Market Entry Strategies and Performance of Multinational Fashion Retailers in Nairobi

Abstract

Global competitive pressure is driving the growth of international business and the establishment of multinational corporations (MNCs) across geographies. Considering that internationalization consumes substantial management time, resources, and expertise, firms strive to select strategies that assure superior performance and competitive advantage in their new markets. Over the last few years, Kenya has experienced an influx of multinational fashion retailers seeking alternative markets for their products. These multinationals are motivated by the expanding middle class, growing consumerism, and supportive infrastructure. The objective iof ithe istudy was to determine the relationship between market entry strategies and the performance of imultinational ifashion iretailers iin iNairobi. The study population was made up of 13 multinational fashion retail companies. The researcher collected data from the entire ipopulation. The research was carried out using a descriptive cross-sectional survey. Semi-structured questionnaires with closedended and open-ended questions were used to obtain primary data. Descriptive statistics were used to analyze the data. The study's findings revealed that multinational fashion retailers in Nairobi pursued a variety of strategies to enter into the Kenyan market. Majority of the firms began by directly exporting their products before venturing fully. Once they had established sufficient demand for their products, they pursued strategies such as franchising, joint ventures with local firms, and FDI. The descriptive statistics indicated a high extent of agreement by multinational fashion retailers that exporting, franchising, joint venture and FDI market entry strategies yielded various financial and non-financial performance ibenefits. The study concluded that pursuit of exporting, franchising, joint venture, and FDI market entry strategies yields financial and nonfinancial value to firms. As such, multinational fashion retailers benefit from exploring entry into new markets using any of the four strategies in response to growing dynamism in their markets of origin. The study recommends that policymakers enact policies that support foreign firms to invest in the country while also protecting existing players from unfair competition. It also recommends that when multinational fashion retailers consider entering new markets, they should adopt a low-risk entry strategy such as exporting to assess the viability of a foreign market before venturing using other strategies.