Overview on Market Entry Modes for Africa

The African continent is the fastest-growing world region but also exhibits substantial barriers to entry. Taken together, these specific conditions require the right market entry mode. In this chapter, the most important market entry modes are presented and their main advantages and disadvantages regarding African markets are discussed. These are export, wholly-owned production subsidiaries, joint ventures, and—for certain service industries—management contracts. While export is still the dominant mode for Western companies in African markets, entry modes with investments have been rising. Overall, selecting the right entry mode is a combined decision of the optimal production location (in the home country, in the host country, or in a third country) and the use or non-use of a local partner, based on several criteria that are presented in this chapter. But at large, the resource commitment in the specific African market should be closely aligned with the level of knowledge that a company has already gathered about that country.