International Market Entry Strategies Used by Stantech Motors Limited in Kenya
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Date
2016-11Author
Nyaga, Esther G
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Domestic companies grapple with tough competition in their home markets leading them to
adjust and look for international business opportunities. Normally, foreign direct investment
(FDI) is preferred entry strategy for MNCs because it allows business owners assurance to
run the business to its own expectations at all levels. This is a challenge to the local company
because of its resource capacity and market coordination expected in FDI situation. Therefore
the process of entering a foreign market is progressive and a long-term venture. This explains
why domestic companies prefer collaborative relationships with multinational corporations.
International business enables domestic companies to expand their human resource skill set
and increase their profitability. This offers business continuity in ways not available to purely
domestic business. Diversifying business into international trade further enables a domestic
company to provide a wider range of products to its customers. A company’s goals and
resources determine its ability to conduct international business.
This case study was carried out to identify the international entry strategy adopted by
Stantech Motors Ltd in Kenya. It was expanded to include the challenges that the company
faces in implementing the international strategy. Primary data was collected by means of
administering interview guide whilst secondary data was obtained from SML internal
documents, automobile magazines, newspaper articles and academic journals.
The study established that Stantech Motors Ltd entered international business as a franchise
with licenses to import completely knockdown kits (CKDs) and assemble on behalf of four
Chinese manufacturing companies. SML also currently sells brands under the franchise
arrangement locally and exports to Uganda and Tanzania.
The study further revealed the company encountered various challenges in implementing the
international strategy. Their greatest challenges at inception were raising the capital required
to establish the international collaboration, perception on quality of the Chinese vehicles by
Kenyans and cultural differences. Intense competition, inadequate incentives from the
Kenyan Government compared to their rivals in other East African countries and taxes
charged on vehicles in Kenya continue to be a challenge to their trade both within Kenya and
East Africa region.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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