Entry Strategies Adopted by AFB Group’s Expansion Into the Kenyan Market

Abstract

Foreign entry strategy is an expansion for growth strategy that firms employ to access foreign markets outside home market jurisdiction. Foreign entry strategy is employed by many firms to expand sales and profits, grow market share and expand into new markets. Saturation of the local market and declining domestic demand may force firms to look for new markets outside home country borders (Partners 2010). This study undertook a research on the entry strategy AFB a microfinance financial credit services provider has used to enter the Kenyan market. AFB is a foreign company with parent headquarters in South Africa. Organizations initiate strategies to survive and achieve competitive advantage over competitors. Foreign entry strategy is used to achieve economies of scale and sustainable competitive advantage through learning experiences in foreign markets. When firms plan to enter a new market, the decision of entry mode is an important one since it can be of considerable significance to the firm’s success in the market (Woodcock 1994, Yigang 1999). The study had two objectives, the first objective was to determine the entry strategies adopted by AFB in expanding into the Kenyan Market, and the second objective was to establish the factors that influence the choice of strategy. The research design was a case study on AFB group and the data collection technique used was an interview guide administered on respondents drawn from senior management cadre of the AFB group. Data analysis was conducted by content analysis method of various themes extracted from the interview responses. The study findings revealed AFB group has used two entry strategies to enter the Kenyan market namely strategic alliance partnerships which were non-equity and acquisitions with an equity ownership form. Factors influencing the choice of strategy were country specific and firm specific. The study findings revealed that influential country specific factors were type of regulations, industry competitiveness and the country levels of technology and economic development, while firm specific factors were firm’s financial resources, technology capability versus competitors, human resource competencies and firm embedded knowledge and competencies from expansion experiences in other countries. The study found out that entry strategy is a dynamic process and is dependent on evolving external and internal environment forces that firm is exposed to in its internationalization process in foreign markets.