International market entry : a South African SME perspective

Basson, Paul M. (2005-12)

Thesis (MBA)--Stellenbosch University, 2005.


ENGLISH ABSTRACT: Since many Small Medium Sized Enterprises (SMEs) have a lack of resources and knowledge of foreign markets, they tend to develop their activities in the domestic market ftrst. When the home market limits opportunities for expansion. pro-active SMEs naturally progress to international activities by exporting to foreign markets. This natural evolution culminates in decisions of how to enter foreign markets and which markets to enter. Selection of overseas markets and entry modes lies at the heart of any international strategy. The value of the small business sector is recognised in economies worldwide. The SMEs' contribution towards growth, job creation and social progress is valued highly and small business is regarded as an essential element in a successful formula for achieving economic growth. It is thus postulated that SMEs will be one of the driving forces to grow the South African economy. By gaining an understanding of the internationalisation process of International Active Enterprises it is hoped to provide the South African SMEs with a tool that can be used for their international expansion programs. The author starts by reviewing relevant and related literature. He then investigates and highlights the different schools of thought on intemationalisation by looking at process, models, strategy and motivation. The research then describes the different modes of market entry and continues by listing the basic factor categories for market entry mode selection. The penultimate step highlights the various factors for selection of foreign markets and applies these factors into a holistic market entry and mode selection model. Finally the internationalisation is focused on SME and more specifically South African SMEs. Their internationalisation behaviour is explained in the light of the model that was developed. The author explains the framework that will be used to model an international market selection and the mode of entry into that international market. This model can guide SMEs into initial international market entry and to make decisive choices as to which international market and mode of entry they select to penetrate international markets.

AFRIKAANSE OPSOMMING: Klein en medium grootte sake-ondernemings het 'n tekort aan bronne en kennis van oorsese markte en dienooreenkomstig ontwikkel hulle eers hul besigheidsaktiwiteite in die binnelandse markte. Wanneer die binnelandse besigheidsgroei-geleenthede versadig word, sal sodanige pro-aktiewe klein en medium grootte sake-ondernemings huI produkte begin uitvoer in 'n poging om nuwe markgroei te stimuleer. Hierdie natuurlike evolusie dwing die onderneming om besluite te neem oor hoe om sodanige buitelandse markte te betree, asook die markkeuse op sigself. Die markkeuse en markbetredings metodiek is die kern van enige internasionale strategie. Die ekonomiese waarde van die klein en medium grootte sake-ondememingsektor word wereldwyd erken. Hulle bydrae tot groei, werkskepping, en sosiale ontwikkeling word wyd erken. So word klein en medium grootte sake-ondememings dan gesien as 'n kardinale bestanddeel om ekonomiese groei te behaal. Dit word dus gestel dat klein en medium grootte sake-ondememings een van die dryfvere vir ekonomiese ontwikkeling in Suid-Afrika sal wees. Die ondersoek van die intemasionaliseringsproses van buitelands-aktiewe ondernemings sal 'n model formuleer wat die Suid-Afrikaanse klein en medium grootte sake-ondememings kan bystaan met hul buitelandse markgroei. Die skrywer begin om die relevante literatuur te bestudeer en beklemtoon die verskillende denkwyses oor buitelandse groei deur te kyk na prosesse, modelle, strategiee en motiverings. Die navorsingstuk beskryf dan die verskillende metodes van markbetreding en Iys die verskillende faktore wat 'n invloed het op die betredingsvraagstuk. Die voorlaaste stap in die model beskryf die verskillende faktore wat 'n rol speel op die buitelandse markkeuse. Al hierdie mark- en betredingsfaktore word in 'n globale model gestruktureer. Laastens word daar gefokus op die Suid-Afrikaanse klein en medium grootte sake-ondememings en hulle internasionaliseringsoptrede word in die lig van die model geskets. Die skrywer verduidelik dus die raamwerk wat gebruik word om buitelandse markbetreding en markkeuse te modelleer. Hierdie model toon rigting aan klein en medium grootte sakeondememings se aanvanklike buitelandse belangstelling en ook hoe om daadwerklike besluite te neem oor buitelandse markbetreding en buitelandse markkeuses.

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