differentiated, the key to competitive success
often lies in constantly added service features or increasing the quality of the offering.
The main service variables are delivery, installation, customer training, consulting
service, repair, and miscellaneous services. Delivery refers to how well the product or
service is delivered to the customer. It includes speed, accuracy, and care in managing the
delivery process. Installation refers to the work that must be done in order to make a
product operational in its planned location. Customer training refers to training the
customers employees to use the vendors equipment properly and effectively.
Consulting services refers to data, information systems, and advising services that the
seller offers either for free or at a given price to buyers. Repair describes the quality of
the repair service available to buyers. Miscellaneous services are when companies can
find other ways to add value through differentiated services. For example the company
can offer a better product warranty or a more appealing maintenance contract than its
competitors.
Advertising
Advertising is a powerful promotional tool. Advertising is designed to achieve a variety
of simultaneous objectives such as immediate sales, brand recognition, and preference.
Advertisers need to establish clear goals as to whether the advertising is supposed to
inform, persuade, or remind buyers. The advertising budget can be established on the
basis of what is affordable as a percentage of sales, on the basis of competitors
expenditures, or on the basis of objectives and tasks. The message decision calls for
generating messages, evaluating and selecting among them, and executing them
effectively. The media decision calls for defining the reach, frequency, and impact goals;
choosing among major media types (such as message and product), selecting specific
media vehicles, whether television, radio or magazine, and scheduling the media.
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50
Finally, campaign evaluation calls for evaluating the communication and sales effects of
advertising before, during, and after the advertising.
Sales Promotion
Sales promotion consists of a diverse collection of incentive tools designed to stimulate
quicker and greater purchase of particular products or services by consumers, such as a
coupon in the newspaper, samples, cash refund offers, prices off, premiums, prizes, free
trials, warranties, and demonstrations. Whereas advertising offers a reason to buy, sales
promotion offers an incentive to buy.
Research and Development
A balanced technology and market driven company is one in which R&D and marketing
share responsibility for successful market-oriented innovation, and for determining and
implementing a leading marketing strategy. The R&D staff takes responsibility not only
for invention but also for successful innovation. The marketing staff takes responsibility
not only for new sales features but also for helping to identify new ways to satisfy needs.
That is to say, a balanced R&D marketing coordination is strongly correlated with
innovation success.
Marketing Research
Marketing research involves collecting information that is relevant to a specific
marketing situation. The marketing research process consists of five steps: defining the
problem and research objectives, developing the research plan, collecting the
information, analyzing the information, and presenting the findings. Good marketing
research is characterized by a true scientific method, by creativity, multiple
methodologies, model building, and cost benefit measures of the value of information.
The most common marketing research activities are the determination of market
characteristics, the measurement of market potentials, the market-share analysis, the sales
analysis, the studies of business trends, the short-range forecasting, the competitiveproduct studies, the long-range forecasting, the pricing studies, and the testing of existing
products.
The definitions and suggestions already stated in the first two chapters determine the
theoretical part of the study. What is remaining is to test the effectiveness of this
opportunity in the Lebanese market.
Objective 1:
Usage and Behavior Study about the Internet in Lebanon
The first objective of the research is to study the usage and behavior of business
companies toward the integration of the Internet for their marketing strategies. Therefore,
answers to the following questions will be available: whether or not companies in
Lebanon are aware of the Internet as a marketing strategy object and whether or not
companies are using the Internet as a marketing mechanism. In order to measure the
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51
usage habits, a frequency of usage analysis will be led. Moreover, a testing on the
Internet efficiency for marketing strategies will be performed. Detailed examination on
the following questions will be justified: how do businesses perceive the Internet
medium? If businesses are not yet using the Internet, then, how soon will they be willing
to operate on the Internet? What are the reasons behind the company's online presence?
The objective is to assess companies opinions of perceived effectiveness of the Internet.
For companies who have not yet joined the Net, an interesting topic for research would
be to find out the reasons for their absence in order to be better able to induce them to
join.
Objective 2:
Characteristics of Internet Marketing Strategies for Business in Lebanon
The second objective is to assess the characteristics of Internet marketing strategies for
business in Lebanon. Determining the methods of marketing strategies enhancement in
companies using the Internet is a necessity. A definition of how companies can best use
the Internet as a marketing tool will be available. Who uses the Internet, which type of
companies will best operate on the Internet and for what purpose, are some of the
questions to be answered. Finally, a specification of the sectors that would best use the
Internet will be needed in order to complete the research.
RESEARCH METHODOLOGY
Analyzing the Data
After sending the questionnaire by electronic-mail to the 100 on-line Lebanese
companies in Greater Beirut, only 22 companies responded from the sectors mentioned
earlier. Concerning the other 100 Lebanese companies not on-line in Greater Beirut, we
ended-up with 71 usable questionnaires. The other 29 questionnaires do not fit the
purpose of the research anymore, since the randomly chosen companies started to use the
Internet for their business during the period of data collection or questionnaire filling.
Tables 1 and 2 summarize the percentage and frequency of the responding on-line
companies and companies not on-line among the five already chosen sectors.
Table 1. Frequencies and percentages among sectors
of the online responding companies.
FREQUENCY
PERCENTAGE
SECTOR
Media & Publications
6
27.3%
Computer Business
4
18.2%
Services:
banks
&
4
18.2%
Insurance
Advertising Agencies
5
22.7%
Food & Consumer Goods
3
13.6%
TOTAL
22
100%
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52
Table 2. Frequencies and % among sectors of the not online responding companies
SECTOR
FREQUENCY
PERCENTAGE
Media & Publications
16
22.5%
Computer Business
9
12.7%
Services:
banks
&
19
26.8%
Insurance
Advertising Agencies
10
14.1%
Food & Consumer Goods
17
23.9%
TOTAL
71
100%
From table 1, we notice that the highest percentages of the responding companies are
among the Media & Publication sector (27.3%), and the advertising agencies sector
(22.7%). However among the companies not on-line, we notice that computer companies
(12.7%) and advertising agencies (14.1) are among the lowest percentages. This could be
explained by the nature of their business and the importance of Internet usage. Computer
companies and advertising agencies are among major sectors that keep up with latest
technologies. There are two different frames and two different types of surveys in which
the research is conducted: an electronic-mail questionnaire has been sent to the On-line
Lebanese companies, and a face to face interviewing and/or over the phone questionnaire
have been done with the Lebanese companies, that are not on-line.
Data analysis for the Lebanese companies not online.
The purpose of the research is to study the usage and behavior of business companies
toward the integration of Internet for their marketing strategies. The questionnaire is
designed in a way to fulfill all the requirements needed to test the hypotheses. Awareness,
perception, usage, and intention aspects are covered in the questionnaire. In order to
measure the usage habits, a frequency of usage analysis is performed. Moreover, a
testing on the Internet efficiency for marketing strategies is executed. From the table
below (table 3), we notice that by far, the most commonly known activities over the
Internet are, sending and receiving e-mail (with the highest percentage 38%), and
searching for information (35.2%).
Table3. Frequencies and Percentages of the responding companies not online
toward the perceived types of activities on the Internet.
FREQUENCY
PERCENTAGE
TYPE OF ACTIVITIES
Sending and receiving E-mails
27
38.0%
Home page designing
3
4.2%
Searching for information
25
35.2%
Browsing the net
3
4.2%
Telecommunication
5
7.0%
Shopping on the Internet
2
2.8%
Communication mean
6
8.5%
TOTAL
71
100%
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53
From the table below (table 4), we notice that the highest percentage (38%) is the opinion
of the responding companies which indicate the positive impact of the Internet on
business is "finding information in an easy and quick way". Followed by a bit lower
percentages (12.7%) which indicates a positive impact is, "time saving." We should not
disregard the negative impact of Internet on business, however, as we can see, the two
items "waste of time" and "receiving junk mails" have a low percentages, 5.6% and 4.2%
respectively. However, that the positive impact of Internet on businesses is more
important than the negative impact.
Table 4. Frequencies and percentages of the responding companies not online
toward the impact of Internet on businesses.
IMPACT OF INTERNET ON BUSINESS
FREQUENCY
PERCENTAGE
I don't know
7
9.9%
No impact
4
5.6%
Time saving
9
12.7%
Finding information in an easy and quick
24
33.8%
way
Waste of time
4
5.6%
Unlimited number of customers
3
4.2%
Receiving junk mails
3
4.2%
Cheap promotion tool
1
1.4%
Easy mean of communication
9
12.7%
Cheap communication mean
3
4.2%
Help to find & know more about competitors
4
5.6%
TOTAL
71
100%
Table 5. Frequencies and percentages of the responding companies not online
according to the reasons for not using the Internet.
REASONS FOR NOT USING INTERNET
FREQUENCY
PERCENTAGE
Not needed in my field of work
16
22.5%
Useless
1
1.4%
Waste of time
2
2.8%
Don't know how to use
2
2.8%
Expensive service
1
1.4%
Intention to use it soon
14
19.7%
Sending e-mails by using personal accounts
8
11.3%
Running newly the business
6
8.5%
Usage is limited for few managers
10
14.1%
(&/or departments only)
Using the fax instead
Unavailability at work
No time is available to use the Internet
TOTAL
2
8
1
71
2.8%
11.3%
1.4%
100%
______________________________________________________________________________________
54
From the table above it is obvious some managers believe that the Internet is not
needed in their field of work (22.5%). By performing a cross tabulation, we will be able
to know exactly which sectors think that Internet is not needed in their field of work. We
note that from the 16 companies out of the 71 who believe that the Internet is not needed
in their field of work, 7 companies are form the FMCG sector, and 4 companies are from
the Media and Publication sector. Moreover, we noted that (17.9%) of the responding
companies intend to use the Internet for their business soon, some companies are
implementing it now, and some other companies have their computer application under
process. We can also see from table 11 that in the service sector, such as banks and
insurance companies, the usage of Internet is limited to specific managers or few
departments such as the computer department, with a high rate of 40%.
Table 6. Frequencies and percentages of the not online responding companies
according to their considerations of Internet as a marketing tool.
MARKETING TOOL
FREQUENCY
PERCENTAGE
Yes
44
62%
No
TOTAL
27
71
38%
100%
62% of the managers from the responding companies consider the Internet as a marketing
tool which might enhance their company's marketing strategies, and 38% do not consider
it as a marketing tool. The reason for considering it a marketing tool is shown in the
below table, where the "getting information" reason has the highest percentage (28.2%).
according to their understandings of Internet as a marketing tool.
FREQUENCY
PERCENTAGE
INTERNET AS A MKTG TOOL
Effective
5.6%
Efficient
4.2%
Getting information
20
28.2%
I don't know
17
23.9%
Our service concerns everyone
4.2%
Not effective
2.8%
Not for the short-term
11
15.5%
Not needed in company's field of work
11
15.5%
TOTAL
71
100%
______________________________________________________________________________________
55

according to their intention for using Internet as a marketing tool.
INTENTION TO USE THE INTERNET
FREQUENCY
PERCENTAGE
AS MARKETING TOOL
Yes
44
62%
No
27
38%
TOTAL
71
100%
Table9. Frequencies and percentages of the not online responding companies
according to the reasons behind their intention to use Internet as a marketing tool.
INTENTION TO USE THE INTERNET
FREQUENCY
PERCENTAGE
AS MARKETING TOOL (REASON)
I don't know
18
25.4%
To enhance company's marketing strategies
8
11.3%
It could be effective
16
22.5%
To increase business profit
4
5.6%
To study the market
2
2.8%
Too early to use Internet as a marketing tool
20
28.2%
Not efficient
3
4.2%
TOTAL
71
100%
We notice from the above two tables, that 62% of the managers from the responding
companies intend to use the Internet as a marketing tool. One of the reasons behind their
intention is that " it could be effective" (22.5%). Those who do not intend to use the
Internet as a marketing tool (38%) say " it is too early to use Internet as a marketing tool"
(28.2%).
Table 10. Mean of Internet usage dimensions for the responding companies not online.
VARIABLE
MEAN
STD DEV
Performing marketing research
6.93
2.30
Gaining competitive advantage
6.51
2.72
Bringing down communication cost
7.44
2.60
Differentiating with competitive products
6.65
2.39
Creating corporate presence
7.58
2.03
Enabling onsite audiovisual presentations
6.76
2.76
Reducing intermediaries in distribution
5.99
3.36
channel
Selling
6.28
2.36
Advertising
6.96
2.09
The mean calculated in the above table represents the average for each variable of the
ranking that respondents classified. Based on this table, the major variable perceived to
be important as an Internet usage dimension, is "creating corporate presence" (a mean of
______________________________________________________________________________________
56
7.58). However, the variable "reducing intermediaries in distribution channel" is

perceived as the least significant variable, (a mean of 5.99).
Data analysis for the online Lebanese companies.
As mentioned earlier, after sending the questionnaire by electronic-mail to the 100 Online Lebanese companies in Greater Beirut, only 22 companies responded from the
different sectors mentioned earlier. To start our analysis, we notice from the below table
(table20), that exact definitions of Interactive Marketing have been given by managers of
the responding online Lebanese companies. The highest percentage, 18.2%, is for
"Direct interaction with customers" attribute, which is the precise meaning of Interactive
Marketing. Other correct definitions like "Direct response from customers," and
"Creating a dialogue with customers" have also been stated by online companies.
Table 11. Frequencies and percentages of the responding online companies toward
Interactive Marketing concept.
INTERACTIVE MARKETING
FREQUENCY
PERCENTAGE
Electronic commerce
1
4.5%
Consumer choose information needed
2
9.1%
about a product
Communication
Targeted messages
Direct response from customers
Online shopping
Feedback
Direct interaction with customers
Support to customer
E-mail sending and receiving
2
3
2
1
1
4
3
1
9.1%
13.6%
9.1%
4.5%
4.5%
18.2%
13.6%
4.5%
Creating a dialogue with customers

