This paper explores some particularities of the strategic decisions adopted by the Romanian exporters. We use four case studies in which there are presented such decisions. We conclude that in the actual complex context for the export activity the adaptation capacity is a key factor of success.Romanian exporters, Strategic decisions, Domestic markets

Dumitriu, Ramona

Nistor, Costel

Stefanescu, Razvan

English

Research Papers in Economics

 
STRATEGIC DECISIONS FOR THE ROMANIAN EXPORTERS 
 
 
Lecturer PhD Razvan Stefanescu, 
Lecturer PhD Student Ramona Dumitriu,  
Assoc. Prof. PhD Costel Nistor 
 
University “Dunarea de Jos”, Galati, Romania, 
rzvn_stefanescu@yahoo.com, 
rdumitriu@ugal.ro,  
costel_nistor_fse@yahoo.com 
 
 
 
 
Abstract 
 
This paper explores some particularities of the strategic decisions adopted by the Romanian exporters. 
We use four case studies in which there are presented such decisions. We conclude that in the actual 
complex context for the export activity the adaptation capacity is a key factor of success.  
 
Keywords: Romanian exporters, Strategic decisions, Domestic markets 
JEL Classification: L23, L25, F15, F10, F19,  
 
INTRODUCTION 
 
In the specialized literature there were revealed some particularities of the exporting firms. 
Bernard  and  Jensen  (1999)  found  superior  methods  of  management  for  the  exporters,  in 
comparison with the non exporters firms. Aaby and Slater (1989) revealed the importance of a 
coherent strategy for the export performances. Eriksson et al. (1997) highlighted the role of 
knowledge in the international activity affected quite often by the uncertainty.  
 
It  is  almost  unanimously  accepted  the  exporter  performances  are  usually  superior  in 
comparison with the non exporters. This situation was explained in different ways, perhaps 
the most known being the learning-by-exporting hypothesis and the selection hypothesis. The 
learning-by-exporting hypothesis stresses the role of gaining knowledge about modern the 
technologies  and  the  management  methods  from  the  foreign  partners  (see,  for  example, 
Clerides et al.; 1998, Delgado et al.; 2002). The selection hypothesis considers the substantial 
difficulties  in  penetrating  the  foreign  markets  impose  that  only  efficient  firms  could  face 
competition from abroad (see, for example, Bernard and Jensen; 2007, Girma et al.; 2004). 
 
In  the case  of Romania,  the export  strategies  design  has  to  take into consideration  some 
important aspects such as: 
-  the high competition from some foreign markets; 
-  the particularities of exports by foreign direct investment; 
-  the European Union adhesion impact; 
-  the global crisis effects. 
 
Some sectors of the Romanian economy are affected by a high competition on the foreign 
markets.  It  is  especially  the  case  of  textiles  and  footwear  industries  which  constituted  a dynamic component of the Romanian exports in the 1990s. Unfortunately, in the last years, 
cheaper Asiatic products conquered these markets causing the Romanian firms’ sales decline.  
 
In the present, about  three  quarters of  the  Romanian exports are  realized by branches  of 
multinational companies. There are hopes the problem of substantial deficits of the Romanian 
trade balance could be solved by attracting foreign direct investments. However, many of 
these  firms  use  in  their  export  production  imported  raw  materials.  They  claim  that  raw 
materials from Romanian markets don’t satisfy their quality standards. 
 
In January 2007, Romania adhered to European Union obtaining unrestricted access to the 
single European market. However, this opportunity wasn’t enough fructified especially by the 
domestic firms which couldn’t fulfill the quality exigencies. Moreover, the labor force costs 
substantial  increase  which  followed  the  adhesion  reduced  significantly  the  exporters’ 
competitiveness. 
 
In Romania the effects of the global crisis came with a delay in comparison with most of its 
foreign trade partners. Electoral considerations led the Romanian authorities to an artificial 
maintenance, during most of the year 2008, the disposable incomes of the population to the 
levels  before  the  crisis.  As  a  result,  while  the  demand  on  the  foreign  markets  has fallen 
drastically, on some domestic markets changes didn’t appear for a quite long period of time.  
 
In  this  paper  we  investigate  some  particularities  of  the  strategic  decisions  of  Romanian 
exporters. For that purpose we take into consideration four case studies. 
 
 
 
CASE STUDY A 
 
 
Firm  A,  a  clothes  articles  producer,  was  settled  in  1998.  From  the  beginning  its  entire 
production was exported in Germany. In the last years the demand from the external markets 
significantly declined. As a result, the turnover of the firm decreased drastically. However, 
firm A didn’t change its strategy. They prefer to fire more than 30 percent of the employees 
instead of finding other markets. In these circumstances, the decline of the turnover continued 
(Figure 1). 
 
The managers of the firm justified their policy by the fact they produced high quality goods 
with considerable costs. They considered that on other markets they couldn’t get prices large 
enough to cover these costs. 
 
 
 
CASE STUDY B 
 
 
The Firm B, a footwear articles producer, was settled in 1992. Between 2004 and 2007, the 
decline of the external demand caused a significant fall of its turnover. In 2007, the managers 
of the firm decided to direct about 20 percent of the production to the internal markets. This 
new strategy led to a substantial increase of the turnover and of the profit.  
 In 2008, the proportion of the production sold in Romania was raised to more than 25 percent. 
In this decision it was taken into account the fact the internal demand didn’t fall as abrupt as 
on the foreign markets. In 2009, the turnover slowly decreased, but not under the level from 
2007, when the domestic markets were drastically affected by the global crisis (Figure 2). 
 
