Theory question 103
International MarketingJK Ltd, a Nigerian company decides to expand its operations to the South African Market.
(a) State four reasons that would have necessitated the company's decision.
(b) List and explain four entry modes the company could use to enter the South African market.
Show the model answer
(a) Any four: saturated or small home market; to reach a larger market and increase sales; to make more profit; to use excess production capacity; to spread risk across countries; favourable trade agreements (e.g. AfCFTA); to gain foreign exchange; to enjoy economies of scale; to meet demand found in South Africa.
(b) Any four, explained: exporting (direct or through agents); licensing; franchising; joint venture with a South African firm; direct investment (own subsidiary/factory); contract manufacturing; strategic alliance; e-commerce.
Give each point as a full sentence, with an example where possible.