TOTAL
2
22
9.1%
100%
Table 12. Frequencies and percentages of the online responding companies toward the
perceived types of activities on the Internet
TYPE OF ACTIVITIES
FREQUENCY
PERCENTAGE
Sending and receiving E-mails
6
27.3%
Searching for information
7
31.8%
Online shopping
2
9.1%
Marketing
1
4.5%
Travelling around the world
2
9.1%
Surfing the net
4
18.2%
TOTAL
22
100%
______________________________________________________________________________________
57
From the above table the major attributes perceived to be significant are, "searching for
information" (with the highest percentage 31.8%), followed by the "sending and
receiving e-mails " attribute (27.3%). To summarize, those two attributes have scored the
highest percentages for both online and companies not online.
Table 13. Frequencies and percentages of the online responding companies
toward the impact of Internet on businesses.
IMPACT OF INTERNET ON BUSINESS
FREQUENCY PERCENTAGE
Easy shopping
2
9.1%
Fast communication mean
4
18.2%
Finding information in an easy and quick way
4
18.2%
Posting e-catalogs accessible by anyone
3
13.6%
anytime
Waste time
1
4.5%
Educational
1
4.5%
Insecurity
1
4.5%
Time saving
3
13.6%
Unlimited number of customer
3
13.6%
TOTAL
22
100%
Table 13 presents the different opinions among respondents, nevertheless one thing is
certain, there is a high positive impact of the Internet on business rather than a negative
one.
Table 14. Frequencies and percentages of the online responding companies
according to the reasons for online presence.
REASONS / ONLINE PRESENCE
FREQUENCY
PERCENTAGE
To improve the company's quality of service
2
9.1%
To benefit form the e-mail usage
4
18.2%
To search for information
5
22.7%
To be up to date with latest technologies
4
18.2%
To match the increasingly competing market
2
9.1%
To exploit advertising matters
2
9.1%
To provide information & news
3
13.6%
TOTAL
22
100%
We notice from table 13 and table 14, that each sector benefits from the Internet usage in
their own special way. For example, the media and publication sector and the service
sector, use the Internet to provide information and news for their customers. There is one
common thing for all sector:, they are benefiting from the e-mail usage and would rather
keep up-to-date with latest technologies
.
______________________________________________________________________________________
58
RESULTS AND CONCLUSION

It has been said that the Internet will facilitate the traditional process of marketing
research. As a matter of fact, figures verify this assumption as the highest percentages
were present for this specific activity over the net. The "Interactive Marketing" prospect
is still new for the Lebanese businesses. While conducting the market research various
definitions were given when asked about "Interactive Marketing". Some respondents
gave exact definitions, others gave close definitions, and other did not answer or gave
wrong answers. However, some businesses are getting advantage of this facility over the
Internet to enhance their marketing strategies. For example, Banque du Liban et d'OutreMer sent their customers e-mail concerning the products and services that the bank
provides. The bank offers the opportunity to calculate monthly payments for loan
amounts, to inquire about credit cards, to download loan and credit card applications, and
to obtain statistics and information on BLOM Group. This is but one example from
many. After all, it is a way to create a dialogue with the customers. Most companies have
web pages that they keep up to date, and some businesses send informative e-mails,
describing their latest products.
More information continues to be provided by every business. Whether a bank, a
computer business, an advertising agency, each business provides the information that
suits its aims. For instance, Baalbeck International Festival Organization informed
thousands of Lebanese people with their Festival schedule, every day program, ticket
pricing, how to get to Baalbeck, history of Baalbeck, and about the organization, just by
sending an informative e-mail. In terms of Internet activities, "sending and receiving emails" and "searching for information" were the most commonly utilized. All chosen
business sectors emphasized that those 2 activities are the most significant.
When the online Lebanese responding businesses and the Lebanese responding
businesses not online, were asked about the impact of Internet on businesses, a much
higher positive response was given than the negative one: finding information in an easy
and quick way, time saving, unlimited number of customers, help to know more about
competitors, etc., few respondents comments' were on the junk mails that may be
received, and that Internet is a waste of time. However, frequencies are very low for the
negative attributes.
Some companies did not join the net, and the reasons given for not using the Internet
were numerous. Some businesses believed that Internet is not needed in their field of
work, some other mentioned that the usage of Internet is limited for few managers and/or
departments. Moreover, some other companies intend to use the Internet for their
business soon, while few others have their computer application under process. A very
high percentage of Internet non users intend to use it soon. When the responding
companies were asked about the reasons for their online presence, every sector seemed to
benefit from Internet in a particular way. For instance, the media and publication sector
and the service sector use the Internet to provide information and news for their
customers and new customers.
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59
Making purchases over the Net in Lebanon is not yet a highly accepted method.
Approximately 82% of the online respondents have not made a purchase over the net.
They believe that it is not yet a secure process, even though special Internet cards are
made by credit card services companies in Lebanon, for this purpose. The MasterCard
Internet account called Web Surfer, costs only US $19 a year. Nevertheless, a new
concept of Internet usage is gaining new insights: "electronic commerce." The Lebanese
search engines added a new opportunity for the net, which is the Online shopping. Many
food industries are benefiting from the Internet. To illustrate, Abdul Rahman Hallab and
Sons, (http://www.hallab-ar.com), a Lebanese sweets shop, is delivering sweets to the
United Stated, Australia, Europe, and many other countries in the world. Actually,
Hallab was the first Lebanese company to sell via the Net. In the web site, price lists
include shipping via DHL and Aramex. They are making excellent profits from
worldwide deliveries. Another industry benefiting from the e-commerce is the wine shop
Chateau Kefraya, (http://www.lebanon.com/chateau-kefraya) that also provides door-todoor deliveries, for example, to the United States. Certain types of products do sell better
over the Web than others such as computer parts, software, Lebanese food, and books.
While conducting the marketing research, businesses were asked to rank the Internet
usage dimensions in order of importance. "Creating a corporate presence" strategy proved
to be the most important. "Bringing down communication cost" and "Gaining competitive
advantage" attributes also proved to be important factors. These were not the only
strategies for efficiency in businesses nowadays, for performing marketing research,
enabling onsite audiovisual presentations, selling, advertising, and differentiating with
competitive products strategies seem to be new uses for the Internet, that will soon arise
in the world of tomorrow. In some countries the Net seemed to be a way of eliminating
the store as a middleman. However, in Lebanon businesses do not consider yet the
Internet as a medium to reduce intermediaries in the distribution channel. Middlemen are
still important in the way businesses are conducted. People are used to going to stores to
buy. People are used to going to a travel agent to get a ticket if they want to travel. They
are not used to the do-it-yourself concept. Finally, most businesses agreed on the fact
that Internet dimensions or new strategies added a lot to the improvement of marketing
strategies.
To fulfill the requirement of the second objective, which is to assess the characteristics of
Internet marketing strategies for business in Lebanon, it is highly important to determine
which type of businesses would best operate or benefit on/from the Internet. From the
research conducted, respondents considered the computer sector, media sector, and
service sector such as banks, insurance companies, financial institutions, hotels,
restaurants, are the businesses who take the most advantage form the Internet. The
computer sector is accustomed to marketing on the Internet because after all, it is a
technology related business. Concerning the service sector, each one is using the Internet
by applying the marketing through information concepts. For example, banks are
providing information about the products and services they offer, daily updates of the
Lebanese capital market, a general overview of the bank, financial reports, corporate
profile, and even job vacancies. Hotels are also benefiting from Internet by supplying
worldwide customers with information. One may know the location of the Hotel on a
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60
map, areas to visit around the hotel, the restaurants, the price of the different rooms, what
the room looks like from inside, and the availability of the reservation through Internet.
Conclusion
The Internet is in its infancy in Lebanon and it will mutate frequently. But if one looks
just over the horizon into the competitive world of tomorrow, its logical extreme is
already visible. Customers demand instantaneous intelligence about the status of their
orders, the average of stock on hand, and the estimated time of delivery. They might want
to review discussions other customers have had about the company. The company with
the most freely available information will win. Through this medium, the company that
opens its electronic doors the widest, will be the strongest. Television, Radio, newspaper,
have existed as passive media. The Internet has risen as an active medium, and will
probably devour great share of other medium usage.
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62
MIDDLE EAST AIRLINES: AN ACQUISITION CHALLENGE FOR

A FAMILY BUSINESS
Abstract
Middle East Airlines (MEA), the Lebanese national carrier, is trying to pull through its
managerial and financial predicament caused by the Lebanese civil war (1975-1990). MEA was a
company over-ridden with inefficiencies, corruption, political interference, nepotism, and cashflow problems. MEA, under the leadership of Mohammad Hout, laid off a number of its
employees in an attempt to render the firm more economically attractive for investors. Joseph
Khoury, CEO and President of a major Lebanese family firm (Khoury Group) was contemplating
buying a sizable share of the company. Going through its historical evolution and different
complexities found at MEA, Khoury began wondering whether it was the right track to pursue.
Introduction
Joseph Khoury was just reflecting on the phone call he had just received. He was talking
to a senior politician in Lebanese government, who insinuated that the Lebanese
government is looking for potential buyers to purchase the Lebanese national airline, the
Middle East Airlines (MEA). Although Khoury had no previous experience in the
airline business, he couldnt let such an opportunity slip by without pondering over it.
Khoury was the owner (CEO and President) of Khoury Group, which was a large
diversified conglomerate of firms across the Middle East, Africa, and Latin America.
Josephs father established Khoury Group: John, a half-Italian half-Lebanese
entrepreneur, who founded an empire of large companies. The group was now comanaged by Joseph (who was stationed in Lebanon and Italy) and his three brothers Sam
(in Senegal), Ramsey (in Dubai), and Rayan (in Brazil). The group was comprised of
several independent companies in which Joseph and his brothers had different majority
financial interests. The brothers had autonomy in running those businesses in different
world regions. Joseph knew, however, that a purchase of a company like MEA would
require much input from all of his brothers.
MEA Background
Middle East Airlines (MEA) was founded in 1945; launching its first service from Beirut
to the neighboring cities across the Arab world. In 1963, after its merger with Air Liban,
MEA added other destinations across Europe and Africa to its network.
For thirty
years; MEA thrived and grew to become one of the leading airlines across the region.
Despite the political upheavals in the region in the sixties and early seventies, MEA
continued to grow and succeed. The 1975 Lebanese war changed the landscape of
aviation in Lebanon, entailing sharp decline in airline travel to Beirut, severe halt to
tourist inflow, frequent closures of the Beirut airport because of its bombing, occasional
destruction of airplanes and loss of airline personnel. The fifteen-year civil war gave a
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63
harsh blow to MEA as it lost its market position and leadership across the region. MEA
nevertheless managed to continue its operations throughout that bleak period.
At the end of the Lebanese civil war in 1990, MEA succeeded in re-establishing its
services to all destinations, it previously served by it. It fortified its network by adding
additional destinations across Europe, Middle East and the Gulf. The impact of the civil
war was, however, too encompassing. MEA continued to lose money year after year due
to inefficiencies and politicization of its managerial process. MEAs losses during
19911997 time frame amounted to over $310 million (ranging from $32 million in
1994 to $87 million in 1997). The upward trend in losses seemed to accelerate at an
uncompromising rate (See Appendices 1 & 2 for financial scenario).
These losses could not be explained by any economic rationale. Despite the fact that the
911 terrorists attack and the US -- Iraqi war adversely impacted worldwide travel, the
magnitude of MEA losses could not be attributed to global political problems. Blame
shifting, strikes, and management-union tensions were creating an unhealthy environment
of mistrust and suspicions.
Successive recovery attempts met with failure due to
political interference, overstaffing, mismanagement, and unfavorable economic and
political atmosphere. Suggestions to privatize the company (MEA was mostly owned by
the Central Bank of Lebanon) were met with accusations between different stakeholders
that some groups were trying to bankrupt the company in order to acquire it for a fraction
of its real value. After Mohammad Al-Hout was appointed as chairman of MEA,
substantial endeavors were made to privatize the company and reduce its current
inefficiencies and burdens.
Mr. Hout initiated a re-structuring plan immediately upon his appointment as MEAs new
Chairman. For instance, the route network was streamlined and many losing routes were
terminated. Early attempts to reduce inefficiencies met with relative failure and stern
resistance against reforms especially from labor unions caused major deterioration.
Nevertheless, such revamping attempts led to a decline in losses to the tune of 50% in
1998. In 2001, the Lebanese Parliament enacted the Open Skies Law, providing
unrestricted access to foreign airlines to Rafik Hariri Beriut International Airport, posing
a major threat to MEA. However, its recovery plan put in place, started yielding
dividends when its financials showed a decrease in its deficit to $20 million in 2001. (See
Appendix 3 for MEA milestones).
Political Interference in MEA
The Lebanese civil war and the peace agreement among the warring factions led to a
heavy politicization of all governmental institutions during the post civil war period.
During the civil war different political parties and militias forced employment in MEA in
a manner that led to gross overstaffing and inefficiencies. After the cessation of
hostilities, the political parties objected to any attempts at reducing the number of MEAs
superfluous staff. In 1999, the then Minister of Transportation Najib Mikati commented
that there was an imperative need to dismantle political patronage of most of the MEA
employees to facilitate higher productivity and higher profitability via effective
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64
managerial decision-making. Mr. Yusuf Lahoud, a former general manager at MEA also
indicated that employment at MEA was mostly based on religious affiliation and political
association instead of skills and merit. The situation was so grave that mangers had
virtually no control over non-performers or wrongdoers because they were politically
backed.
Overstaffing was a key problem at MEA. With only nine planes and 4500 employees,
the company had the highest employee-airplane ratio on the planet. The average age of
the employees was approaching 50 years. The Lebanese ministry of transport estimated
that MEA was spending close to $25 million on non-productive employees annually.
After consecutive losses of $44 million in 1999, $41 million in 2000, and $35 million in
2001, enormous political pressure led to the postponement of privatization. However, it
was allowed to proceed with its restructuring plan. From 1998 to 2002, MEA executed its
largest restructuring plan ever, to turn around the company from its huge annual losses.
The plan included a reassessment of MEAs network, reengineering different policies
and procedures, cost management schemes across the board without compromising the
quality, the initiation of new marketing schemes such as frequent flyer program and yield
management systems, and better partnerships with suppliers and travel agents etc.
The Company Structure
The MEA group includes following subsidiaries:
-
MASCO subsidiary responsible for the maintenance of aircrafts

