Journal of Economic and Financial Sciences (Apr 2020)
Effective strategies followed by multinational enterprises expanding into Africa
Abstract
Orientation: Retail sector multinational enterprises (MNEs) face challenges and follow diverse strategies when they expand into foreign markets. Research purpose: The major aim of this article is to determine how three well-established retail sector MNEs, namely, Walmart, Carrefour and Shoprite, addressed the challenges they faced and structured their market entry strategies in the African continent. Motivation for the study: While the opportunities in Africa are perpetual, breaking into the African market is not so straightforward. It is in this regard that the importance of determining the challenges faced by established retail MNEs in Africa and the valuable lessons that can be drawn by small and upcoming MNEs, from the experiences of these prominent MNEs studied, is exposed. Research approach/design and method: This article employs a mixed-method approach (i.e. case study and semi-structured interviews) to determine the challenges faced by Walmart, Carrefour and Shoprite when they expanded into Africa, and how they overcame those challenges. Main findings: The findings reveal that Walmart and Shoprite possess a substantial footprint in sub-Saharan Africa, while Carrefour enjoys a substantial footprint in North Africa and Francophone Countries of west Africa. Furthermore, Walmart follows a risk-averse approach when expanding into the African continent and only expands into new foreign markets based on the market potential and the ability to succeed. Carrefour’s main strategy is to achieve international expansion into Africa through the acquisition of international partnerships with local and regional firms. Shoprite, on the other hand, maintains that no written strategy was followed when the retail MNE expanded into Africa. It is also evident that external factors are significant for MNEs seeking to invest in Africa. Practical/managerial implications: Not all MNEs expanding into Africa have been successful. Accordingly, the practical value of this article rests upon the lessons that small and upcoming MNEs can learn from the experiences of MNEs that are now well established in African markets. Contribution/value-add: This article contributes to existing foreign direct investment (FDI) literature by identifying challenges that Walmart, Carrefour and Shoprite faced when they expanded into Africa. In addition, lessons that aspiring and small MNEs, specifically in the retail sector, can learn from these three retail MNEs that are now well established in African markets are drawn.
Keywords
