(a) JK Ltd, a Nigerian company decides to expand its operational to the South African Market.
State four reason that would have necessitated the company's decision
(b) JK Ltd, a Nigerian company decides to expand its operational to the South African Market.
List and explain four entry modes the company could use to enter the South African market
(a) - Access to new customers and markets
- Diversifying its business to reduce risk
- Taking advantage of new opportunities in South Africa
- Increasing profitability through economies of scale
(b) - Exporting
- Franchising
- Joint venture
- Wholly owned subsidiary
Exporting:
This mode of entry is suitable for JK Ltd as it requires low investment and allows the company to test the market with minimal risk. The main disadvantage is that it may be difficult to maintain quality control.
Franching:
This mode of entry allows JK Ltd to expand quickly and takes advantage of an already established business with knowledge of the South African market. However, it may be difficult to maintain control over the franchisee.
Joint venture:
This mode of entry allows JK Ltd to share the risks and expenses of entering the South African market with a local company. However, Jk Ltd may lose some control over the operations of the joint venture company.
Wholly owned subsidiary:
This mode of entry gives JK Ltd complete control over its operations in South Africa. However, it requires significant investment and may take longer to establish a presence in the market.
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