MEAG subsidiary responsible for the ground handling operations
MEAS subsidiary responsible for the airport facilities
LBACC subsidiary responsible for the minority interest in a catering company 1.
The MEA fleet consisted of nine new Airbus aircrafts to service its network covering
the Middle East, Europe and Africa. Three A330-200 were leased from ILFC and six
A321-200 were purchased from Airbus Industries as presented in Table # 1.
Table # 1 MEA Fleet
Model
Number
A330-200
A321-200
MEA
Fleet
Source http://www.mea.com.lb
As presented inn Table # 2, MEA operated eleven regional and fourteen international routes and
served seven destinations across the Gulf, four in the Middle East, ten in Europe and four in
Africa.
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Table # 2
Destinations Served by MEA
Regional
International
Amman
Abidjan
AbuDhabi
Accra
Cairo
Athens
Dammam
Paris
Doha
Copenhagen
Dubai
Dusseldorf
Istanbul
Rome
Jeddah
Frankfurt
Kuwait
Geneva
Larnaca
Kano
Riyadh
London
MEA
destinations
Lagos
Milan
Nice
Source http://www.mea.com.lb
Marketing Operations
MEA was active in different market segments such as business travel, leisure travel,
freight, lease, charter, and pilgrimage. The passenger segment contributed the highest
share of the companys income, followed by the lease, charter, and pilgrimage segments.
The freight segment trailed behind. In the passenger market, the mix of business and
leisure segments varied depending upon destination. Most passengers flying to the Gulf
region, for example, were business travelers while Europe bound passengers were mostly
leisure travelers.
The restructuring plan required the formulation of a re-engineered marketing strategy.
Frequent flyer programs were revamped and modernized. Better use of MEAs
information system and web presence were made available although it did not seem that
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66
MEAs customers made effective use of these services. MEA was mostly reliant on
travel agencies for generating its business. MEA also increased the number of its sales
staff and invested more in the training and development of its personnel.
Labor Issues
During the Lebanese civil war period, MEAs workforce passed through a stage of total chaos.
Although some of its staff displayed legendary bravery in running the company in those agonistic
times, the civil war period also witnessed periods of great tensions, strikes, and miserable
employment conditions. What was once the pride of Lebanon slowly became infested with
fragmented subcultures of nepotism and disarray.
The prevailing corporate culture after the
conclusion of the civil war posed severe hindrances to any meaningful turnaround. While the
dreadful events of the civil war caused the company to lose around $200 million during the civil
war carnage, many more millions of dollars were lost because of managerial and labor
inefficiencies
Nepotism and religious power centers in the company caused certain employee factions
to harshly criticize the incoming Chairman Mohammad Hout for his inexperience in the
airline business. Some critics to external market forces to which he was only a
spectator attributed the relative lower losses in the first couple of years since he assumed
helm of affairs. But those voices seemed to calm down after the companys performance
indicators in subsequent years started to improve.
Competition
The open-skies governmental policy, approved by the Lebanese parliament in 2002, has
posed strong challenge for MEA. The increased travel activity at the Rafik Hariri Beirut
International Airport meant more foreign airlines getting into Lebanon and directly
competing with MEA. However, new and increased competition was one of the most
important impetus and drivers that pushed MEA to strive for better performance.
Earlier, MEAs market share decreased gradually from 1991 through 1995 due to
increase in the number of strong and viable foreign competitors serving Lebanon. This
was augmented by the poor service that MEA was providing in stark contradiction to its
glorified heritage and past image. Customers grumbled about the towering disparity in
fares with competitors with no real value in return. Its poor customer service made its
patrons defect to competitors, forcing the company to improve its offerings in the
restructured plan. By the early 2000s it was becoming evident that MEA was performing
better despite all the doubts and suspicions.
Privatization
As part of its liberalization reform plan to decrease the mounting national debt, the
Lebanese government executed a privatization program for inefficient and lossmaking public sector institutions across the country. The proceeds from privatizing
those entities would be channeled to reduce national debt and develop the fiscal
balance in national budgets. That was a commitment that the government made
during its agreement with world donor governments at the Paris 2 conference.
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67
Lebanese parliament ratified a privatization law in 2000 that constituted the foundation
for developing initiatives facilitating privatization of several entities in various sectors.
The law established the Higher Privatization Council that started functioning in 2001.
The International Finance Corporation (IFC) signed an agreement with the Lebanon's
Central Bank (which owned 99.37% of MEAs shares), to help it in the divestment of
banks shares in MEA. IFC offered assistance in identifying prospective investors,
market the venture, and organize international tender for this endeavor. IFC also
proposed a number of measures to restructure the troubled company before its
privatization, encompassing laying off 1000 unnecessary staff immediately, increasing
the productivity of the existing workforce, restructuring the MEA group, rationalizing the
route network, and making prudent use of existing fleet2. MEAs picture has been
improving since then with higher reported and expected revenue figures each year.
Alternative Privatization Scenarios
Privatization was seen as a significant choice for MEA due to the multitude of factors. It
was viewed as a mechanism to elevate public financing, and as a tool to curb
inefficiencies and corruption. MEA was foreseen to perform much better under
competent independent management separate from political interference. Furthermore,
MEA strived to attract the competencies of the private sector so that it could compete in
the fiercely competitive airline environment.
There were a number of privatization alternatives under consideration ranging from
selling entire MEA to forging alliances with strategic partners. Many experts and
members of the business community advocated direct selling of the whole airline. Its
outright sale could be struck through a worldwide tender and the airline could be offered
to the highest bidder. Worker groups and labor unions for obvious reasons opposed this
option. In addition, fears mounted pertaining to the inability of the government to solicit
willing bidders because of the airlines deteriorating situation. Cost inefficiencies, over
employment and liquidity problems, posed major turn-offs for potential investors. In
addition, the unpredictable political environment, caused by the persistent assassination
of its national heroes and leaders such as former Prime Minister Rafik Hariri, would not
be an attractive feature that would persuade outside investors into such a venture.
The alternative scenarios available included an entire liquidation of MEA or complete
transfer to the government. The first scenario was not found to be attractive by Lebanese
officials because of patriotic and social reasons. About 3,500 employees may end up
losing their jobs in case of total liquidation. The second scenario would only worsen the
financial condition of the government if MEA were completely acquired by the Lebanese
government. Adding MEA to its portfolio would only augment government's deficits
undermining its reform programs aimed at national debt reduction, that at last count was
running more than $42 billion.
Alliance would facilitate the entry of global carrier(s) into the Lebanese market in a
manner that would otherwise be unfeasible. An alliance attempts to synergize the efforts
of competitive and comparative advantages of various players in different markets in a
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68
manner where they can complement each others core competencies. Alliances make it
easy for larger airlines to overcome legal obstacles found in smaller closed markets and
for smaller airline to reach a wider network of destinations. Almost all alliances integrate
partners from different markets. MEA has had a history of alliances in the past, most
notable of which was with Air France.
Whats Next?
John Khoury was contemplating the issue of buying Middle East Airlines for his family
business. The airline was obviously doing better in mid 2000 but he wasnt sure whether
his company was ready to invest in such a troubled venture in Lebanon that was a very
unpredictable country for potential investment. Though, he felt a sense of duty and
fulfillment in salvaging his countrys ailing airline, he wasnt sure whether moving into
that direction made good business sense. He wondered what he needed to do to persuade
his brothers (Sam, Ramsey and Rayan) into at least - considering this opportunity.
Teaching Notes available from the first author
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69
Appendix 1
Middle East Airlines Balance Sheet (LL Thousands)
2001
2000
1999
1998
CURRENT ASSETS
Cash and banks
85,421,793
20,525,257
10,919,460
11,303,685
Receivables, less allowance for doubtful accounts
54,191,214
49,864,231
42,443,789
46,957,446
Equity securities
8,105,044
11,618,136
22,288,991
17,421,000
Inventories and expandable parts
7,637,471
8,594,660
9,222,0 II
9,242,88]
] 9,581,374
18,114,547
17,808,473
16,801,815
174,936,896
108,716,831
102,682,724
101,726,827
Long-term receivables
Property and equipment (net of accumulated
depreciation)
35,918,584
29,140,787
26,525,909
23.718,Y45
846,977
868,147
875,520
921,094
Fleet, property, and equipment
27,659,416
33,952,291
35,193,750
29,122,815
Prepaid expenses
NON-CURRENT ASSETS
Assets revaluation surplus
84,870,717
88,928,683
90,748,321
92,567,958
149,295,694
152,889,908
153,343,500
146,330,812
324,232,590
261,606,739
256,026,224
248,057,639
47,655,876
43,818,294
54,578,657
57,201,527
683,560
575,551
589,894
3,627,763
168,910,349
136,471,555
142,247,767
147,357,811
30,632,017
TOTAL ASSETS
CURRENT LIABILITIES
Bank overdrafts
Current maturities of long term debts
Accounts payables and accruals
Air traffic liability
30,101,562
33,454,539
33,078,471
Current portion of employees' termination benefits
45,090,056
50,000,000
292,441,403
264,319,939
230,494,789
238,819,118
NON-CURRENT LIABILITIES
Long term debts
Employees' termination benefits
Provision of contingencies
Loan from major shareholder (advance on capital
increase)
301,500
45,240
21,630,368
22,315,260
85,342,033
100,498,985
7,862,666
18,481,878
21,394,573
28,826,005
256,204,176
215,055,048
115,280,285
10,444,000
285,998,710
255,852,186
222,016,891
139,814,230
578,440,113
520,172,125
452,511,680
378,633,348
279,000,000
279,000,000
279,000,000
279,000,000
84,870,717
88,928,683
91,560,082
93,379,720
61,014
61,014
61,014
61,014
60,300,000
TOTAL LIABILITIES
SHAREHOLDERS' EQUITY
Capital
Revaluation reserve
Other reserves
Cash contribution from mother company
Accumulated deficit
DEFICIT IN SHAREHOLDERS' EQUITY
(678,439,254) (626,555,083) (567,106,552) (503,016,443)

(254,207,523) (258,565,386) (196,485,456) (130,575,709)
TOTAL
LIABILITIES
AND
SHAREHOLDERS'
EQUITY
324,232,590
261,606,739
256,026,224
248,057,639
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70
Appendix 2
Middle East Airlines Income Statement (LL Thousands)
2001
2000
1999
1998
OPERATING REVENUES
Passenger
Freight, mail, and excess baggage
Lease, charter, and pilgrimage
Traffic and engineering
304,116,406
300,722,759
276,552,064
280,076,167
24,737,862
25,257,531
26,212,183
27,083,558
1,367,446
1,468,349
1,157,907
9,664,038
15,811,271
20,186,063
10,629,604
9,263,777
346,032,985
347,634,702
314,551,758
326,087,540
OPERATING EXPENSES
Flying operations
149,025,539
163,411,339
141,281,831
143,917,331
Maintenance
62,718,979
71,511,211
64,753,702
63,107,539
Passenger service
38,003,205
40,656,393
40,290,918
44,331,008
Ground operations
34,245,277
37,737,117
40,351,870
41,181,520
Promotion and sales
62,964,412
64,837,675
63,249,719
68,379,955
General and administrative
32,975,162
32,886,253
34,940,537
36,415,590
5,669,142
5,545,564
4,895,715
5,030,021
Depreciation
OPERATING (LOSS)
385,601,716
416,585,552
389,764,292
402,362,964
(39,568,731)
(68,950,850)
(75,212,534)
(76,275,424)
(17,172,053)
(15,048,694)
(17,545,058)
(9,063,188)
360,050
358,281
189,825
598,894
(1,641,234)
1,780,551
(117,626)
13,384,953
(7,322,545)
(3,513,093)
(10,670,854)
4,738,482
17,421,000
2,055,257
3,268,485
2,936,324
2,675,518
95,467,111
NON-OPERATING INCOME/(EXPENSES)
Interest expense
Interest income
Gain/(loss) on sales/disposal of aircraft and
spares
Write-off of B707 aircraft
Unrealized gain/(loss) on equity securities
Income/(loss) from subsidiaries
Cash contribution from mother company
Reorganization cost
(95,467,111)
Other income/(loss)
9,679,567
29,613,327
20,647,348
(2,962,836)
(2,197,678)
(2,430,176)
(1,546,507)
(2,193,955)
(12,429,184)
6,870,920
9,302,788
12,537,841
(51,997,915)
(62,079,930)
(65,909,746)
(63,737,583)
Income/(loss) on exchange
NET LOSS
ACCUMULATED DEFICIT
Balance at January 1 as previously stated
Write back of revaluation of B747/B707
Write back of revaluation of investments in related
companies
Write back of depreciation on asset revaluation
Balance as adjusted
Net loss for the year
Balance at December 31
(626,555,083) (567,106,552) (503,016,443) (497,844,881)

-
51,201,172
811,762
113,744
1,819,637
1,819,637
7,364,849
(626,441,339) (564,475,153) (501,196,806) (439,278,860)

(51,997,915)
(62,079,930)
(65,909,746)
(63,737,583)
(678,439,254) (626,555,083) (567,106,552) (503,016,443)
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71
Appendix 3
1945
January 1, 1946
1946
1955-1960
1960
1962
1963
1968
1974
1975
1976
1980
1983
1975-1990
1991
1992
1992
1993
1993
1995
1996
1997
1998
1998
1998
1999
1999
2000
2001
2001-2002
2002
2003
2004
2004
2004
MEA Milestones
MEA founded
Beginning of services
Services to main cities in the region
Expansion of network into Western Europe, India & Pakistan
Purchases of additional land assets and launching of an information
center
Record in operating profits
Merger between MEA & Air Liban
Destruction of most of its fleet due to an Israeli raid on Beirut airport
Expansion of fleet (Boeing 747) Best service award
Beginning of the Lebanese war
MEA gets best airline management award
Electronic reservation system
Launching of BEY-NY route
Several closures of Beirut airport (around 800 days) meant severe
disturbances in operations and market leadership
Launching of Beirut-Singapore-Sydney route
MEA chairman announces $200 million losses due to Lebanese war
(1975-1990)
Government gives MEA exclusivity of passenger air traffic for 20 years
Leasing of Airbus aircraft
Beirut-Colombo (Srilanka) route
Beirut Brazil route
Central bank of Lebanon takes full control of MEA
Modernization of fleet (4 Airbus aircraft)
Appointment of Mohammad Hout as Chairman
Mounting pressures and losses
Closure of routes to Kano, Kuala Lumpur, Accra, Berlin, Bucharest,
Bahrain, Brussels, Doha, Copenhagen, Sao Paolo, Nice, Bombay,
Colombo, and Milan
Alliance with Air France
Service to Tehran launched. Reopening route to Kano
Alliance with Malaysian Airlines Reopening route to Accra
Open-Skies agreement is passed in Parliament
$30 million losses
Recovery Plan initiated
$3 Million profits
$22 Million profits
Implementation of a new automatic flight system, the Automatic
Firming Procedure
Expansion & modernization of fleet
$50 Million profits
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72
A LEBANESE FAMILY OWNED HILAL STORES ENTRY INTO

