Best Market Entry Strategies for Foreign Companies in Kenya – Kenya is one of the key logistical conduits into the East African Community Regional Market consisting of south Sudan, Tanzania, Uganda, Rwanda and Burundi. Many foreign companies establish their regional headquarters in Kenya. Here are some of the entry strategies that foreign companies can consider.
The simplest and easiest way to meet the needs of the Kenyan and East African markets is by Exporting. This approach has minimal effect on the ordinary operations for your Company and the risks involved are less than other alternatives. There are two broad avenues of Exporting; Indirect and Direct Exporting. The two forms of Exporting are distinguished on the basis of how the exporting company manages the transactions flow between itself and the Kenyan Importer or Buyer. When it comes to Indirect Export the manufacture leverages on the services of various types of independent Marketing Organizations located in Kenya and are in the Business of Importing and Distribution of the Products. Direct Importing will involve your Company doing the Importation and Distribution of the products.
In this strategy, your company Joins Hands, Shares ownership and management with another company. This method works best for two Companies with complementary Assets, Distribution Channels, and Technology . This company Mutually benefits the two companies and enables them to achieve common objectives that include; risk/reward Sharing, technology sharing, Joint product development, Political Connections, and Conforming to Government Regulations
This is a system in which Local business owners (franchisees) pay fees and royalty to your foreign company (franchiser) in return for the right to be identified by your trademark, to sell your product or services and often use your business format or systems. There are two types of franchising relationships the business format relationship where you provide to the Local Business not just a trade name, product/service, but an entire system for operating the business. The other type is traditional or product distribution relationship the focus for this is not the system of doing business but mainly on the product you manufacture or supply the local Business.
A merger is a combination of your entity with a Local Entity Leading into the creation of a new one, the desired effect being the accumulation of assets and liabilities of distinct entities and several other benefits such as economies of scale, tax benefits, fast growth, synergy and diversification. The merging entities cease to be in existence and marge into a single servicing entity. Acquisition comes in when you acquire controlling interest in another company. It does not lead to dissolution of the company whose shares have been acquired but it leads to a change of the company ownership structure.
This is a voluntary formal agreement between your Company and a Local Entity to pool your resources to achieve a common set of objective while remaining independent entities. It is mainly used to expand the production capacity and increase market share for a product. Alliances help in developing new technologies and utilizing brand image and market knowledge of both the companies.
Ultimately the choice of a market entry strategy in Kenya is very important in the entrant’s future decisions and performance in the local markets due to complex, continual change and dynamic business environment. It is Vital for foreign companies to adopt entry strategies that will preposition them to take the chances in the Kenyan economy in a manner that is bearable.
Contact us Today for an in depth insight on the Best approach for your company. We are also happy to help you identify and contract local Partners in order to help you smoothly penetrate the local Market.