Entry Strategies Adopted by Multinational Manufacturing Companies in Kenya

Abstract

The focus of the operations of multinational corporations is on the coordination of the allocation of resources in its international operations in order to minimize production cost and maximize revenue. This research investigated the entry strategies adopted by multinational manufacturing companies in Kenya. The objectives of the study were to determine the entry strategies adopted by manufacturing multinational companies in Kenya and to determine the extent to which entry strategies affect performance. This study adopted a survey design in the investigation of the entry strategies adopted by multinational manufacturing companies in Kenya. The study adopted a census approach and all the 45 companies which are involved in large scale manufacturing in Kenya were selected from the KAM Directory as at 31st July 2010. The study used both primary and secondary data. The study found out that the factors that lead a company to enter into international business can be divided into either external (environment specific) and internal (firm specific). More favorable cost levels were found to be influencing the firm’s decision to enter the Kenyan market to a great extent. Wholly owned subsidiaries was used as the main entry strategy to a very great extent It can be concluded that the decision criteria for the mode of entry depends on socioeconomic characteristics, political and legal characteristics, financial conditions and consumer variables. Future research studies can examine how capital of multinational companies influences the entry strategy of the multinational company. Studying the past individual and shared experiences of managers can be fundamental in understanding a firm’s current entry choices.