The Effect of International Business Strategies on Organizational Performance in the Developing Country Telecommunication Industry - A Case of MTN Nigeria Plc.
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Date
2021-06
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Griffith College
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Abstract
Several organizations across the globe have entered into new geographical locations or other countries to establish and carry out their business operations. Emerging economies have been a location of interest for many multinational companies and locations such as Nigeria have hosted different international organizations in various sectors of her economy in the last couple of decades. The choice of targeting developing countries such as Nigeria as a preferred location for business operations of international companies might not be unconnected with the availability of abundant human and natural resources in the most populous country in Africa. Hence, it is crucial for firms penetrating Nigeria’s business environment to adopt and implement suitable international business strategies that would ensure that their overall organizational goals are accomplished. To this end, this study examined the effect of international business strategies on the performance of Telecommunications companies in Nigeria.
The study adopted a quantitative research technique and used a cross-sectional design that involves the senior staff of MTN Nigeria Plc. and their customers are knowledgeable about their products/services. Data were obtained from a sample size of 150 respondents located in Lagos, Port Harcourt, Abuja, and Ibadan. The research instrument for data collection was a structured questionnaire using Google form and data was processed with the help of Statistical Package for Social Sciences (SPSS) version 20.0 software. The reliability of the research instrument was confirmed through Cronbach Alpha with a 0.822 reliability result which is above the 0.7 benchmarks as prescribed by Sharma (2016). Descriptive statistics were used for data analysis, answering of research questions, and hypotheses were tested using Spearman’s rank correlation.
The empirical findings corroborate the significance of international business strategies and their impact on organizational performance in the Nigerian telecommunication industry. Specifically, the results reveal that differentiation strategy has a significant and positive influence on customers’ loyalty that represents organizational performance. Furthermore, the study confirms that cost leadership strategy has a strong significant influence on customers’ retention that represents organizational performance and lastly, the research result shows that market focus strategy has a positive significant influence on customer satisfaction which is a good measurement of organizational performance in the Nigerian telecommunication industry. Therefore, the study recommends that managers and decision in the telecommunication industry makers continue to provide affordable quality products and services that would meet their customer’s requirements to ensure their satisfaction and increase their loyalty. In addition, it is also recommended that the Nigerian government should provide a good conducive business environment, most especially necessary infrastructure which will support investors operations enable them to perform optimally to achieve their corporate objectives.
Description
The increase in globalization in recent times allows companies to spread their business tentacles beyond their local business environment or their country into a foreign land and expand their businesses. However, penetrating favorably into a new foreign business environment demands that organizations embrace potent international business strategies that would effectively cater to their needs and ensure that their corporate expectations in terms of customers’ satisfaction, productivity, and profitability are accomplished. According to Todaro and Smith (2015), globalization presents new means for global poverty eradication which could be directly or indirectly beneficial to third world countries in terms of sociocultural, technological, scientific financial, and trade optimization (Gamade et al., 2020). Thus, both advanced and emerging economies can substantially benefit from globalization through a prosperous economy as a result of their engagement in global trade (Ahmedova, 2015; Prasanna et al., 2019).
International business connotes every international transaction of an entity in respect to goods, services, and information exchange for commercial and revenue generation purposes (Kefalas, 1989). Organizational involvement in international operations exposes it to different benefits as well as uncertainty (Kefalas, 1989). Hence, the formulation, adoption, and implementation of effective business strategies are crucial to ensure proper coordination of the company’s operational processes across national boundaries (Hitt et al., 2015). Economic imperative, political imperative, quality imperative and administrative coordination has been identified by Bhandari and Verma (2013) as the typical approaches that multinational companies adopt in international strategy formulation and implementation. Furthermore, the combination of one or more of these four common methods of implementing international business strategy ensures that organizations are abreast of fundamental realities which will guide them in making strategic choices and informed decisions (Bhandari and Verma, 2013). Therefore, the decisions and choices of managers and decision-makers regarding their organization entering a new geographical location will be geared towards the enhancement of their performance and actualization of overall organizational goals.
Unprecedented advancement in information technology and other technological infrastructure also provided an enormous opportunity for organizations to go international (Howcroft et al., 2019). Incessant technological innovations. Most especially in the telecommunication industry, has created a highly competitive market which requires equally effective competitive strategies for firms operating in such industry to exploit the available opportunities, manage the risks and threats judiciously and optimize their performance to be successful (Akingbade, 2014).
Organization's need for expansion into other geographical locations has increased considerably in the last couple of decades (Jones, 2006). The purpose of firms spreading their business tentacles to multiple locations has been linked to the immense benefits inherent in operating businesses across different locations and borders as well as the need to exploit the opportunities that abound in the new locations (Buckley and Munjal, 2017; Mitsuhashi & Min, 2016). Thus, internationalization is a crucial phenomenon that firms penetrating foreign markets must take seriously. This is to enable them to design strategies that would not only align their processes with realities in the new locations but also coordinate their activities in such a way that adds value to their customers (Ayaga and Nnabuko, 2019) in other to accomplish their corporate objectives.