BAHRAIN
Siraj Hilal, President and CEO of a family owned and Lebanon-based Hilal Chain Stores,
was perusing the fax he just received from Jamil Salem in Bahrain. Hilal was a major
shareholder in Hilal Store, the owner of a major supermarket chain across Lebanon, and
was pondering over the issue of entering the Bahraini market. Salem was negotiating
with a major local supermarket chain (Helwa) in Bahrain to buy them out on behalf of
Hilal. Helwa, being a major supermarket across Bahrain, had several stores at key
locations, but was suffering from increasing losses during the past few years caused by
managerial inefficiencies and overstaffing. The fax explicitly spelled out that Samir
Ahlam, the sole owner of Helwa wanted a definite offer from Hilal within a week
pertaining to the acquisition. The negotiations have been going on for couple of years
and Hilal commissioned a team of top-notch professionals to conduct a marketing
feasibility study. He, however, never thought that Ahlam would pressure him pertaining
to a definite offer within a week.
INTRODUCTION
The Hilal Store (THS), established in 1945, was a multi-divisional company, focusing on
Retail and Trading as its core business activities, with a turnover of more than USD 80
Million, and growing in double digits annually. THS was the leader in the Lebanese
Retail Industry, and operated one of the largest retail chains of 16 Super Stores across
Lebanon and some neighboring countries. THS had a market share estimated around
19% across Lebanon and a 10-15% shares in other Arab countries. An ambitious
expansion plan was under way to extend THSs reach across existing countries as well as
other countries in the region. In 2002, THSs management was approached by Helwa, a
struggling supermarket chain operating across Bahrain, with an offer to set up a joint
venture in Bahrain. THSs management was immediately attracted to the idea but wanted
to examine the feasibility of such a venture.
Historical Evolution
The founder of Hilal Group, the late Jamal Hilal, Sirajs grandfather, established his
business at Sidon, Lebanon in 1945. He started as a retailer of cheese, jam and homeprepared products in a tiny shop in Old City, the traditional part of Sidon. After some
initial struggles with low sales, his efforts became more fruitful when he started adding
new varieties of products in his shop. Two of his brothers joined the company in the early
1960s adding more strength to the company. Hilal earned such a reputation for quality
that the Lebanese army commissioned the company to become among its chief suppliers
of jam and other food products. The Hilal Group expanded, and started selling other
______________________________________________________________________________________
73
products of other suppliers, that was supplemented later by the import and sale of other
food products with enviable success. When the second generation of the Hilal family took
over, they were able to move the company further ahead despite the troubling political
and security situation across the country. Companys activities became more diversified
and the Hilal Group grew to comprise a group of companies involved in the supermarket
business all over Lebanon.
The company imported over 15,000 different products from Saudi Arabia, UAE, Egypt,
Syria, Sudan, U.S.A., U.K, France, Germany, Italy, Switzerland, and the Far East. The
company had a state of art warehousing system where products were stored, that tracked
using an on-line real-time system. THS prided itself in offering customers the best
service, modern atmosphere, variety, quality, and value, unmatched by the competition.
THS was the recipient of numerous National Business Awards during the past few years
for its commitment to excellence and exceptional customer service.
THS in Lebanon
THSs high market share across Lebanon proved its market leadership. Though, it had
several key locations all over Lebanon, yet its limited expansion outside Lebanon meant
that it was not tested on an international level. Lebanon also had not witnessed the entry
of major international retail players till very recently. Its only expansion so far was in
Jordan, a market that had not faced the entry of major global competitors in the retail
industry.
THS adopted state of the art IT systems, placed extreme importance on
continuous streamlining and updating its supply chain activities, and emphasized firstrate employee recruitment and development.
Due to its ability to offer exclusive
products, THS was able to command higher prices on several items which sometimes
backfired as it gave the perception of an over-priced super-market to its regular
consumers. Its consistent and unyielding high quality customer service, however,
permitted it to sustain a loyal customer base. The speedy expansion of THSs operations
and branches meant that it had to continuously update its IT, supply chain and logistical
support systems proving to be a challenging and costly task, leading one of its mangers,
to comment, that sometimes our logistical support does not catch up to operations
expansion. The companys insistence on continuous innovation and development,
however, always meant that such challenges were handsomely met.
Despite THSs success, local competitors started copying THSs strategies. THS faced
traditional competition from convenience stores and government operated COOPs. Those
were trying to follow suite and copy THSs marketing practices. Moreover, international
chains (such as Spinneys) were opening new superstores in THSs core markets thus
putting more competitive pressures on THS. International retail competitors such as
Spinneys brought recognized global brand names, proven track records, exceptional
business models, and strong bargaining power. The local and regional retail industry was
also going through tremendous technological changes. In the past few years, the
emergence of online shopping drifted certain customers away from traditional stores.
This wave did not yet pick up in THSs markets, but some analysts felt it was bound to
happen in the foreseeable future. Despite the fact that THSs locations were carefully
______________________________________________________________________________________
74
chosen to be in prominent accessible areas, further expansion in Lebanon was becoming

harder as numerous strategic locations were getting more expensive and accordingly
could not be conveniently bought.
Despite the above challenges THS continued to enjoy many competitive advantages over
other retailers. THSs endless strategic endeavors were aimed to enhance its market
position, penetrate new markets, upgrade its facilities and practices, and take care of its
customers and employees. All these initiatives led to THS holding a firm grip over its
market share and ensuring consistent growth that was substantiated by strong supplier
relations, broad product offerings, continuous desire to sustain customer satisfaction, and
adopting cutting-edge technology and solutions.
As Siraj Hilal was reflecting on the issue at hand, he started reviewing the marketing
feasibility study prepared by consultants pertaining to THSs entry into Bahrain, whose
major highlights are presented below.
Bahrain Country Profile
Economic Profile:
The Kingdom of Bahrain encompasses a total surface area of Area: 693 sq. km. (268 sq.
mi.); (about four times the size of Washington, DC.) and is an archipelago consisting of
33 islands, only six of them are inhabited. 1 Bahrain is a founding member of the World
Trade Organization. It had a history of active commercial activity and its economy was
stable. In order to promote foreign entrepreneurship, the Bahrain government enacted
regulations in January 2001 giving foreign firms the right to own real estate. Bahrain was
also in the final stages of finalizing a Free Trade Agreement with the US. Bahrain has
also become a well-known international financial Center and a leading hub for Islamic
Banking across the region, thereby asserting itself as the ideal regional destination for
foreign direct investment. It had an excellent communications system, key and accessible
geographic location, superior infrastructure, and a tax-free environment. The Bahraini
Dinar (BD) was a freely convertible currency. Table # 1 shows Bahrains economic
profile.
Bahrains International Airport was served by more than 39 international airlines, and
had been expanded through a major program to handle increased traffic of up to 10
million passengers a year. The national carrier, Gulf Air (whose ownership is shared
with Oman, Qatar and Abu Dhabi) provided a comprehensive schedule of regional and
international flights. DHL Worldwide Express operated a fleet of seven aircrafts from its
regional hub erected next to the airport in Muharraq, handling inbound and outbound
shipments between the Middle East and the rest of the world.
The major seaport of Mina Sulman could accommodate vessels up to 65,000 tons, and
had a container capacity of 150,000 twenty-foot equivalent units (TEU) per year.
Although the port was adequate for current volumes of sea-borne freight, plans for an
estimated USD 711 million new port and associated industrial zones were initiated. The
1
http://www.umsl.edu/services/govdocs/backgroundnotes/27.htm
______________________________________________________________________________________
75
new port would have a capacity of 234,000 20-foot TEUs and would include 1,800
meters of quay with minimum 15 meters water depth designed for containers, general
cargo, dry bulk and roll-on-roll-off (Ro-Ro) traffic; small craft berths; a container
terminal including container freight station, an aluminum packing shed; and a general
cargo area. 2 Bahrain had a well-developed road infrastructure, with multi-lane highways
running across the country. Bahrain was linked by causeways to Muharraq, the second
largest island where the international airport is situated; to Sitra, where the industrial
sector was located; and to Saudi Arabia by the 25km long King Fahad Causeway.
Table # 1
Bahrains Economic Profile
Economic Factors
GDP (US$ bn)
Real GDP growth (%)
Consumer price inflation (%)
Population (m)
Exports of goods fob (US$ bn)
Imports of goods fob (US$ bn)
Current-account balance (US$ bn)
Foreign-exchange reserves excl gold (US$ bn)
Exchange rate BD:US$
1999
6.8
4.3
-1.3
0.7
4,363
3,468
-36.7
1,369
0.376
2000
8.5
5.3
-0.7
0.7
6,195
4,394
782.4
1,564
0.376
2001
7.9
4.8
-1.2
0.7
5,577
4,047
146.9
1,684
0.376
Demographic Profile:
The total population of Bahrain more than tripled between the census of 1971 and 2001
from 216,078 to 650,604. The latest available official population figures for 2002 stood at
672,000. Bahraini nationals accounted for majority of the population, although the
proportion has been following a steady decline over the past few decades (as depicted in
Table # 2).
Table # 2
Number and Percentage Distribution of Bahrain Population by Nationality (1941 - 2001)
Item
2001
1991
1981
1971
1965
1959
1950
1941
405,667
244,937
650,604
323,305
184,732
508,037
238,420
112,378
350,798
178,193
37,885
216,078
143,814
38,389
182,203
118,734
24,401
143,135
91,179
18,471
109,650
74,040
15,930
89,970
62.4
37.6
100
63.6
36.4
100
68
32
100
82.5
17.5
100
78.9
21.1
100
83
17
100
83.2
16.8
100
82.3
17.7
100
Number
Bahraini
Non-Bahraini
TOTAL
Percentage
Bahraini
Non-Bahraini
TOTAL
Source: http://www.bahrain.gov.bh/census/a2.htm
http://www.state.gov/www/about_state/business/com_guides/2001/nea/bahrain_ccg2001.pdf
______________________________________________________________________________________
76
Bahrain had a rather young and productive population with 35% of the population below
the age of 20, and 60% between the age of 20 and 59. This ratio indicates a high
proportion of spending consumers. Table # 3 illustrates the population age mix based on
2001 demographics data.
Table # 3
POPULATION BY AGE GROUPS, NATIONALITY AND SEX - 2001
TOTAL
Age
0-4
0-19
20-39
40-59
60+
BOTH
SEXES
60,385
232,364
265,754
126,622
25,864
650,604
FEMALE
29,431
113,296
106,076
44,945
12,638
276,955
MALE
30,954
119,068
159,678
81,677
13,226
373,649
NON BAHRAINI
BOTH
SEXES FEMALE MALE
12,064
5,815
6,249
39,918
19,231
20,687
139,222
42,509
96,713
62,891
13,290
49,601
2,906
881
2,025
244,937
75,911
169,026
BAHRAINI
BOTH
SEXES
48,321
192,446
126,532
63,731
22,958
405,667
FEMALE
23,616
94,065
63,567
31,655
11,757
201,044
MALE
24,705
98,381
62,965
32,076
11,201
204,623
Source: http://www.bahrain.gov.bh/census/Part2/01/htm/0602.0.htm
Retail Market Analysis Market Profile:

Bahrain enjoyed a high GDP per capita estimated at US$11,528 that is indicative of a
relatively strong purchasing power. In addition, Bahrains multi-ethnic market resulted
in a wide variety of food products offered locally. The expatriate community throughout
the Gulf region impacted the tastes for food consumption and patterns of purchasing
across the region.
Moreover, Bahraini consumers through their openness to other
cultures and continuous travels to foreign countries, (both Western and Eastern), became
more conscious of types of foods, their nutritional values, and prices with a willingness to
pay extra for quality products. The growing incorporation of Bahraini women into the
public life, and their increasing access to the workplace meant greater purchasing
inclinations. Table # 4 demonstrates these characteristics of Bahrains market.
Table # 4
Changes in Labor Force Size by Nationality and Sex (1971-2001)
Nationality and Sex

