Foreign Market Entry Strategies and Performance of Multinational Manufacturing Firms in Nairobi Kenya

Abstract

Foreign marketing entry strategies have been significantly linked to influence an organization performance. There has been mixed results in the industrial investments in Kenya as new multinational manufacturing companies enter the Kenyan market while other relocates to other regional market. This has been mainly contributed by intense competitive environment created domestically and complemented by regional integration initiatives. The purpose of the study was to determine the effect of foreign market entry strategies on performance of multinational manufacturing firms in Nairobi County, Kenya. The independent variable for the study was foreign market entry strategies while the dependent variable was firm performance. The study employed descriptive cross- sectional design. The results were analyzed using social sciences (SPSS) computer software Version 25.0. From the results of correlation analysis, there is a positive and statistically significant correlation between foreign market entry strategies and firm performance of multinational manufacturing firms. Foreign market entry strategies were found to be satisfactory (R2=90.6%) in explaining performance of multinational manufacturing firms. Regression analysis results showed that foreign market entry strategies had a positive and statistically significant relationship with the performance of multinational manufacturing firms. The study concludes that manufacturing multinational firms use more than one market entry strategy to venture into foreign markets. The foreign market entry strategies used include licensing, strategic alliance, joint venture, franchising and foreign direct investment. This study recommends for due diligence on licensing strategy before making entry to the market. Licensing is very critical to the growth of a manufacturing company. It is important for the manufacturing company to analyze properly this strategy as it has the potentials of restricting future activities of the company and reveal much other information that may give an advantage to future competitors. The study recommends that manufacturing companies within the same sector can join together to enhance their competitive in the market. Manufacturing companies using strategic alliance can share human resource competencies, resources and technological know-how to the advantage of the two companies. The study emphasizes the need for manufacturing companies to be more thoughtfully before entering into joint venture due to the level of high risks involvement. This is possible by involving industry experts to offer professional and practical advises regarding joint venture market entry strategies. The study recommends that multinationals firms should carry out research on prospective foreign markets to inform the choice of foreign market entry strategies. This is to ensure they use the appropriate entry strategy to positively influence the organization’s performance.