Answer to Question #190054 in Management for Morafi

Question

MTN adopted a customer-focused strategy in its markets of operation. Specifically, MTN used various entry strategies across Africa. Examine the entry strategies used by MTN and analyse the benefits and challenges of each of the strategies in the respective countries.  

Answer 1

Modes of Entry: Merchants in emerging markets

Expansion into developing markets has been motivated by a saturated, lessening local market, enhanced market competition in an era where political reforms in nations have influenced increasing commercial development, middle-class income, and urbanization that demand premium quality retail services. The entry modes employed by MTN consist of joint ventures, franchising, and licensing.

Joint Ventures

MTN completed the transaction of ATC joint ventures for R8,9 billion. In March 2019, the company presented its asset realization program ("ARP"), aiming to lessen debt, streamline its portfolio, minimize risk factors, and advance its revenues. The primary advantage of having a Joint Venture, MTN, has been combining the members' skillsets engaged in the Joint Venture. Moreover, the company can reduce its risks and contact with the market, and the members also share the revenues and the expenditures in the Joint Venture. The key disadvantage is that it takes time and effort to create the appropriate relations, and affiliating with other businesses might be challenging.

Franchising

A commercial system where a private group of persons is traded the rights of business model, the name, and the logo of a much more significant business, typically a Multinational Company such as MTN by the proprietors or franchisors to manage it a different position is called as Franchisee Business. The inauguration of MTN's franchise business projected the cellular network's revenues to double over in early 2000. The initiative allowed current MTN merchants to develop their business. At this point, the company may be more gifted at growing the business and turning a projected turnover than workers. In contrast, franchisors get royalties from transactions, and the businesses earn money from returns. Though, attaining development in both is not at all times conceivable, possibly causing intense engagements.

Licencing 

In June 2020, MTN Group reached a contract for continuing restitution of its operational licenses in Uganda. MTN distinguished that the permit was "prolonged to accommodate conclusion of rebirth negotiations that have been continuing for nearly two years." At this point, MTN does not need to suffer the expenditures of manufacturing, marketing, packaging, or retailing its services and products. On the other hand, the company will likely lose its control over its services and products comprising marketing, packaging, and retailing.