Challenges of International Expansion

Ghauri & Cateora (2010) established that cultural dynamics played a vital role as far as international marketing was concerning. Marketing is a major component of business strategy and is particularly critical in the exporting and franchising approaches to international market entry. Cultural dimensions differ among all countries.

Usunier (1996) developed an empirical outlook of 50 nations based on Hofstede’s cultural dimensions of; power distance, uncertainty avoidance, individualism, and masculinity. It was based on a scale of 1 – 100. A country like United States had; power distance (40), uncertainty avoidance (46), individualism (91), and masculinity (63), (Usunier, 1996).

On the other hand, an emerging nation like India had the respective scores of; 77, 40, 48, and 58 using the same scale. Effectively, advanced economies tended to exhibit greater levels of individualism with collectivism being witnessed in developing economies. The ability to encapsulate cultural knowledge is imperative in achieving success.

Cultural diversity also extends to management practices, which can influence the success of the venture. Daimler-Benz faced such challenge when it acquired Chrysler with management cultures clashing on several. This was particularly instrumental in the massive failure of the acquisition as the cultural differences affected production.

There are numerous regulatory and legal challenges whenever an organization establishes significant market penetration in an external market (Hitt, Ireland, & Hoskisson, 2011). This is evident for investments that require extensive resources commitments such as joint ventures, acquisitions, and developed of Greenfield operations.

Other risks that are associated with internationalizing business include; political and economic risks (Hitt, Ireland, & Hoskisson, 2011). Political instability has a direct impact on economic outlook. Tepid economic growth in external markets affects the impetus to inject more funds and influence the expected rate of return.

Research Gaps

Hitt, Ireland, & Hoskisson (2011) explored the general approach to business expansion by considering various options that are available to businesses, which are seeking presence in international markets. The generalized approach does not take cognizance of specific market dynamics that are unique to different regions and countries.

Katsikeas et al. (2007) and Albaum & Duerr (2008) alluded to the general conditions that prompt firms to consider expanding into international markets. The overriding element is that there is great generalization in most literature. There is also increased focus in individual cases with greater emphasis on western multinationals expanding into Asian markets.

This study sought to evaluate the internationalization approach to a frontier market (Kenya) and also examined the rapid ascension of an emerging market multinational into another emerging market region. The two companies are based on the same industry sphere, which allows for cross comparison of their respective performances.

The specificity of the market research driven by the two case studies provided greater insights into accessing the fast emerging frontier markets, which have much greater potential.