Effect of internal factors on choice of foreign market entry Strategies of multi-national cement manufacturing firms in Kenya:a case of Bamburi cement limited

Abstract

The environment in which the organizations operate is never static. Firms depend on the environment for the required resource and a profitable market for their goods and services. Existing evidence shows that there is no right international market entry mode that can be seen as a suitable choice for a firm.. Minimal research work has been done on the effects of G internal factors like size, product, international experience, profit objective and management risk attitude on the choice of foreign market entry mode in international markets. Therefore, this study sought to fill the existing research gap by evaluating internal factors influencing choice of foreign market entry strategies used by multi-national cement manufacturing firms in Kenya with a focus on Bamburi Cement Limited. The specific objectives of the study included: To determine the effects of company size, management risk, profit motive and international experience on the choice of foreign market entry strategies used by multinational cement manufacturing firms in Kenya. Contingency and Transaction Cost theories guided the study. It was a descriptive case study with a target population of 340 employees. Stratified random sampling technique was used to select a sample size of 103 employees being 30% of the target population. The study relied on primary data which was collected through administering structured questionnaires comprising of closed and open-ended questions; developed in line with research questions. Cronbach's Alpha was used to test reliability with results at 0.88, 0.85, 0.75 and 0.82 for the four questionnaire items. Validity was checked by exposing the instruments to experts in the area. Data was analyzed using descriptive statistics. Mean and standard deviation were used. Results showed thatprofit motive was highest determinant of choice of foreign market entry strategy with a mean score of 3.9196(S.D.= 0.75). Type of product had mean score of 2.0896(S.D.= 0.92) implying it was low in determining choice of market entry while management risk attitude was considered moderate with mean score of 2.8109(S.D.=0.85). Similarly, company size contributed at moderate level with a mean score of J.1558(S.D.= 0.78). The standard deviations indicate the responses for each item were spread far from the mean. It is concluded that company size had moderate effects in choosing international market entry strategy. Effects of type of product was low, effects of management risk attitude moderate and effects of profit motive high in choosing foreign 'market entry strategy. The study recommends emphasis on all these factors by management of the company as they all have effects to some level. The results are expected to help international cement firms improve on their choice of strategies and form basis for further research