MODE OF ENTRY OMULTINATIONAL CORPORATION AND THEIR PERFORMANCE IN THE NIGERIAN MARKET

ABSTRACT

This study investigates the mode of entry of multinational corporation and their performance Nigerian market. Research on the entry mode of multinational companies (MNCs) to Nigerian market has been one of the major topics in the international business, and the performance factor has been regarded as one of the major factors to explain the entry mode selection of MNCs. Based on the developing nature of the Nigerian market, MNCs can enter a market with Franchising, Licensing agreement, Exporting, joint venture or a wholly owned subsidiary, and Turnkey. This study test reasons for entering in the Nigerian market, modes of entering, challenges faced by multinational during entry and finally the impact of mode of entry of MNCs and their performance in the Nigerian market. The research adopted the survey method, with the use of the Questionnaire. The results from the analysis on the first hypothesis show that a MNCs come into the Nigerian market for different reasons with different modes peculiar to their organization. The second hypothesis indicated that there are various challenges MNCs faced when entry into Nigerian market . And the third hypothesis was supported indicating significant influence of mode of entry on the performance of MNCs in Nigerian markets.

CHAPTER ONE

INTRODUCTION

1.1      Background of the Study

The saturation of affluent companies in developed markets has greatly reduced their profit margins. This has led to the need for multinational companies to expand their operations beyond geographical borders and increase interest in emerging markets. The movement to emerging economies appears reasonable, as the sum of emerging populations, are estimated on to be average 80% of the population worldwide, which brings more opportunities to the multinationals in increasing their wealth.

Multinationals have solely been competing for the top tier of the market pyramid which is small and has been shrinking. Challenges faced by multinationals in entering emerging markets include: rise in corporate interest in these emerging markets, frequent unavailability of convertible currency resulting in barter and counter trade hence placing a burden on international managers to market products received in return to other consumers; Lack of protection some of the countries afford to intellectual property rights resulting in illegal copying, Lack of good quality products as many producers place emphasis on product performance neglecting style and product presentation.

In the recent years, the world business environment has changed dramatically through the globalization of economies and liberalization of markets, resulting in a new, furious business setting for firms (Ishimwe, 2013; Kagabo, 2012; Mutio, 2013). Advancement in political and economic changes, technological revolution and advancement in communications, transportation and