Factors Affecting Foreign Market Entry Strategies for Financial Institutions: A Case Study of Equity Bank Kenya

Project Report Submitted to the Chandaria School of Business in Partial Fulfilment of the Requirement for the Degree of Masters in Business Administration (MBA)The purpose of the study was to determine the factors affecting foreign market entry strategies for financial institutions with a key focus on Equity Bank Kenya Limited. The study was guided by specific objectives that focused on: determining internal firm factors that affect foreign market entry for financial institutions; examining external factors that affect foreign market entry for financial institutions; and determining industrial factors that affect foreign market entry for financial institutions. In this study, the research design used in this study was descriptive. The total population used in the study was all employees working at Equity Headquarters located in Upper hill Nairobi (836) in total. The sampling frame for this study was the complete list of all employees of Equity Bank Headquarters located in Upper hill, obtained from the organization’s human resource department. Stratified sampling technique was used to select the sample size for the study. The sample size for the study was 271 respondents as received from the formula used as shown on the methodology section. The study applied the use of primary data collection technique. This was achieved through the use of questionnaires. The study used quantitative data analysis. The study showed that internal factors had the ability to impact foreign market expansion strategies used by companies. The study revealed that Equity Bank (K) Limited’s strategy formulation process was linked to the organization’s long-term plans and was guided by the company’s vision, mission and objectives. Their organizational culture facilitated their ability to adapt to both external and internal changes and the company had the ability to create sustainable change through the integration of changes in their organizational culture. The study showed that, the flow of organizational knowledge within the company and the encouragement from leaders who supported innovation and knowledge management initiatives facilitated the ability of the organization in entering new foreign markets. The study revealed that external factors had the ability to impact foreign market expansion strategies. It showed that Equity Bank (K) Limited focused on the foreign rules and regulations established by law-makers before deciding on entering a foreign market. The company considered factors relating to: the freedom and protection of acquiring property and engaging in voluntary transactions, ability to assume a reasonable capacity for the expatriation of earnings from their international operations without unreasonable regulations or taxation and economically safe environments, before entering a foreign market. The study concludes that these factors create different cultural values in different societies and their influences on the transfer of management practices among nations were a great influence on the organization’s intention to enter a new foreign market. The study showed that industrial factors had the ability to impact foreign market expansion strategies, and that the company managers’ ability to understand the effect of industry forces impacted their entry strategies. The study showed that the institution was affected by the threat of entering a new market by established companies as well as the presence of substitute products from rival firms. Equity Bank (K) Limited was influenced by the size and concentration of customers in the foreign market as well as the saturation of their domestic market. The study recommends that to enter a new market, the firm should select markets that have less intense rivalry so as to avoid engaging in price wars. Globalization is a reality and is driving internationalization. Although there are challenges in going international, the study recommends that firms train and retrain their leaders to understand the external environment factors like the socio-culture, legal and technological in order to prepare adequately for a smoother process. The study recommends KBA and the government to organize various workshops and seminars that would expose the managers and policy makers of financial institutions to external factors that impact the internationalization procedures of financial institutions