Bahraini
Male
Female
Both Sexes
Non-Bahraini
Male
Female
Both Sexes
Total Labor Force
Male
Female
Both Sexes
2001
1991
1981
1971
94,353
32,768
127,121
73,118
17,544
90,662
51,949
9,250
61,199
35,884
1,843
37,727
147,123
34,097
181,220
113,739
22,047
135,786
74,230
6,855
81,085
20,884
1,400
22,284
241,476
66,865
308,341
186,857
39,591
226,448
126,179
16,105
142,284
56,768
3,243
60,011
Source: http://www.bahrain.gov.bh/census/a6.htm
______________________________________________________________________________________
77
Bahrain also witnessed an explosion in retail activity fueled by the emergence of

commercial malls. Those malls accounted for the majority of retail activity; traditional
markets and stand-alone shops were losing ground. The Seef District had four of
Bahrains most popular malls: Seef Mall, Al-Aali Mall, Dana Mall and Bahrain Mall.
Other well-known malls in Bahrain included the Riffa Mall, the Isa Town Mall, the
Sheraton Complex, and Yateem Center. Retail industry was expected to expand further
with the launch of numerous new malls in Bahrain including one in Amwaj islands,
Durrat Al-Bahrain, and others.
Food Retail Market Analysis
Bahrains food retail market was characterized by the presence of many retailers. In
2002, there were 11 major retailers operating multi-branch stores across Bahrain, some
with only supermarket products and some with additional home center items. Bahrains
total market size was estimated at BD 86,671,440 per year with a total retail space of
57,718sqm. Table # 5 illustrates Bahrains retail market profile.
Table # 5
Retail Industry Profile
Main Indicators
No of retailers
No of branches
Total retail space (sqm)
Total daily sales
Total yearly sales
Avg yearly sales per sqm
Avg per capita sales/year
11
26
57,718
BD 237,456
BD86,671,440
BD 1,502
BD 172
Big Stores was the top retailer in Bahrain with yearly sales of BD 27.3 Million, giving it
a 31.6% market share. It also had the largest store in terms of space. It was the most
efficient retailer with average yearly sale/sqm of BD 2,395. The industry average in
Bahrain was BD 1,498. Al-Muntazah had the most number of branches (9 branches).
Most others had 3 or fewer branches around the island. Khayal had 2 branches. Manama,
the capital of Bahrain, had the most concentration of food retail space in the country. Big
Stores accounted for more than half of that. Manama also had the highest rate for per
capita yearly purchases at BD 327. It is obvious that Manama is attracting customers
from all over the country (especially Muharaq). Although Muharaq has a high population
count, yet it has a low total of food retail space and a low per capita purchase rate.
Issa Town had a significant purchasing power although a small population and a per
capita purchases of BD272 per year. However, the most efficient area in terms of
sales/sqm was Rifaa. Tables # 6 and 7 summarize the market competitive situation by
retailer and by area of operation.
______________________________________________________________________________________
78
Table # 6
Competitive Analysis by Store
S.N
Store Name
1
2
3
4
5
6
7
8
9
10
11
Big Stores
Hayat
Helwa
Khayal
Baradi
Jewel
Hyperstore
Shami
Kabeer
Familiar
Rainbow
Total Space
(sqm)
Daily Sales
(BD)
11,400
9,190
9,140
4,050
4,180
3,530
3,800
2,300
6,970
1,200
1,960
75,000
51,000
23,500
18,956
15,000
13,000
12,000
9,000
8,000
6,000
6,000
No. of Stores
1
9
5
2
3
3
1
1
1
1
1
Yearly Sales
(BD)
27,375,000
18,615,000
8,577,500
6,918,940
5,475,000
4,745,000
4,380,000
3,285,000
2,920,000
2,190,000
2,190,000
Table # 7
Competitive Analysis by Area
S.N
Area
Total
Space
(sqm)
Daily
Sales
(BD)
1
2
3
4
5
6
7
Riffa
Muharaq
Hamad Town
Issa Town
Manama
Northern
Sitra
1,360
4,620
1,550
6,540
36,939
4,560
2,150
15,000
20,500
12,000
21,500
138,000
20,286
10,170
No. of
Stores
1
5
2
3
12
3
2
Population
Avg Sale
Capita/Year
(BD)
79,985
91,939
52,718
36,833
153,395
43,691
43,910
68
81
83
213
328
169
85
Big Stores was a category killer in Manama area and its surroundings. The central
area of Bahrain (Rifa, Sitra, Issa Town, and Hamad Town) seemed to provide a huge
potential for a Big Stores-like format. The area had adequate offering from small formats,
so new competition could offer a differentiator and an alternative for the population from
driving north to Big Stores, and instead shop in that area. The largest shop was Khayals
store in Sitra occupying 2,787sqm. Three formats that seemed to be working in Bahrain
were: (1) Large hypermarkets which attracted customers from all over the island thus
generating high sales and capturing high market share; (2) Large number of smaller
stores around the country; and (3) Few discount stores.
Target Market Analysis
THSs marketing study for Bahrain further revealed that its target market would consist
of Sitra, Issa Town, Central Region, Riffa, and Hamad Town with a target Population of
263,415 (40% of Bahrains consumers). The study also revealed that the population in
______________________________________________________________________________________
79
the target area included 54% middle income and 12% high-income consumers. Tables #
8, 9 and 10 illustrate the demographics of the target market.
Table # 8
Population Nationality Mix (Target Market)
Area
Sitra
Central
Isa Town
Riffa
Hamad Town
Total
% of Bahrain
Bahraini
29,637
34,825
31,461
42,597
48,952
187,472
47%
%
67%
70%
85%
53%
93%
71%
Non-Bahraini
14,273
15,144
5,372
37,388
3,766
75,943
31%
%
33%
30%
15%
47%
7%
29%
Total
43,910
49,969
36,833
79,985
52,718
263,415
41%
%
17%
19%
14%
30%
20%
Source: http://www.bahrain.gov.bh/census
Table # 9
Bahraini Population Gender Mix (Target Market)
Area
Sitra
Central
Isa Town
Riffa
Hamad Town
Total
Male
14,873
17,608
15,818
21,675
24,767
94,741
%
50%
51%
50%
51%
51%
51%
Female
14,764
17,217
15,643
20,922
24,185
92,731
%
50%
49%
50%
49%
49%
49%
Total
29,637
34,825
31,461
42,597
48,952
187,472
%
16%
19%
17%
23%
26%
Table # 10
Residency Type Profile (Target Market)
Area
Sitra
Central
Isa Town
Riffa
Hamad Town
Total
% of Total
Villa
985
2,962
432
4,815
887
10,081
29%
Villa
Within
Complex
Conventional
House
(Iskan)
Tradition
House
Building
90
297
5
139
0
531
2%
1,713
1,962
4,442
2,975
7,697
18,789
54%
1,179
818
73
1,981
1
4,052
12%
243
417
187
718
16
1,581
5%
Total
4,210
6,456
5,139
10,628
8,601
35,034
Although the target market had 40% of Bahrain population, it accounted for 25% of food
retail sales and contained only 20% of retail space of the country, reflecting a shortage of
retail space, and motivating area residents to head to Manama for shopping. Although
the target market population was middle to high income, yet the per capita purchases in a
year was almost half of the countrys average, demonstrating shoppers visiting Manama
______________________________________________________________________________________
80
to patronize its Malls. There was a shortage of discount stores across the target market.
Last Chance had only one store controlling 8% market share. The retail format that
seemed to be working successfully in the target market was the smaller stores existing
along with large stores. Al-Montana was found successful in this format and was top in
terms of market share and second in terms of efficiency sale per sqm. The main
indicators of the retail market in the target market are presented in Table # 11.
Table # 11
Main Indicators of Retail industry in Bahrain (Target Market)
No of retailers
No of branches
Total retail space (sqm)
Total daily sales
Total yearly sales
Avg yearly sales per sqm
Avg per capita sales/year
5
8
11,600
BD 58,670
BD21,355,880
BD 1,841
BD 100
Al-Muntazah was the top retailer in the target market with yearly sales of BD 11.5
Million giving it a 53.7% market share of the retail industry. Baradi was the most
efficient retailer with average yearly sale/sqm of BD 2,474, while the industry average in
Bahrain was BD 1,498/sqm. The target market average was 1,841/sqm, which was also
above the Bahrain average. Issa Town and Sitra had the most concentration of food retail
space. The most efficient area in terms of sales/sqm was Rifaa. Issa Town had a
significant purchasing power alongwith a small population, (yielding per capita purchases
BD272 per year). The retailer with most branches was Al-Muntazah (4 branches in target
market). All others had 1 branch. Tables # 12, 13 and 14 summarize the target market
competitive situation by retailer and by area of operation.
Table # 12
Competitive Analysis by Store (Target Market)
S.N
Store Name
Total
Space
(sqm)
Daily
Sales
(BD)
No. of
Stores
Yearly
Sales (BD)
Market
Share
1
2
4
3
5
Baradi
Hayat
Khayal
Shami
Last Chance
1,030
4,700
1,550
2,300
2,020
7,000
31,500
6,670
9,000
4,500
1
4
1
1
1
2,555,000
11,497,500
2,434,550
3,285,000
1,642,500
11.9%
53.7%
11.4%
15.3%
7.7%
______________________________________________________________________________________
81
Table # 13
Competitive Analysis by Area (Target Market)
Total
Space
(sqm)
S.N
Area
1
3
7
4
Riffa
Hamad Town
Sitra
Issa Town
1,360
1,550
2,150
6,540
Daily
Sales
(BD)
15,000
12,000
10,170
21,500
Avg
Yearly
Sale/sqm
(BD)
4,026
2,826
1,727
1,200
No. of
Stores
1
2
2
3
Population
Avg Sale
Capita/Year
(BD)
79,985
52,718
43,910
36,833
68
83
85
213
Table # 14
Top 5 Selling Store Branches (Target Market)
S.N
Store Name
Location
1
2
3
Hayat
Shami
Hayat
4
5
Baradi
Khayal
Riffa
Isa Town
Issa Town
Hamad
Town
Nwaidrat
Daily
Sales
(BD)
Yearly Sales (BD)
15,000
9,000
8,000
5,475,000
3,285,000
2,920,000
7,000
6,670
2,555,000
2,434,550
Merchandise Considerations
Consumer Profile and Behavior:
The distinguishing factors of potential consumers resembled those in neighboring gulf
countries with a mix of nationals and non-nationals co existing in each market, and both
groups constituting strong target markets for retailers. Over 50% of the consumer base
was under thirty years of age. High and middle-income consumers comprised most of
the customer base. Despite the fact that the average consumer yearned for high quality
products, price was the most important determinant in each consumers decision-making
process. This did not mean that consumers had no high expectations of quality and
brands. On the contrary, consumers were sophisticated and were well versed about
different brands and their distinctive attributes.
Distribution Channels:
During the last two decades, the relative dependence on agricultural-food imports had
yielded the development of the infrastructure and import facilities in Bahrain. There
were numerous food importers, many of who were also wholesalers, distributors, and
retailers; however, five to six companies dominated retail food industry. Local agency
laws prohibited the importation and sale of brand name food products by other than the
main agent. By law, foreign companies did not require a local agent or partner in order to
______________________________________________________________________________________
82
set up or operate a regional office in Bahrain, although foreign companies setting up

regional offices found it useful to have some sort of partnership with a local company or
individual. Main multinational brands of products existed through the local trade,
although Suppliers Service levels average only 75%, a low level compared to best
practices across the MENA region. Estimates of profit margins on various products
categories are illustrated in Table # 15.
Table # 15
Profit Margin on Various Product Categories
Product
Margin
Imported food and general merchandise 25% to 30%
Locally procured frozen products
12% to 22%
Locally procured dairy products
8% to 18%
Locally procured grocery products
3% to 13%
Helwa was established as a regional Service agency in the 1950s, followed by the
opening of the Groups first grocery store in the Kingdom of Bahrain few years later.
Helwas activities have since broadened to include fashion and footwear, quick service
restaurants, coffee shops, supermarkets and the distribution of fast moving goods.
Helwa operated five supermarkets in Bahrain with annual sales of BD 9 million. Its gross
profit during initial years of its operations was 16 % and the number of employees was
220. Losses incurred reached around -1% of sales in the past couple of years. Helwa had
market reputation as one of the oldest supermarkets in Bahrain, located at prominent
locations with ample parking spaces. However, Helwa lacked effective stores
management, had a limited assortment and was suffering from managerial inefficiencies
and operating losses.
CONCLUSION
As Siraj Hilal, CEO and President of his family business, was going over the findings of
his research team, he called for a meeting of his top management team to discuss the
issue. The management of THS was contemplating to move into Bahrain through setting
up a fifty-fifty joint venture with Helwa. The joint venture would take over the
Supermarket division of Helwa. THS would take over Management Control of the joint
venture as well. The marketing and financial data given to him was interesting, but such
a move would entail taking a major entrepreneurial risk. He had lingering questions to
answer and he wasnt sure he had all the information to address them: Should his family
business go ahead with the acquisition? Should his family business establish a joint
venture with Helwa? Should his company enter Bahrain on its own and forget about
Helwa? What risks could be faced if THS starts from scratch in Bahrain? What risks
could be faced if it set up a venture with Helwa? In making up his mind, he wasnt even
sure about what more information he needed to have before making up his mind for a
multi-million dollar foreign direct investment in Bahrain.
Teaching note available from the first author.
______________________________________________________________________________________
83
CHATEAU KSARA WINE COMPANY OF LEBANON

