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

By

OTOKITI BISAYO OLUWATOSIN CUGP100236

Presented To

Department of Business Administration and Management

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.

TABLE OF CONTENTS                                  Pages
Cover Page
Title Page - - - - i
Certification - - - - ii
Declaration - - - - - - - iii
Dedication - - - - - - - iv
Acknowledgements - - - - - - - v
Abstracts - - - - - vi
List of Tables - - - -
 
CHAPTER ONE: INTRODUCTION
11  Background of Study - - - - - - 1
12  Statement of Research Problem - - - - - 3
13  Objectives of the Study - - - 4
14  Research Questions - - - 4
15  Research Hypotheses - - - - - - 5
16  Scope of Study - - - 5
17  Significance of Study - - - 5
18 Methodology - - - - - - 5
19  Limitation of Study - - - 6
110Outline of Chapters - - - 6
111Operationalization - - - - - - 7
112Definition of Terms - - - 7
 
CHAPTER TWO: LITERATURE REVIEW                          21
Introduction - - - - 9
22 Conceptual Framework - - - 9
221 Multinational Corporations - - - - - 10
221Nature and Origin of Multinational Corporation - - - 10
222 Definition of Multinational Corporation - - - - 11
223 Features of Multinational Corporation - - - - - 12
224 Advantages and Disadvantages of Multinational Corporation - - - - 14
225 Cost cum Benefits of Multinational corporations - - - - 16
226   Modes of Entry - - - 18
227 Selection Mode - - - - - - - - - - - 19
228 Indirect Market Entry - - - 19  
229 Direct Market Entry - - - 21
2210 Strategies Used By Multinational Corporations During Entry - - 22
2211 Rules of selecting Entry mode - - - - 29
2212 Reasons for Entering into the Nigerian market - - - - - - - 30
23 Theoretical Framework - - - - - 30
231 Theories of Multinational Corporation - - - - - - - - - 30
232 The Theory of Internationalisation of Multinational Corporations - - - - 31
233 Motives of Internationalisation - - - - - - - - - 31
234 Reasons for firm internationalisation - - - - - - - - 35
235 Success and Failure in the Internationalization Process - - - 35
236 Industrial Organization Theories - - - - 36
237 Transaction Cost Theory - - - 39
238 Basic Transaction Costs Theory - - - - 40
239 Application Of Transaction Cost Theory To The Multinational Firm - - - - - 45
2310 The Relationship Between Internationalization Theories And Market Entry
Modes - - - - 46
24 Empirical Framework 241 Entry Mode of MNCs and their Performance - - - - 47
242 Entry Mode of MNCs and their Challenges - - - 49
 
CHAPTER THREE: RESEARCH METHODOLOGY
31 Introduction - - - 50
32 Research Methodology - - - 50
33 Research Design - - - - - - 50
34 Population of the Study - - - - - - 51
35 Sampling Technique - - - 51
36 Sample Size - - - - - - 52
37 Method and Sources of Data Collection - - - - 52
38 Research Instruments - - - 52
39 Method of data Analysis - - - - - 52
310 Validity Test - - - 53
311 Reliability Test - - - 54
 
CHAPTER FOUR:DATA PRESENTATION ANALYSIS AND INTERPRETATION
41 Introduction - - - 55
42 Demographic Data Analysis - - - - 55
43 Answering Research Questions - - - - 70
44 Hypothesis Testing and Discussion of Results - - - 70
 
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
51 Introduction - - - - - - 71
52 Summary - - - - 71
53 Discussion of the Findings - - - 75
531Theoretical Findings - - - 75
532 Empirical Findings - - - 75
54 Recommendations - - - 75
541 Conclusion - - - - 76
542 De- limitation of Study - - - - - 76
543 Suggestions for further Study - - - - 76
References - - - - 79
Appendices - - - - 83

LIST OF TABLES
Table 1: Staff status Distribution of Participants - - - - 55
Table 2: Marital Status Distribution of Participants - - - 56
Table 3: Age Distribution of Participants - - - - 56
Table 4: Academic level of Participants - - - - 57
Table 5: Work Experience of Participants - - - - 58
Table 6: Nature of Business - - - - - 58
Table 7: Years of operation in Nigeria - - - - - 59
Table 8: Branches in other country - - - - 60
Table 9: Where the branches are located - - - - - - - 61
Table 10: They entered into Nigerian market for Profit Making - - - - - - 61
Table 11: They entered into Nigerian market to increase mkt share - - - 62
Table 12: They entered into Nigerian market to increase Loyalty - - 63
Table 13: They entered into Nigerian market to Secure the future - - 63
Table14:They entered Nigerian market for Development and employment
generation - - - - - - - - - 64
Table 15: Operating with the permission of our parent company - - 65
Table 16: Sale of products through an agent based in the country - - 67
Table 17: Our org is completely independent of our parent company - - - - - 68
Table 18: Our organization reports directly to our parent company - - 69
Table 19: Our organization came and started operation in Nigeria - - 69
Table 20: Our organization acquired an established firm for operation - - 69
Table 21: Our organization set up a new operation in Nigeria - - - - - 69
Table 22: Government regulations and policies were a huge barrier - - 70
Table 23: Geographical location was difficult at the entry stage - - - 70
Table 24: Present market share - - - - - 71
Table 25: Our company is listed on the Nigerian stock exchange - - 72
Table 26: Our company is rated as one of the highest - - - 72
Table 27: Our market share has been stable over the years - - - 73
Table 28: Present worth of market share - - - - 73
Table 29: Present value of market share - - - - 74
Table 30: We are one of the leading Multinational Corporations - - 74
Table 31: We lead and others follow - - - - 75
TABLE 32: Research Questions 1 - - - - 75
TABLE 33: Research Question 2 - - - - 76
TABLE 34: Research Question 3 - - - - 77
TABLE 35: Research Question 4 - - - - 78
TABLE 36: Hypothesis 1 - - - 79
TABLE 37: Hypothesis 2 - - - 80
TABLE 38: Hypothesis 3 - - - 81