Entry Strategies Adopted by AFB Group’s Expansion Into the Kenyan Market
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Date
2015-11Author
Ochieno, Immaculate
Type
ThesisLanguage
enMetadata
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Foreign entry strategy is an expansion for growth strategy that firms employ to access
foreign markets outside home market jurisdiction. Foreign entry strategy is employed by
many firms to expand sales and profits, grow market share and expand into new markets.
Saturation of the local market and declining domestic demand may force firms to look for
new markets outside home country borders (Partners 2010). This study undertook a research
on the entry strategy AFB a microfinance financial credit services provider has
used to enter the Kenyan market. AFB is a foreign company with parent headquarters in
South Africa. Organizations initiate strategies to survive and achieve competitive advantage
over competitors. Foreign entry strategy is used to achieve economies of scale
and sustainable competitive advantage through learning experiences in foreign markets.
When firms plan to enter a new market, the decision of entry mode is an important one
since it can be of considerable significance to the firm’s success in the market (Woodcock
1994, Yigang 1999). The study had two objectives, the first objective was to determine
the entry strategies adopted by AFB in expanding into the Kenyan Market, and the second
objective was to establish the factors that influence the choice of strategy. The research
design was a case study on AFB group and the data collection technique used was
an interview guide administered on respondents drawn from senior management cadre of
the AFB group. Data analysis was conducted by content analysis method of various
themes extracted from the interview responses. The study findings revealed AFB group
has used two entry strategies to enter the Kenyan market namely strategic alliance partnerships
which were non-equity and acquisitions with an equity ownership form. Factors
influencing the choice of strategy were country specific and firm specific. The study findings
revealed that influential country specific factors were type of regulations, industry
competitiveness and the country levels of technology and economic development, while
firm specific factors were firm’s financial resources, technology capability versus competitors,
human resource competencies and firm embedded knowledge and competencies
from expansion experiences in other countries. The study found out that entry strategy is
a dynamic process and is dependent on evolving external and internal environment forces
that firm is exposed to in its internationalization process in foreign markets.