PENETRATING GLOBAL MARKETS: CHALLENGEES AND
OPPORTUNITIES
Fadi Asrawi, Haigazian University
Chateau Ksara in collaboration with the Union Vinicole du Liban UVL [the association
of wine producers in Lebanon] is attempting to position the Lebanese wine in the world
market as a prestigious, high quality product. At the same time, a strategy is being
executed to protect the local market from increased competition from the cheaper, lower
quality foreign brands. This case study analyzes Ksaras competitive position in Lebanon;
its expansion opportunities in the international wine market and assess the effectiveness
of its strategies towards achieving its objectives.
INTRODUCTION
Ksara, Lebanons biggest and oldest winery, was established in 1857 and has been
producing quality wines ever since. For more than a century, Ksara has been a leader in
the Lebanese wine market in terms of production and market share. During its lifetime,
Ksaras major ups and downs have been mainly related to the causes of the Lebanese
civil war. Although two other major producers existed in the market, competition has not
been fierce. Three other producers consolidated their efforts to keep the local wine the
number one selling wine in the country as well as to introduce Lebanon wines across the
world alongside France, Italy, Spain, Germany and Austria.
Since the main competition to Lebanon came from the renowned French wines, the three
local producers instead of competing among each other targeted their products towards
international consumer segments keeping the local competition on fair grounds. Locally,
their major concern has been to keep the local wines as the lead selling wines across the
country. However, during the past decade the Lebanese wine industry has started to
witness a major turnover. Since the end of the civil war in 1990, the emergence of both
foreign and local (new, cheaper, and poor quality) wines are challenging the major local
quality wine producers. Moreover, globally the emergence of a new trend in the art of
wine making is reshaping the worldwide wine industry and is putting the renowned
global wine making industry at stake.
The Global Wine Industry
The major division in the global wine industry today is between the Old World
countries and the New World countries. The Old Wine World consists of Western
European countries such as France, Italy and Germany, while the more recent entrants
into the global wine industry, such as the United States, Chile, New Zealand, Australia
______________________________________________________________________________________
84
and Canada are considered the New Wine World countries. For approximately 150 years,
these New Wine World countries have been learning the wine traditions of Western
Europe and are now attempting to master the skills in order to produce fine wines. In very
recent history, the New Wine World has equaled the quality of the Old World wine, yet
this phenomenon has brought with it a new wine culture, as well as mechanized mass
production with which smaller, more refined vineyards of old wine world are unable to
compete.
Traditional Old World currently has held a market share of 71% of the total world wine
industry, while the New World, has succeeded in accumulating 29% of total worldwide
wine market. The United States has emerged as the fourth largest power in the global
wine market. California alone generates more than 90% of the United States wine
production, making California, as its own entity, the fifth largest wine producer
worldwide.
France is particularly alarmed by the demand for New World wines. According to the
Bordeaux Wine Bureau, (CIVB) in the past 10 years, French wine consumption across
the global market has decreased from 71% to 66%. France is being forced to change its
archaic and aristocratic ideals of the wine market due to recent trend towards more
creative and less acidic wines. Even their most loyal of neighbors, the Balkan states, have
decreased their consumption of French wines, switching over to the consumption of
innovative New World wines. Apparently, the impact has been most recognizable in the
United Kingdom, where New World wine has become particularly strong, gaining 14%
of the market share during the past 10 years, capturing 40% of the United Kingdoms
overall wine market.
The New World attitude towards Old World wine is much more positive than the reverse.
Each year, the United States imports 124 million gallons of wine, 50% of which
originates in France or Italy, while the US exports only 80 million gallons annually, of
which, 1.5 million gallons (1.875%) going to France and Italy collectively. The
sentiments are not mutual between the two wine worlds; then again, neither are the rules - an issue that is highly controversial in the wine industry. Wine making techniques differ
according to region, terrain and cultural traditions. France, for instance, is infamous for
manipulating these differences to imply that the rules governing the international wine
industry are not just. The terrain of the New World allows for production of wines that
are fruity and high in sugar, while a key element, acidity, is not as readily produced.
Therefore, according to the regulations of the International Office of Vines (OIV), the
New World participates in "acidification", or the addition of grape acid to their wines.
The French have expressed their grievances in accordance with this regulation and have
proceeded to refer to New World wines as manufactured wines. In Old World grapes
there is an overabundance of acid, which at times would prove to be undrinkable in its
normal state; therefore the OIV allows them to take part in a process known as
chaptilization, in order to sweeten the wine.
In an effort to protect themselves from the domineering Old World vineyards, the new
world wine producing countries, have developed a pact that ensures their acceptance of
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85
each others growing techniques and traditions, allowing them to increase confidence in
the industry and play the game by their own new rules. Their ability to create this pact
relies solely on the recently formed New World Wine Producers Forum (NWWPF),
which compliments more traditional OIV's role, although the OIV is still the governing
body of Old World wine producers. Their first initiative in their vision for control of their
destiny was to withdraw from the OIV. New World Wines now have their own
international alliance, which France refuses to recognize. This New World agreement
has left the Old World growers to acclimate to a new and rapidly transforming global
wine culture and market. However many older issues, such as geographical indication,
water pollution and a constantly changing agricultural industry, still remain at the
forefront of global discussions.
The newly formed Wine Pact among the new world wine producers has given rise to
many challenging disputes between these so called New World wine producers and the
Old World wine producers. Before the separation of the wine producers, there was one
governing body, the OIV. Now, with the recent installation of the NWWPF, there are two
standards by which the industry regulates global trade. In signing separate international
agreements, the two worlds have increased the dimensions of conflict within the
international arena, not to mention the already ailing agricultural sector. With the signing
of the Mutual Acceptance Agreement (MAA), the New World producers have formally
agreed to their legal standards of international trade, or, in other words, not those to
which OIV members conform.
Global Crisis
So many vineyards have been planted around the world that the production far exceeds
the consumption of wines, which continues to go down in Europe while it increases a
little bit across North America. An American consumer, for instance, only drinks 13
bottles of wine a year while the French consumer drinks 52 bottles of wine. This is a vast
difference. At that rate, it will take a few years to reabsorb the glut of wine in the USA.
The major European wine producing nations of France (22%), Italy (20%), Spain (17%),
Portugal (4%), and Germany (4%) enjoy 67 percent of the global wine export volume
market. The new world countries controlling 29 percent of the global wine export volume
market are: (e.g. Australia (8%), Chile (6%), US (5%), South Africa (3%), Argentina
(2%), and others (5%)).
Old Wine World:
The big loser for years has been France. It is sad that a political event, which has nothing
to do with wine, brought down its reputation. The sales are down by about 19%. Of
course, the amateurs of Bordeaux, Burgundy or Rhne wine will continue to buy, but the
smaller appellations are suffering. France, being the biggest producer of wine in the
world, can produce wine cheaper than everybody. The inexpensive wines will allow this
country to survive well because of economies of scale. France can beat everybody.
Unfortunately, because of bad economic situation the consumer has reduced his scope
and bought throughout the years more inexpensive wines than before. A $5 wine rarely
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86
tastes as good as a $50 wine. Maybe, if a rapid economic recovery sets in, this trend will
reverse itself. The major markets where France exports its wine are UK, Germany,
Belgium, Netherlands, and United States.
The Italians every year come up with more and more delicious wines not only made by
big producers but small Italian producers also produce sensational wines. The only
problem is that their cost structure is high and every year the Italians tend to increase
their prices. Within two or three years, this will not be possible anymore, and they will
have to reduce their prices to stay globally competitive. The major export markets for
Italian exports are Germany, United States, UK, and France.
One of the big players in the global wine market is Spain. Besides the traditional regions
of Spain (Rioja, Ribera, Rueda), a multitude of new regions are producing great wines at
reasonable prices. Montsant, Toro, Somontano, Valdepeas, Borja, Jumilla ,and Navarra
are now making wines as good as the other regions. The major markets where Spain
exports its wines are: France, Germany, Portugal, UK, and Italy.
The Old World saw its weakest wine sale and harvest during the past 10 years. The
drop in production is primarily the result of the heat wave and drought that hit central and
southern Europe during the 2004 summer months. Production is not expected to increase
significantly in the near term due to policy controls. This is the fourth year in a row that
wine production has dropped across the old world. Per capita wine consumption is
decreasing in some countries, such as Italy, France, and Spain. In addition, the planting of
vines is strictly regulated and controlled by governments in terms of acreage and allowed
varieties. Governmental controls remain in place to encourage the production of quality
wines while discouraging the production of poor quality. New plantings of wine grapes
are prohibited until July 21, 2010 except under certain exceptional circumstances.
New Wine World:
New World wine producers such as Australia have increased wine production. The
Australians have made a great penetration of the US market. Most of their wines are
commercial wines with great flavors and prices below $10 per bottle. 90% of the wine
trade of Australia is controlled by four big companies (such as Southcorp wine company,
Hardy wine company, Orlando Wyndham wine company, and Beringer Blass wine
company). Only Western Australia has small growers focused on quality, but their prices
are high because they do not have economies of scale. Australia has not yet demonstrated
a style or specific varietals, which would give Australia a name in the world wine
industry. The major global markets where Australian wines are in high demand are: UK,
United States, New Zealand, and Canada.
Chile is in a good situation compared to others. The Chileans have moderately priced
wines but have an incredible aggressiveness to promote their wines. It seems to be
rewarding. The major markets where Chile exports its wine are United States, UK,
Canada, and Denmark.
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87
California continues to swim in a lake of wine due to over planting six or seven years
ago. Great global deals could be struck with the Californian wineries. U.S. wine exports,
after leveling off during the last few years, took off again to reach a record high of $634
million. U.S. wine imports have also hit a record $3.3 billion as domestic producers
continue to battle for market share at home. The greatest competition to the market share
for U.S. wines come from the EU-15 nations, though some of the New World
producers has become significant competitors as well. The major markets where United
States exports its wine are UK, Canada, Japan, and Netherlands.
Argentina has been making great strides over the years, and is determined to be
recognized on the global stage for its great wines. Its brands, Malbec, Merlot and
Cabernet-Sauvignon, are doing very well across the world. Argentina has plenty of land
to plant grapes in high altitude and obtain world-class wines. The major markets where
Argentina exports its wines are: Russia, South Africa, Paraguay, United States, and UK.
Canada is the number two export market for the U.S. wines. The Canadian wine industry
receives generous governmental support. The major markets where Canada imports its
wine are France, Italy, Australia, and United States, and its major export markets are:
USA, Taiwan, Japan, UK and Hong Kong.
The United Kingdom is the worlds largest importer of wine and the largest market for
U.S. wines. The United Kingdom does produce a very small quantity of mostly white
wines. United Kingdom consumers are buying more wines, often at the expense of beer.
This trend is expected to grow with consumers learning more about wines and trading up
to more expensive wines. The largest consumer segment for wine consists of those in 3549 age group in the middle and upper-middle classes. The major markets where UK
imports its wine are France, Australia, Italy, United States and Spain.
Table 1 Major Global Producers of Wine
COUNTRY
PRODUCTION
EXPORTS $
(in m-hectoliters)
(in Millions)
FRANCE
51.97
$6,600
ITALY
47.2
$3,200
SPAIN
36
$1,700
AUSTRALIA
9.9
$1,500
CHILE
5.8
$680
US
3.58
$634
ARGENTINA
$175.6
12.7
S. AFRICA
9.6
$428
CANADA
0.871
$48
UK
0.009
$238.6
HOLLAND
0No prod? How does it $140.8
export?
JAPAN
1.1
$39
Source of 2003 Data from Global Trade Atlas
IMPORTS $
(in Millions)
$565.6
$273.7
$106.9
$106.2
$0.894
$3,300
$1.2
$12.5
$852
$3,600
$790.6
$995
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88
The top exporters of wine are: France, Italy, Spain, Australia, United States, and
Argentina, while the top importers of wine are UK, United States, Japan, Canada, and
Holland. The highest consumption of wine per capita is in France, Italy, United States,
UK, Spain, and Australia.
Historical Evolution of Wine Industry Across Lebanon
Winemaking in Lebanon has an illustrious past that can be traced back 4,000 years to a
time when the Phoenicians cultivated vineyards and traded their wines along the
Mediterranean routes, introducing viniculture to many parts of southern Europe. Barrels
of wine were shipped out from the thriving ports of Tyre, Sidon and Byblos to various
international destinations including Egypt, during the reign of the Pharaohs.
A few centuries later, came the advent of Romans whose taste for the nectar of the gods
was renowned. As a tribute to the god of wine, they built the magnificent Temple of
Bacchus at Baalbeck, a divine witness that still stands in all its glory, to this day,
providing Lebanon with one of its greatest tourist attractions.
The unique qualities of Lebanese wines have made them popular across the world,
mainly owing to the fertile soil and exceptional climatic conditions of the Bekaa Valley,
the national vineyard of Lebanon. With an average of 240 days of sunshine
complemented by about 600 millimeters of annual rainfall, the valley is globally
renowned as an ideal place for world-class grape cultivation.
Winemaking is a growing industry across Lebanon and the product is in great demand,
illustrated by the fact that in the past decade or more, the amount of wine produced and
exported from Lebanon has more than doubled and is gaining popularity far beyond the
Mediterranean region. Table # 2 shows the historical evolution of different wineries
across Lebanon.
Table # 2 --- Lebanons Major Wine Companies
Ksara
Kefraya Musar
Wardy
Massaya
Year
Established
Tons of Grapes
Bottles
Produced
Lebanese
Market Share
Exports
Distributors
1857
1982
1930
1997
1998
Clos St
Thomas
1997
2000
1,800,000
1700
900,000
1000
800,000
NA
500,000
NA
530,000
350
175,000
35%
25%
NA
NA
NA
NA
49%
Chateau
Ksara
40%
Neo
Comet
80%
Chateau
Musar
65%
Gabriel
Bocti
70%
G.
Vincenti
& Sons
80%
Clos St
Thomas
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The oldest winery in Lebanon (established in 1857) that is still in operation to this day is
Chteau Ksara, in the Bekaa Valley. Other wine making companies to follow have been:
Nakad (1923), Musar (1930), Kefraya (1982), Clos St Thomas (1997), Kouroum Kefraya
(1997), Wardy (1997) and Massaya (1998). This, however, is not the end of the list as
there are numerous micro wineries (Bacchus, Domaine des Tourelles), and monasteries
(Annaya), that also produce small quantities of wines. From the fabled wine of Qana to
modern day Lebanon, the Lebanese wine industry has traveled a long way, but emerging
victorious after enduring 15 years of traumatic hardships during Lebanons bloody civil
war (19751990).
The list of locally produced wines is growing steadily. In addition to three major wineries
of Lebanon: (Kefraya, Musar, and Ksara), Lebanon boasts to have another 5 small
wineries: (Clos St Thomas, Nakad, Wardy, Kouroum Kefraya and Massaya). Thanks to
the concerted efforts of these 8 wineries, 40% of Lebanons annual five million-bottle
output is sold worldwide. Strong tradition, unique soil, and perfect climate for 9 months
of sunshine each year, are the main factors responsible for the production of high quality
wines in Lebanon.
Major wine firms are jointly collaborating under the umbrella of their national platform,
the Union Vinicole du Liban (UVL), established in 1997, and are lobbying for enactment
of laws to regulate the business in the country. The upcoming establishment of the
National Wine Institute, jointly sponsored by the UVL and the Lebanese government,
will be the center for viticulture (the science of the growing of grapevines), viniculture
(wine production, analysis, and quality control), and responsible for marketing and
promotion of Lebanese wine around the world. The institute will also act as the
regulating body of the Lebanese wine industry: tracking down the bulk-quantity wine
importers who are bottling wine in Lebanon and selling them as locally made products.
UVL is also fighting the invasion of foreign wine brands into the local marketplace.
Foreign wines, which are enjoying a 30% market share and increased consumption,
especially those imported from East-European countries such as Bulgaria and Romania,
or more quality wines from France, Spain and Italy, are becoming cheaper, although
currently a 70% tariff exists on such imports. However, with the execution of the
Lebanese trade agreement with the EU soon, this tariff will slash to zero, turning foreign
wines into a real threat to the local wine industry.
Wine prices in the international markets are on constant decrease, making the marketing
of Lebanese wines across the world a major challenge. Even the French, who were in the
past noted as the wine masters of the world, have started to lose ground to the New
World wineries established across California, Australia, New Zealand, South Africa,
Chile, and Argentina etc. These newcomers are invading the dynamic British market
where, on average, 20 liters of wine is drunk per person annually. One major strategy
that paved the way for these brands to become famous is the generic campaigns that their
countries have carried out worldwide to build their brand images as wine producers.
Global consumers are now aware of such new wine brands and individually New World
brands are promoting their brands taking the advantage of the newly built profile of their
wines in the international markets.
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90
Lebanese wine does not enjoy this same notoriety abroad. Lebanon still enjoys an image
of civil-war, hostages, terrorism, and assassination, further cemented by the recent
assassination of a popular former Prime Minister (Rafik Hariri). Very few wine
consumers around the world are aware of Lebanons wine producing competencies.
About one third of the Lebanese wine production is exported mainly to the UK, Ireland,
France, Sweden, Germany, USA, Canada, and Japan etc. Lebanese wine exports generate
revenues of around $7.5 million per year.
Table # 3 -- World Wine Consumption (in Thousands of Hectoliters)
1997
1998
1999
2000
2001
Average
97- 2000
Lebanon
268
176
160
148
145
188
Table # 4 -- World Wine Production (in Thousands of Hectoliters)
Lebanon
Lebanon
1997
1998
1999
2000
2001
Average
97- 2000
248
186
188
188
195
202
Table # 5 -- Exports in Wine

