The Relationship between market entry strategies and financial performance: a case of international companies in Kenya
Kamau, James Muigai
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Multinational Corporations (MNCs) are confronted with unprecedented levels of uncertainty due to increasingly rapid pace of economic globalization. The main objective of this research was to establish the relationship between multinational/ transnational market entry strategies and financial performance. The study employed a cross-sectional descriptive survey design. Cross-sectional study was considered as the most appropriate time horizon because information was gathered at a particular point in time or over a short time span. The target population 60 senior management staff of the selected MNCs and due to the small size of this population, there was no sampling hence the study was a census survey. A semi structured questionnaire was the main data collection instrument. In this study, 60 questionnaires were distributed to the respondents out of which 48 questionnaires were received and analyzed representing 80% response rate which was considered adequate. Data analysis with the help of SPSS produced descriptive statistics and correlation results. The results showed that both equity and non-equity modes as independent variables have a significant positive relationship with financial performance. Nevertheless, market entry strategies do not directly enhance the profits, ROA and ROI of these firms (no causal link). Joint ventures, strategic alliances, Mergers & Acquisitions and franchises had impacted financial performance to a great extent while exporting and contract manufacturing to a low extent. As per the findings, effective market entry strategies produce high financial performance for MNCs. The study findings revealed that the impact of entry strategies on ROA was larger compared to ROI and profitability. Moreover, internal resources, external environment and firm size are the key determinants of market entry strategies to use. The study recommends that multinationals firms should carry out research on prospective foreign markets to inform the choice of foreign market entry strategies.