Foreign market entry strategies

2008 ◽  
pp. 267-295
Keyword(s):  
Market Entry ◽  
Foreign Market ◽  
Foreign Market Entry ◽  
Entry Strategies

scholarly journals The Effects of Foreign Market Entry Strategies on Financial Performance of Listed Multinational Firms in Kenya

2021 ◽  
Vol 6 (3) ◽  
pp. 216-225
Author(s):  
C. Smith ◽  
M. Ogutu ◽  
M. Munjuri ◽  
J. Kagwe
Keyword(s):  
Financial Performance ◽  
Market Entry ◽  
Multinational Firms ◽  
Foreign Market ◽  
Foreign Market Entry ◽  
Foreign Firms ◽  
Policy Makers ◽  
Entry Strategies ◽  
Internationalization Theory ◽  
Entry Strategy

The objective of this study was to establish the effects of foreign market entry strategies on the financial performance of listed multinational firms in Kenya. Internationalization theory was used as the theoretical foundation of the study. Empirical studies reviewed revealed that several studies had been done on the direct relationship between performance of multinational firms and their modes of entry into foreign firms. However, none of these studies focused on the financial performance of listed multinational firms. The study utilised a cross-sectional descriptive design. Secondary data collected from firms’ annual reports and financial statements for a period of four years (2014 to 2017) was used. The firms’ financial indicators of Sales Growth, Return on Equity, Return on Assets and Return on Capital Employed were employed to measure their performance. Franchising, exporting, wholly owned subsidiary and acquisitions were assessed as the entry strategies used by multinational firms. Data was collected from all the 62 listed multinational companies in Kenya and analysed using quantitative methods. This analysis was most preferred for data collected was quantitative in nature. The relationship between the independent and the dependent variable was tested using simple linear regression. The results show that the performance of multinational firms operating through franchises and as wholly owned subsidiaries as well as acquisitions was lower than the performance of multinationals operating as export companies. The study concludes that the mode of entry into foreign markets chosen by a firm significantly affected its financial performance in the said market. It is therefore recommended that multinational firms wishing to expand their operations globally to come up with long term strategies that have gone through rigorous scrutiny for the benefit of the firm. The study gave a contextual understanding of the internationalization theory. The theory managed to emphasize on reasons why multinational firms should expand their operations beyond their national boundaries. Actual ingredients for policy makers to undertake a well thought through policy formulation to fully understand the importance of choosing the right entry strategy was provided for in the results. Recommendations of the study are that a thorough marketing evaluation of the country of interest should be undertaken to ensure that proper measures are put in place for the selection of an entry strategy that will address the goals and objectives of a firm. The study also recommends that employees of a firm who are at the forefront in the internationalization process should be well informed and trained ahead of the firm’s plans. Policy makers and advisories in countries are advised to streamline the processes of foreign firms’ registration so to attract foreign investors.

scholarly journals The Influence of Firm Characteristics on the Relationship between Foreign Market Entry Strategies and Financial Performance of Listed Multinational Firms in Kenya

2020 ◽  
Vol 5 (3) ◽  
Author(s):  
Christine Ooko ◽  
Martin Ogutu ◽  
Mercy Munjuri ◽  
Jeremiah Kagwe
Keyword(s):  
Financial Performance ◽  
Market Entry ◽  
Multinational Firms ◽  
Foreign Market ◽  
Foreign Market Entry ◽  
Firm Characteristics ◽  
Foreign Markets ◽  
Entry Strategies ◽  
The Right ◽  
The Relationship

The main objective of this study was to establish the influence of firm characteristics on the relationship between foreign market entry strategies and the financial performance of multinational firms in Kenya. The study was hinged on Resource-Based View as a theoretical foundation. The literature revealed that numerous studies had been conducted on the influencing factors of firm characteristics such as Size and Age on the financial performance of multinational firms. However, these studies did not put into consideration of other possible factors such as firm characteristics and indicators such as liquidity and leverage. More so, the studies did not consider firm characteristics as a possible influencer of the direct relationship between choice of entry strategies and financial performance of multinational firms. The study utilized a cross-sectional study design which adopted both analytical and descriptive type of studies. Secondary data was used to obtain the desired information from the multinational firms’ annual reports for the financial years 2017, 2016, 2015, and 2014. The study focused on only the publicly listed multinational firms in the Nairobi Security Exchange. Data were obtained from all the 62 listed firms. The study used Sales Growth, ROA, ROE, and ROCE to measure financial performance. Age, Liquidity, and Leverage were used as indicators of firm characteristics with leverage and liquidity further measured as Debt-Equity ratio and Current Assets Ratio respectively. Foreign market entry strategies were measured using Franchising, wholly-owned subsidiaries, Acquisition, and Joint Ventures. The results of the study showed that an interaction between firm characteristics and foreign market entry strategy significantly affected the direct relationship between foreign market entry strategies and the financial performance of multinational firms. The study concludes that firm characteristics have a positive effect on the financial performance of multinational firms through the influence of their choice of entry into foreign markets. It is recommended that multinational firms with desires to expand globally should use their global footprint to maximize on their international operations through leverage activities. In addition, policies governing the liquidity of companies to be revised in order to increase financial performance if previously they affected it. For the study was only limited to the publicly listed multinational institutions, future researchers should consider studying all the multinational firms operating in Kenya. The study provided a contextual understanding of the Resource-Based View. This theory tried to bring in views on choosing the right entry strategy into foreign markets based on the familiarity or unfamiliarity of a foreign market setting given the resources available to a firm. Findings also provided key ingredients for policymakers to embark on an integrated policy formulation in the full understanding of the interplay of a firm’s unique characteristics as far as multinational firms are concerned. And in practice, global business management should be in a better position to identify the right entry strategies into new markets that would yield them great financial profits.

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