Q (Metric ton)
Value US $ (000)
1397
7962
Unit Value (US $)

5699
CHATEAU KSARAWINE COMPANY OF LEBANON: A CASE IN POINT

KSARA Lebanons biggest and oldest winery boasted a 35% market share of Lebanese
wine industry in 2004, by producing two million bottles with revenues of around $6.5
million. The winery harvests nearly seven tons of grapes per hectare of its 300 hectares
on average. Ksara exports 49% of its wine, mainly to France, which takes around 250,000
bottles.
Historical Perspective:
In the heart of the Bekaa Valley, near Baalbeck, lies the KSARA estate, so named
because it was the site of Frankish Ksar, or fortress, at the time of Crusaders occupation
of Lebanon. The property that was acquired by the Jesuit Fathers in 1857 was already
famed as a vineyard. Ksaras natural wine cellar was a grotto discovered by the Romans.
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91
Its tunnels were reportedly enlarged to their present size during World War I, when the
Jesuit Fathers sought refuge there, while trying to alleviate famine in Lebanon by creating
employment. One hundred men worked underground for four consecutive years to
complete the elaborate network of tunnels stretching for almost two kilometers (about
2,000 yards). The temperature in the tunnels is ideal for wine, varying throughout the
year from 11 to 13C.
Jesuit fathers pioneered the introduction of high-quality vines in Lebanon through good
varieties, enjoying the exceptional climatic conditions in the Bekaa. Their neighboring
vineyards of Tanail, an estate that also belonged to the Jesuit Fathers, also supported the
process. KSARA came into the hands of its present owners in 1973, when the Jesuit
Fathers decided to sell the estate in conformity with the directives of the Vatican II
synod. Charles Ghostine now manages it; a lawyer who loved making wine so much that
he also joined the management of the most ancient winery in Lebanon. KSARAs estate
is planted with a wide variety of grape wines, of which the most important are Cabernetsauvignon, Syrah, Semillon, Grenache, Sauvignon-Blanc, Cinsault, and Merlot.
KSARAs wine has been described as robust dry and fruity, with a strong personality.
The numerous international awards won by this great estate further confirm the quality of
its superb wines.
KSARAs Culture:
Climatic conditions in the Bekaa provide KSARA vineyards with exceptional
advantages. There is almost no rainfall during the growing season and diseases seldom
strike the vines. Downy mildew and colding month worms are rarities and do not
demand treatment. Botrytis rot does not exist here and so there is no reason to be
worried about the harvest. KSARAs grapes are grown organically without the use of
pesticides and herbicides. Harvesting is done by hand and there is no need for selection
because the grapes reach ripeness without fear of botrytis rot. The wines of KSARA
ageing is done in spacious underground galleries where appropriate temperature is
maintained for bringing wine to its peak of perfection. The cavern used for the aging
process was discovered in Roman times when a fox pursued by a pack of hounds was
seen disappearing into the ground through a cleft in the rocks.
International Presence:
Ksara has been able to penetrate international markets through local distributors. Its
products are exported to 19 countries across Europe, Australia, Canada, USA, Brazil
Paraguay, Japan, Bahrain and UAE. It is also an energetic exhibitor on the international
stage, regularly attending the major wine fairs in London, Bordeaux, Verona and
Dsseldorf.
Competitive Position:
Until the mid 1990s, Ksara, Kefraya and Musar dominated the market. Since then, old
companies, such as Nakad, started re-penetrating the market, and newcomers, Massaya,
Wardy, Clos St Thomas, Kouroum de Kefraya and others managed to take a small share
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92
from the market. At present, the number of local wine producers has reached eight,
collectively controlling 70% of the local wine consumption.
Chateau Kefraya:
Situated in the heart of Lebanon, in the Bekaa valley, Chateau Kefraya expands its 300
hectares domain to the foothills of the Mount Lebanon, 20 km to the south of Chtaura
city. Its vineyard is planted in a succession of terraces and hills having abrupt slopes, at
an altitude of 950 to 1100 meters on clayey, limy and stony soils, together with an
exceptional sun lighting - six to seven months a year without any precipitation. Its winery
is located in the middle of the domain, fitted with highly sophisticated equipment
allowing the manually gathered grapes to be conveyed, picked off from the bunch,
vinified and pressured very carefully. These two features have allowed the elaboration of
a special and authentic wine character to Chateau Kefraya. This estate has received great
praise from wine critics the world over, wine magazines such as the wine advocate,
Decanter, Civart 1995, and the Revue Le Paysan Francais. They have all praised Kefraya
as a truly great wine. Carignan, Syrah, Mourvedre, Grenache, Cinsault, CabernetSauvignon, Clairette, Boubounlenc and Chardonnay are used in the production of this
internationally renowned wine.
Massaya:
Massaya is a French-Lebanese collaboration whose estate is at Tanail. The partnership
brought together Hubert de Bouard de Laforest, co-proprietor of Chateau Angelus with
Dominique Hebrard, former co-proprietor of Chateau Cheval Blanc and Daniel Brunier,
co-proprietor at Le Vieux Telegraph. This prestigious Franco-Lebanese collaboration has
united great men of wine and has brought into being its first vintage in 1999.
Clos St. Thomas:
Clos St. Thomas is located in Kab Elias, where the hills of Mount Lebanon meets the
plain, and is a newly established winery. Clos St Thomas was established by Said Touma,
with his long family tradition of 100 years in wine making. Though still in its infancy,
they produce 175,000 bottles, of which 80 percent are exported to Europe, and North
America.
Chateau Musar:
Chateau Musar which produces an outstanding, fine, full-bodied red wine that would put
up a very good fight against the best of the French wines was founded in 1930 by Gaston
Hochar within an 18th century castle. It is located at Ghazir, 15 miles north of Beirut in
Mount Lebanon. Following an expansion of the cellar in the late 1950's, Chateau Musar
is able to store more than one million bottles of wine. A family concern, Chateau Musar is
owned by Gaston Hochar's two sons, Serge and Ronald. The vineyards of Chateau Musar
are located at an altitude of over 3,000 feet (1,000 meters) in the Bekaa Valley where the
surrounding mountains running parallel to the Mediterranean coast shelter the vines. The
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93
vineyards of Chateau Musar cover 130 hectares, produce a limited yield of about 25
hl/ha, resulting in approximately 20,000 cases of the "Chateau Musar" wine, and a
production of different other wines.
Chateau Musar attained international notoriety during the wine fair of Bristol in England
in 1979, where wine media named it the "find of the fair". Following this event, Chateau
Musar's reputation reconfirmed itself in most other European countries, as well as across
the United States, Canada, and in some Asian countries. Decanter Magazine paid tribute
to Serge Hochar's achievements by nominating him "Decanter Man of the Year" in 1984.
During the era of civil war carnage in Lebanon, Chateau Musar managed to consistently
produce high quality wines, leading the "Wine Spectator" magazine to use headlines such
as: "Chateau Musar makes great, age worthy reds amid the chaos of Lebanon's war".
Chateau Musar exports more than 80% of its total annual production throughout the
world.
Musar:
Musar is the first Lebanese winery to become a member of the Office International de la
Vigne et du Vin (OIV). Its wines are the spearhead of the Lebanese wine industry; setting
it on the international stage of quality vintages. Ksara, Kefraya, and Musar have set the
pace for many other wineries in the country. Besides being the biggest producer, Ksara
has been able to defend its market share against the competition from old and new local
producers and foreign imported products. It has successfully increased its production
over the years (from 1.2 million bottles in the early 1990s to 1.8 million in 2004).
Although the competition is getting stronger, each of the Lebanese wine making
companies has managed to position its products as a quality wine, but in a different way.
Ksara, for example, has been able to create an image of having the best-value range at all
price levels, whereas Kefraya red wine (compte de M) and Wardys white wine are
perceived the best in their categories.
CONCLUSION
Ksaras, as a proud symbol of Lebanons cultural wine heritage has emerged as a leader
of Lebanons wine industry and has maintained its leadership position for more than a
century. However, in the contemporary environment of globalization characterized by
EU-Lebanon trade agreement, Ksara has been encountering new challenges. For instance,
it needs to learn how to compete with the competitively priced foreign imported wines
products available across Lebanon, (especially when tariffs on imported wines, currently
at 70% will slash down to zero).
Stiff foreign competition on the soil of Lebanon has created a kind of unity among
Lebanese wine producers, under the umbrella of UVL and through the creation of the
national wine institute. In addition to government funding sought (probably in the form of
tax reduction), local wine producers are looking for ways to reduce the cost of local wine
bottle to be able to compete, especially against the European bottles (mainly Bulgarian
Varietals, one-grape wines and high-end French labels).
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94
Lebanese consumption of wine, (although growing at 10% per year), cannot continue to
be the major source of revenue for Ksara due to its small population and modest per
capita consumption. Lebanon is exporting 40% of its wine to over 50 countries. Ksara
is leading in terms of number of bottles exported, followed by Musar. However, it is the
latter who claims placing Lebanon on the worlds wine map.
Appendix # 1
KSARAs Vineyards
KSARA ESTATE:
There are 20 hectares (50 acres) of noble varietals such as Sauvignon, Chardonnay,
Grenache and Cabernet-Sauvignon. Yields are low from a clay/chalky soil, but the wines
it produces are concentrated, aromatic and possess a marked personality.
MANSOURA:
80 hectares (200 acres) of Cinsault, Cabernet-Sauvignon, Gamay, Syrah, Cabernet-Franc,
Tempranillo, Petit Verdot and Grenach varietals on small vineyards on a brick-red clay /
Chalky soil produce intense, supple and aromatic wines with good ageing qualities.
TANAIL:
Half of Tanailss 240 hectares (600 acres) is under vines and all of its grape harvest
comes to KSARAs cellars for winemaking. Varietals at Tanail are Cinsault, Grenache,
Carignan, Muscat, Ugni Blanc and Sauvignon.
The soil ensures late maturity that prevent over-ripening and the grapes produce light,
lively and graciously fruity wines.
KHIRBET KANAFAR:
The 50 hectares (125 acres) of the Khirbet Kanafar vineyards belong to KSARA and are
planted with noble varietals: Semillon, Sauvignon Chardonnay, Clairette, Syrah,
Cabernet, Sauvignon Caladoc, Merlot and Mourvedre.
The Khirbet Kanafar vineyards cover broken slopes of clay / Chalky soil with remarkable
qualities for cultivating vines, permitting several varietals to develop their potential. The
red wines are rich, fleshy and tannic, while the whites are delicate and aromatic and with
good length.
TALL DNOUB:
There are 30 Hectares Lime and Clay Soil.
Grape varieties: Petit Verdot, Merlot and Cabernet Franc.
KAB ELIAS:
There are 11 hectares on the ethils of Kab Elias, on of KSARAs highest vineyards, at
1400m altitude. There's a presence of Salty and gravelly soil over the limestone bedrock.
Grape varieties: Muscat and Merlot.
HOUMMAR:
There are 6 Hectares grave and lime.
Grape varieties: Cabernet Sauvignon.
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95
AN EXAMINTION OF ENTREPRENEURIAL ORIENTATION: A

