Competitive Strategies for Kenya’s Growth Markets
Kirjoittanut Rolex Owino
The World Bank projects that Kenya’s GDP will grow at a rate of 5.8%, this year (2019), whilst it is forecasted to expand to a rate of 5.9% in 2020. Accordingly, these favourable growth forecasts have predominantly been driven by a resilient private sector, positive investor confidence and a stable macroeconomic environment.
As such, the country has continued to become a hotspot for various lucrative business opportunities, particularly within the following key sectors of the economy: Agribusiness, Renewable Energy, Health Care, FinTech, Information & Communications Technology (ICT), Education, Manufacturing, Infrastructure and Building & Construction. In this regard, foreign private-sector stakeholders, such as innovative companies, are bound to prosper within these markets, as informed by the aforementioned favourable economic indicators.
However, it is of paramount importance to integrate a savvy market entry strategy to ascertain that long-term sustained growth and overall success would be achieved. In this view, the following provided Competitive Growth Strategies will ensure the long-term successful exploitation of varied business opportunities, therein.
Exporting is the least-risky market entry strategy to the Kenyan marketplace. It is categorised into two forms, namely indirect exporting and direct exporting. These are distinctively operationalised based on how your company manages its transaction with the Kenyan importer/buyer.
Hence, as relates to indirect exporting, your company leverages upon the expertise of local independent marketing organisations – in the import and distribution business. As per direct exporting, your company will both undertake the independent importation and distribution of your products/services.
Joint venturing will involve your company partnering with a local company – through the acquisition of shares and controlling interests. This market entry strategy is ideal if your company possesses assets, distribution channels and technologies – that are complementary with your target local company.
This arrangement is typically a mutually beneficial relationship, whereby common objectives are intended to be achieved, such as risk/reward sharing, technology sharing, joint product development, political connections, and conforming to governmental regulations.
Franchising involves a local company (franchisee) paying agreed-upon fees and royalties to your company (franchiser) – in return for possessing the rights to utilise your trademark, sell your products/services and adopt your overall business operational infrastructure.
Nonetheless, this arrangement is categorised into two types of systems. One of the systems involves the provision of exclusive rights to a local company to utilise your company’s overall business operational infrastructure.
The other system specifically focuses on providing your local partner with the rights to distribute your product(s)/service(s) – as opposed to providing exclusive rights to utilise your company’s overall business operational infrastructure.
Mergers & Acquisitions
Mergers involve the consolidation of your company with a local partner – with the intent of forming a new business entity. The core thrust of this arrangement is to benefit from a number of advantages, ranging from the accumulation of the assets and liabilities of distinct entities, economies of scale, tax reliefs, bolstered growth, synergies and diversification interests.
Correspondingly, acquisitions involve your company acquiring controlling interests in a local company. This arrangement, however, does not lead to the dissolution of the local company, instead – it alters its ownership structure.
Strategic alliances involve the formation of various voluntary formal agreements between your company and a local company. The overriding objective is to pool your resources to ensure the achievement of common objectives, whilst maintaining your independent identities.
A key feature in this arrangement is that it is utilised to expand the production capacity, and increase the market share of products.
Associated benefits therein include buttressing new technology development, leveraging brand image and the market knowledge of either company.
Summing it up
As illustrated hitherto, incorporating a savvy market entry strategy is of paramount importance, whilst entering the Kenyan marketplace. This will ensure that your organisation attains long-term sustained growth and overall success, therein.