Determinants of foreign market entry strategies to gain competitive advantage by commercial banks in Kenya

Abstract

The world is in an era of globalization and companies are continuously affected by the competition around the world. Increasing globalization has led to an increase in international joint ventures, companies establishing subsidiaries and sales offices abroad. Thus, as organizations seek to enhance their competitive positions in an increasingly global marketplace, they are discovering that they can improve their performance by adopting different foreign market entry modes which will enable them to position themselves in market dominance and improve the firm’s overall performance. The complicated part is to choose the right entry mode for the right company considering the company’s resources and assets. The objective of the study was to determine foreign market entry strategies and competitive advantage by commercial banks in Kenya. The research design adopted by the study was cross sectional descriptive survey design. The population of the study comprise of all the 8 commercial banks in Kenya which have entered into foreign markets. Data collection was undertaken using a questionnaire which was administered to the heads of business development and marketing, retail banking and corporate departments. The data collected was analyzed using Statistical Package for Social Sciences and presented using descriptive measures, percentages and frequency distribution tables. The study established that the commercial banks entered into foreign market through mergers with a local bank, strategic alliance, export of services directly, sequential market entry strategy, licensing, foreign direct investment, joint venture, purchase of a wholly owned subsidiaries and direct acquisition. The study found out that entry into foreign market by the commercial banks considers the political situation in the countries, sufficient foreign market size for greater growth potential, competitive technology, conducive legal environment, taxation and business regulations, income distribution to sustain entry and growth requirements, adequate and conducive monitors and fiscal policies and conducive foreign currency exchange conditions in the country. The entry of commercial banks into foreign market enabled the banks to achieve competitive advantage over its competitors through market research on pricing, security of product/service and technical innovation strategies