VALIDATION STUDY IN 68 COUNTRIES IN AFRICA, ASIA,
EUROPE, AND NORTH AMERICA
Utilizing samples of Entrepreneurs/Small Business Owners from Africa (n = 2689), Asia
(n = 403), North America (n = 2794) and Europe (n = 4616) the dimensional nature of an
individual level measure of entrepreneurial orientation designed by Carraher (1998) is
examined. Carraher (1998) in samples from North and South America found the 6-item
instrument to be unidimensional. It is suggested that additional research should be
performed examining the construct of entrepreneurial orientation.
INTRODUCTION
Over 15 years ago Cunningham and Lischeron (1991) examined the state of the art of the
entrepreneurship literature and found four main areas of study. These included the study
of the personal characteristics of entrepreneurs, the recognition of opportunities by
entrepreneurs, the management and leadership styles of entrepreneurs, and
intrapreneurship or corporate entrepreneurship entrepreneurship within existing
ventures. A much under-examined area that, at times, can combine all four of these areas
of study is the study of entrepreneurial orientation. Lumpkin and Dess (1996) define
entrepreneurial orientation at the organizational level as the processes, practices, and
decision-making activities that lead to new entry (p. 136). It includes the constructs of
autonomy, competitive aggressiveness, innovativeness, proactiveness, and risk-taking.
Smart and Conant (1994) proposed that individual level entrepreneurial orientation
should include the following six dimensions: 1. the propensity to take risks; 2. the
tendency to engage in strategic planning activities; 3. the ability to identify customer
needs and wants; 4. level of innovation, 5. the ability to persevere in making your vision
of the business a reality; and 6. the ability to identity new opportunities.
Carraher (1998) based upon the groundbreaking works of Smart and Conant (1994) and
Lumpkin and Dess (1996) designed two individual-level entrepreneurial orientation
scales a general one with 6 items and a personality-oriented one with 34 items. In the
present study the dimensional nature of the 6-item entrepreneurial orientation with
samples from four continents is examined using data from 68 countries.
RESEARCH METHODOLOGY
The samples included Entrepreneurs/Small Business Owners from Africa (n = 2689),
Asia (n = 403), Europe (n = 4616) and North America (n = 2794). They were from the
following 68 countries: Andorra, Angola, Austria, Belarus, Belgium, Benin, Botswana,
Bulgaria, Burkina Faso, Canada, Central African Republic, China, Cote dIvoire, Czech
Republic, Denmark, Eritrea, Ethiopia, Estonia, Finland, France, Gabon, Germany, Ghana,
Hungary, Ireland, Japan, Kenya, Latvia, Liberia, Liechtenstein, Lithuania, Luxembourg,
______________________________________________________________________________________
96
Madagascar, Malawi, Malaysia, Mauritius, Mexico, Moldova, Mozambique, Myanmar,

Namibia, Netherlands, Niger, Nigeria, Norway, Poland, Portugal, Singapore, Slovakia,
Slovenia, Spain, South Africa, South Korea, Sudan, Swaziland, Sweden, Switzerland,
Tanzania, Taiwan, Thailand, Togo, Ukraine, United Kingdom, United States, Vietnam,
Yugoslavia, Zambia, Zimbabwe. The gender distributions of the respondents were as
follows: Africa (47% male, 53% female), Asia (61.5% male, 38.5% female), Europe
(41.4% male, 58.6% female), and North America (50% male, 50% female).
Questionnaire Design:
The questionnaire included the 6-item general Entrepreneurial Orientation scale from
Carraher (1998). Entrepreneurial Orientation was responded to on a 5 point Likert type
scale (Carraher, 1998). Previously it had been found to have high test-retest reliabilities
of .85 (1-month) and .82 (6-month) (Carraher, 1998). The coefficient alpha reliability
estimates for the scale ranged from .926 (North America) to .930 (Asia) to .931 (Europe)
to .941 (Africa). The data collection process used the back translation processes in order
to assess whether or not the items were being properly translated in to the local trade
languages in the countries within the study. The items were translated from English to
the local trade language then back to English again by a team of translation experts as
part of their formal training and evaluation. In a sample of Chinese students Parnell,
Shwiff, Yalin, and Langford (2003) found a coefficient alpha reliability estimate of .725
with a non-Chinese (English) version of the questionnaire.
Data Analysis:
Each data set was subjected to a principal components analysis using a combination of
the parallel analysis criterion, the subjective scree test, the CNG scree test, and the
eigenvalue greater than one criterion as the retention rules. All four tests had 100%
agreement in determining that a one-dimensional solution was optimal for these data sets.
Table 1 shows the results of the principal components analyses. As should be clear from
Table 1 in all four samples support was found for a single dimensional structure for the
entrepreneurial orientation scale.
DISCUSSION AND CONCLUSIONS
Based upon the results of the current study it would appear that the short individual-level
general entrepreneurial orientation scale of Carraher (1998) does appear to be
unidimensional however it could still be useful to seek to replicate these findings within
these and other cultures and countries (Carraher, Carraher, & Whitely, 2003; Carraher &
Whitely, 1998; Parnell & Carraher, 2005) especially looking at the general population
as opposed to business owners.
______________________________________________________________________________________
97
Table 1 Principal Components Analysis

Africa
EO1
EO2
EO3
EO4
EO5
EO6
Eigenvalue
.760
.955
.884
.930
.954
.791
Asia Europe North America

.726
.956
.927
.928
.956
.621
.741
.947
.853
.920
.947
.777
.736
.953
.882
.919
.911
.710
4.671 4.463 4.522 4.407
EO1 = I consider myself to be entrepreneurial.

EO2 = I desire to be self-employed.
EO3 = I planned to own my own business.
EO4 = I plan on opening my own business at some point in the future.
EO5 = I have a strong desire to own my own business.
EO6 = I aspire to be my own boss.
A second area for potential research that could prove fruitful would be to examine the
content and construct validities of various facets of entrepreneurial orientation for SME
owners and entrepreneurs within the U.S. and across cultures (Carland, Hoy, Boulton, &
Carland, 1984; Carland, Hoy, & Carland, 1984). This should likely begin with
qualitative research seeking to examine the underlying content and constructs of
entrepreneurial orientation for business owners and non-business owners. Very little
basic research has been performed examining how subjects of interest actually perceive
of the construct as opposed to how we believe that they should view it (Carraher &
Buckley, 1996). In the current study this was done post hoc with the examination of
what the business owners might consider to be promotions and whether or not they felt
that they had a boss. These questions were asked due to the lower sizes of the loading for
Question 6 I aspire to be my own boss as compared with the other items. Based upon
the post hoc interviews with the owners, it was found that many of the business owners
did feel that they had a boss. Most often they perceived their boss to be either their
spouse or the individual supervising their marketplace complexes [the individuals
overseeing their place of business whether a landlord or a mall supervisor]. The business
owners additionally considered promotional opportunities to include starting a potentially
more profitable business, opening a larger store, or gaining employment working for
someone else at a higher rate of income which was not expected.
Additionally researchers may need to become better aware of the characteristics that give
individuals the ability and motivation to differentiate between potentially
multidimensional measures. In research, we may often develop tunnel vision in our areas
of study and believe that we know how a population should perceive variables of interest.
______________________________________________________________________________________
98
For instance, suppose that a survey asks subjects to rate the usefulness of anthraquinoneglycidyl methacrylates, phenonlsulfonphthalein, acrylated azo, poly (2vinylanthoquinones), chromorange GR, coumaric acid, fluorescein, erythrosine B, and
vinyl malachite green (copolymerized with N-vinylcarbazol) as polydyes? While
individuals in industrialized societies deal with polydyes such as these nearly every day
of their lives (e.g., dyes in clothing, paint on cars, in computer mouse pads), it is unlikely
that most populations of interest other those polymer chemists and material scientists
would see this survey as containing three clear dimensions (see Carraher, 1990). A
researcher deeply involved in this context might expect that respondents should quite
clearly see that the first three items are all good for use as polydyes, the second three
make just moderate polydyes, and the last three are poor polydyes. Furthermore, the
researcher may expect that this survey should have perfect test-retest reliability as the
properties of these polymers should not change over time. However, the terminology
used in this questionnaire is unfamiliar to most non-polymer chemists and therefore the
reliabilities, validities, and number of observed dimensions measured through the
questionnaire will likely change from sample to sample. When developing or applying
any measure, researchers need to seek to understand how various populations of interest
naturally perceive of the constructs being considered rather than impose the researchers
belief of how subjects should conceptualize constructs in those areas (Sturman &
Carraher, in press). This is especially true in entrepreneurship research where the
definition of entrepreneur is still open to debate.
Based upon the ground-breaking work of Smart and Conant (1994) it would also be
useful for future research to examine the relationship of this and other scales purporting
to measure entrepreneurial orientation to customer service orientation (Carraher,
Carraher, & Mintu-Wimsatt, 2005), performance (Carraher, Franklin, Parnell, & Sullivan,
2006), and to general personality variables such as polychronicity (Carraher, Scott, &
Carraher, 2004), learning styles (Carraher, 1995), the Big Five Personality variables
(Chait, Carraher, & Buckley, 2000), or even attitudes towards benefits (Hart & Carraher,
1995). This could help lay the groundwork for identifying where in the overall construct
constellation of personality factors, facets, and constructs entrepreneurial orientation
would fit.
In conclusion in the present research the dimensional nature of the 6-item general
individual-level entrepreneurial orientation scale is examined using four samples of small
business owners totaling 10,502 from 68 countries in Africa, Asia, Europe, and North
America. A one-dimensional sample was found in all four of the samples supporting the
unidimensional nature of the instrument. Future research is suggested with particular
attention to identifying how populations of interest actually perceive of entrepreneurial
orientation rather than assuming that all populations would view it in the same manner. It
is also suggested that it may prove fruitful to examine where the entrepreneurial
orientation construct would fit in the overall construct constellation of personality factors,
facets, and constructs.
______________________________________________________________________________________
99
REFERENCES
Carland, J., Hoy, F., Bolton, W., & Carland, J. (1984). Differentiating entrepreneurs
from small business owners: A conceptualisation. Academy of Management
Review, 9, 354-359.
Carland, J., Hoy, F., & Carland, J. (1984). Who is an entrepreneur? Is a question worth
asking. American Journal of Small Business, 12, 33-39.
Carraher, C.E. (1990). Polymeric dyes. Polymer News, 15, 301-306.
Carraher, S. (1995). On the dimensionality of a learning style questionnaire.
Psychological Reports, 77, 19-23.
Carraher, S. M. (1998). Manual for the Individual-Level Entrepreneurial Orientation
Scales. Indiana University.
Carraher, S. & Buckley, M. R. (1996). The effect of cognitive complexity on the
perceived dimensionality of the PSQ. Journal of Applied Psychology, 81, 102109.
Carraher, S., Carraher, S.C., & Mintu-Wimsatt, A. (2005). Customer service
management in Western and Central Europe: A concurrent validation strategy
in entrepreneurial financial information services organizations. Journal of
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Carraher, S., Carraher, S.C., & Whitely, W. (2003). Global entrepreneurship, income,
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Carraher, S., Franklin, G., Parnell, J., & Sullivan, S. (2006). Entrepreneurial service
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Carraher, S., Scott, C., & Carraher, S.C. (2004). A comparison of polychronicity levels
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Carraher, S. & Whitely, W. (1998). Motivations for work and their influence on pay
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Chait, H., Carraher, S., & Buckley, M. (2000). Measuring service orientation with
biodata. Journal of Managerial Issues, 12, 109-120.
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100
Cunningham, J. & Lischeron, J. (1991). Defining entrepreneurship. Journal of Small

Business Management, 29 , 45-61.
Hart, D. & Carraher, S. (1995). The development of an instrument to measure attitudes
towards benefits. Educational and Psychological Measurement, 55, 498-502.
Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the Entrepreneurial Orientation
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Parnell, J. & Carraher, S. (2005). Validating the management education by Internet
readiness (MEBIR) scale with samples of American, Chinese, and Mexican
students. Journal of Education for Business, 81 (1), 47-54.
Parnell, J., Shwiff, S., Yalin, L., & Langford, H. (2003). American and Chinese
entrepreneurial and managerial orientations:
A management education
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Volume 2, 2005

Shawn Carraher, Editor

International Journal of Family Business, Volume 2, 2005

The International Journal of Family Business

Shawn M. Carraher, Editor

International Journal of Family Business, Volume 2, 2005

Copyright 2005 by the International Family Business Center

International Journal of Family Business, Volume 2, 2005

EDITORIAL REVIEW BOARD

Johnathon R.B. Halbesleben

International Journal of Family Business, Volume 2, 2005

MIDDLE EAST AIRLINES: AN ACQUISITION CHALLENGE FOR A FAMILY

LETTER FROM THE EDITOR

Entrepreneurship, World Wide Web, and Cases

International Journal of Family Business, Volume 2, 2005

International Journal of Family Business, Volume 2, 2005

EXPLORING NEW FRONTIERS IN WOMENS FAMILY BUSINESS

Women Family Business

RESEARCH METHODOLOGY AND DATA

Table 1: Descriptive Statistics, Characteristics of the Female Business Owners, Their

Female entrepreneurs: How far have they come? Business

Schwartz, E.B. (1976). Entrepreneurship: A new female frontier. Journal of

PERSONAL SHOPPING VALUE, CONSUMER SELF-CONFIDENCE,

the social consequences of their personal consumption/shopping related decisions. Stated

Reliability and Validity Analysis

My friends and I enjoy talking about the styles

self and others. In T. S. Robertson & H. H, Kassarjian (Eds.), Handbook of consumer

Concepts, issues, and

Paridon, T. J. (2005c). Extending and clarifying causal relationships in research

DETERMINANTS OF THE SINGAPOREANS CONSUMER

and Deodorants will be referred to as toiletries throughout this paper. Cosmetics on

Table 1: Brands of Shampoos Purchased

Unilevers exceptional performance is in stark contrast to P&Gs, which is likely to lose

7-not important at all

Consumers Satisfaction with Attributes of Current Shampoo

Table 4: Changes in Brands of Shampoo Chosen

Table 5: Reasons for Changing Brands of Shampoo

Conclusions and Marketing Implications

Limitations of Our Study

Euromonitor, 2000. Consumer Lifestyles in Singapore, Integrated Market Information

WORLD WIDE WEB PRESENCE AS A STRATEGIC TOOL FOR

selling (Lymer, 1999), reporting of information (Marston, 2003), for reputation

Table 2 Number of companies showing general company information on website

As seen in Table 8, the use of the website as an information/communication tool (38%)

Table 11 Perceived benefits of using a website

Table 12 displays the biggest perceived costs/disadvantages of using a website. About

INTERNET MARKETING IN AN EMERGING COUNTRY:

Our service concerns everyone

Not for the short-term

Not needed in company's field of work

Table 8. Frequencies and percentages of the not online responding companies

7.58). However, the variable "reducing intermediaries in distribution channel" is

Creating a dialogue with customers

RESULTS AND CONCLUSION

MIDDLE EAST AIRLINES: AN ACQUISITION CHALLENGE FOR

MASCO subsidiary responsible for the maintenance of aircrafts

Receivables, less allowance for doubtful accounts

Inventories and expandable parts

Fleet, property, and equipment

Assets revaluation surplus

Current portion of employees' termination benefits

(678,439,254) (626,555,083) (567,106,552) (503,016,443)