The influence of international market entry strategies on the performance of manufacturing multinationals in Kenya
Date
2013
Authors
Gideon, Linah Nduku
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
The study was on the influence of international market entry strategies on the performance of manufacturing multinationals in Kenya. Mode of entry into an international market is the channel which organization that wants to operate in international markets employs to gain entry to a new international market. The choice for a particular entry mode is a critical determinant in the successful running of a foreign operation. Therefore, decisions of how to enter a foreign market can have a significant impact on the results.
The research design used in this study was descriptive research design. There are 213 Multinational Corporations in Kenya. Out of the 213 Multinational Corporations, 108 firms are in the manufacturing sector and are located in Nairobi. The population of the study is therefore 108 firms. The sampling frame was retrieved from the online yellow pages. It is for this reason that the study considered 50% of the population. This yielded 54 firms. The study used a questionnaire as the preferred data collection tool. Descriptive statistics included frequencies and measures of central tendency mainly means and frequencies. Inferential statistics included regression modeling, t-test and Analysis of Variance (ANOVA).
Results indicated that manufacturing multinationals used various international market strategies to venture into business. These strategies include licensing, whole owned subsidiaries, joint venture, exporting, direct investment and strategic alliances. Results further indicated that the firms used these market strategy entries to a large extent. Regression results indicated that market entry strategies had an influence on performance of the firm (profitability and market share). The study findings also indicated that there are various factors to consider behind the choice of a market entry strategy. These factors or considerations include resources available, company competence, competition in the market, size of the host country, availability of possible partnering firms with host country, host country requirements and state of firm development.
The study concludes that manufacturing multinational firms used more than one market entry strategy to venture into business. This was probably to enhance the firm’s performance. It was also possible to conclude that the firms used licensing and direct investment to a very large extent and wholly owned subsidiaries, joint venture, franchising and strategic alliances to a large extent. It was possible to conclude that there are various factors that manufacturing multinational firms consider before choosing the market entry strategy to use. These factors are resources available, company competence, competition in the market, size of the host country, availability of possible partnering firms with host country, host country requirements and state of firm development. It was possible to conclude that all market entry strategies had a positive and significant relationship with performance of firms.
The study recommended that the multinationals firms to carry out research on the market entry strategies before venturing into international market. This is to ensure they use the appropriate entry strategy to enhance the organization performance. The study also recommends that the management to evaluate the factors to consider when choosing an entry strategy thoroughly so as to make sure they know the market very well and that the management to evaluate the factors influencing the choice of market entry modes. This is to ensure that they choose the best mode.
Description
A Dissertation submitted in partial fulfillment of the requirements for the Degree of masters in commerce (MCOM)
Keywords
International market, Performance, manufacturing multinationals, Kenya, Business