 
 
CASE STUDY C 
 
 
The Firm C, a clothes articles producer, was settled in 2002. In the first years almost all the 
production  was exported in Italy. However,  those  items  which  didn’t satisfy the  standard 
quality  from  the  Italian  markets  were  sold  in  Romania  with  some  success.  In  2006,  the 
external demand decline convinced the firm managers to assign a part of production to the 
domestic markets. The production was adapted to lower cost and lower quality items. As a 
consequence, the turnover and the profit grew significantly in 2007 and 2008.  
 
In 2008 the proportion of production sold on the Romanian markets was raised to about 25 
percent, when the Italian markets were substantially affected by the global crisis. In 2009 
Romania entered in a severe recession. Despite this, the managers of the firm decided to 
increase  to  40  percent  the  proportion  of  production  for  the  domestic  market.  They 
accompanied this decision by reducing again the costs and lowering the standard of quality for 
the production sold on the domestic markets. This policy led to a substantial increase of the 
turnover in 2009 (Figure 3). 
 
  
 
CASE STUDY D 
 
 
The Firm D is a filial of a multinational company created in 2006 and it produces equipment 
for  airports.  In  the  first  year,  the  firm  imported  all  the  raw  materials  from  abroad.  The 
managers  of  the  firm  were  skeptic  about  the  Romanian  firms’  capacity  which  produced 
similar items to fulfill their quality exigencies. However, in 2007 a local producer convinced 
them to experiment a sort of raw material produced in Romania. The new production had 
passed all the quality tests.  
 
In the next years the proportion of raw materials bought from the local producers increased 
gradually. The costs were substantially reduced since the Romanian raw materials were much 
cheaper than those from abroad. The standards of quality were maintained and the firm’s 
turnover continued its ascendant trend (Figure 4). 
 
 
CONCLUSIONS 
 
In this paper we presented four cases reflecting the importance of the exporters’ adaptation to 
specific circumstances. The firm A which didn’t change its marketing strategy, despite the 
decline of demand on the foreign markets, had to pay with a drastic decrease of its turnover. 
Instead, the firm B and the firm C which reacted in a similar context by directing parts of their 
productions towards the domestic market managed to increase their turnover. The case in which  a filial  of a  multinational company  decided  to acquire  the  raw materials  from  the 
internal markets is important from the perspective of the foreign direct investment impact on 
the trade balance.  
 
It is difficult to predict the future evolution of the global crisis for Romania and for its foreign 
trade  partners.  This  uncertainty  requires  a  capacity  of  adaptation  from  the  Romanian 
exporters. 
 
 
References 
 
 
Aaby, N. E. & Slater, S. F. (1989), Management Influences on Export Performance: A Review of the 
Empirical Literature 1978-88, International Marketing Review, vol. 6, no. 4, pp. 7-25; 
 
Bernard A. B., Jensen J. B. (1999), Exceptional exporter performance: cause, effect, or both?, Journal 
of International Economics 47, 1–25; 
 
Bernard, A. B., J., Jensen J. B., Redding S. J. and Schot P. K. 2007, Firms in International Trade, 
Journal of Economic Perspectives, 21(3): 105-130; 
 
Clerides, S., Lach, S. and Tybout, J. (1998), Is Learning-by-Exporting Important? Micro-Dynamic 
Evidence from Colombia, Mexico, and Morocco, Quarterly Journal of Economics, 113(3):903.947; 
 
Delgado, M. A., Farinas, J. C. and Ruano, S. (2002), Firm Productivity and Export Markets: A Non-
parametric Approach, Journal of International Economics, 57(2):397.422; 
 
Eriksson, K., Johanson J., Majkgård A., Deo Sharma D. (1997), Experiential knowledge and cost in 
the internationalization process, Journal of International Business Studies. second quarter, pp: 337 – 
360; 
 
Girma,  S.,  Greenaway,  D.  and  Kneller,  R.  (2004),  Does  Exporting  Increase  Productivity?  A 
Microeconometric Analysis of Matched Firms, Review of International Economics 12, 855-866; 
 
Martins  P.S.,  Yang  Y.  (2007),  The  Impact  of  Exporting  on  Firm  Productivity:  A  Meta-Analysis, 
University of London, Working Paper, October 15; 
 
Pavord, W. C., Bogart, R. G. (1975), The Dynamics of the Decision to Export, Akron Business and 
Economic Review. No. 1, pp. 6–11; 
 
Reid, S. (1981), The decision-maker and export entry and expansion, Journal of International Business 
Studies, 12(2), pp. 101-112; 
 
Sharma, D.D., Blomstermo, A. (2003), The Internationalization Process of Born Globals: A Network 
View, International Business Review, Vol. 12, No. 6 
 
 
 
 
 
 
 
 APPENDIX 
 
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Figure 1. Evolution of the turnover for the exporter A (millions RON)  
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Figure 2. Evolution of the turnover for the exporter B (millions RON)  between 2004 and 2009 
 
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Figure 3. Evolution of the turnover for the exporter C (millions RON)  
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Figure 4. Evolution of the turnover for the exporter D (millions RON)  
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Strategic decisions for the Romanian exporters

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