The increase in global commercial activities and the growing number of multinational enterprises (MNEs) in international markets has prompted an immense interest in the entry modes and strategies used by these MNEs by researchers. The choice of which entry mode to adopt when entering foreign market remains one of the most important decisions to be made by the firms internationalisation process owing to the benefits and risk associated with each type of entry mode and what type of industry they are linked to. Wilson (1980), Gatigon and Anderson (1988), Harzing (2002), Dikova and Witeloostuijn(2005). Once established inside the host country, these MNE s look for ways to expand and gain more market share within their industry to maintain competitive advantage and leadership. This involves the adoption of various expansion strategies. The Nigerian telecommunication industry was deregulated in 2000, giving private and foreign investors and opportunity to invest in the industry. This came as a good opportunity to investors as the potential in the Nigerian telecommunications market was great. Being Africa most populous country with an estimated population of 131 million people of which less than 10% had access to affordable mobile phones, the need to expand effectively is necessary to reach as much people as possible. Two wholly owned foreign MNEs namely MTN and Econet (later to become Zain) were given licences to operate as Global System Mobile (GSM) communication operators in 2001 and 2000 respectively. Despite being the first operator of GSM in Nigeria, Zain has not expanded as rapidly as MTN. Currently MTN holds 43% of the market share with network coverage all over the country while Zain controls 23% of the Nigerian Telecommunication market.
1.2 Aim of the Research
The research is aimed to achieve the following:
1) Analyse the choice of entry modes used by MTN and Zain different stages in entering the Nigerian market
2) To identify factors that influenced the entry modes and expansion strategies of MTN and Zain.
3) To discover differences and similarities between the expansion strategies used by MTN and Zain.
4) To analyse how effective the expansion strategies has been.
1.3 Rationale of the Research
The research aims to find out the expansion strategies used by two MNEs in the Nigerian telecommunication industry. Although Zain had the first mover advantage, it has not expanded as much as MTN which came in second. By analysing their entry and expansion startegies, the discoveries made would be useful in helping future investors into the sector make appropriate decisions.
LITERATURE REVIEW
Foreign Direct Investment (FDI) occurs when a firm invests directly in a foreign market (Hill 2009). FDI can take the form of Greenfield (wholly new establishment with 100% foreign ownership) or a merger with or an acquisition of an already existing local firm (Hill 2007). Certain theories exist that try to explain the rationale behind various FDI modes. Most FDI theories follow two paths namely: the neo-classical theory and internationalisation theory. The neo classical theory of FDI rests on the premise that MNEs engage in foreign direct investments due to the difference in returns from other countries, relying on the assumption of a perfect market (Roberts 2001). However, this assumption of a perfect market when no such market exists makes it an unrealistic theory in today's market environment. The internationalisation theory on the other hand explains the reasons for foreign direct investment to be based on the transaction costs differences across borders. The most used theory under this view is Dunnings Eclectic Theory (1979). Dunnings eclectic theory also known as the OLI paradigm asserts that ownership advantages, location advantages and internationalisation motives are the drivers of FDI. The expansion of MNEs within their host country can be done through joint ventures with local firms who are believed to have better knowledge of the local environment; however, such strategies can be stressful where the percentage of control of each partner is not clearly stated. Also, in the case of firms that deal with technological 'know how', joint ventures may not be considered as they may be prone to loss of intellectual property. MNEs can also expand within their host country by setting up wholly owned subsidiaries, though this may be slower than joint ventures or acquisition, they provide an opportunity for the firm to have more control over its operations.
The decision of which expansion strategy to employ depends to an extent on the type of MNE, its mission and other external factors prevalent in the host country.
RESEARCH QUESTIONS
This research questions for this dissertation are:
What are the entry modes and expansion strategies used by MTN and Zain to enter Nigeria?
What factors influenced the expansion strategies of MTN and Zain within Nigeria?
4.0 METHODOLOGY
This section presents a summary of how the different parts of this project namely the research philosophy, strategy, data collection and method of analysis fit together in order to answer the research questions. The various components of the research design are discussed briefly stating the considerations that informed the selection of each method and how the limitations posed by the chosen methods would be managed.
4.1Research Philosophy
According to Saunders et al (2009), research philosophy relates to the researchers views on the development of knowledge. Three views dominate the literature on research philosophy namely: positivism, interpretivism and realism. The research philosophy for this research is interpretivism. Interpretivism holds on the view that reality is not objectively determined but is socially constructed (Husserl 1965 cited in Kelliher 2005). The unique and complex nature of business enterprises makes it difficult to have a positivist approach; as such an approach fits best to physical sciences where law-like generalisations are applicable (Saunders et al 2009).In this research, the entry modes and expansion strategies of two MNEs would be analysed to make sense of their actions, motives and intentions, hence the appropriateness of this philosophy.
4.2 Research Design
The research questions set above would be answered using a case study approach. Robson (2002: 178) defines case study as 'a strategy for doing research which involves an empirical investigation of a contemporary phenomenon within its real life context using multiple source of evidence'. It is also an excellent way of exploring existing theories to seek conformities.
4.3 Data Collection Method
There are two types of data that can be used for research purposes namely: primary data and secondary data. Primary data refers to data that originates directly from the researcher for the specific purpose of addressing his research question (Malthotra 2004). On the other hand, secondary data refers to data that has already been collected by a researcher for another purpose (Saunders et al 2009).This research would be based on secondary data collected from various reputable sources. The sources can be categorised into internal and external sources. Internal sources refer to the data that was collected by the MNE being studied and can be assessed on their corporate websites. External sources refer to the data that has been collected by national and international institutions such as Economic reviews, academic journals and articles, data from international agencies such as International Monetary Fund (IMF), United Nations Conference on Trade and Development (UNCTAD) would also be used. The use of both internal and external sources of secondary data helps reduce the bias in the materials. However, the issue of reliability and accuracy have been raised as a disadvantage of secondary data. This would be managed in the research by the use of data from reputable world organisations, which due to their importance make use of credible and accurate researchers and research instruments.
4.4 Data analysis
This study will be carried out by conducting a qualitative analysis of the secondary data employed. Relevant theories would be used to analyse and interpret the results.
4.5 Methodology limitations
The main limitation of this research is the use of secondary data collection; however this limitation was addressed above. Another limitation is the time frame involved in writing, this doesn't allow for exhaustive use of available data as such would take a longer period. The use of case study makes it difficult to generalise findings, however, this has been tried to manage by using two case studies, also putting into consideration that the Nigerian Telecommunication industry has only three major international players.
5.0PROJECT PLANNING
ACTIVITIES
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1.Gathering of materials and relevant literature
2.Literature review and report drafting
3.Write chapters one and two
4.Collection and analysis of secondary data
5.Write chapter three, four and five
6.Cross-check referencing
7. Draft completed and revised
8.Print and Submit
