Entry Mode Issues in the Internationalisation of South African Retailing

Abstract

The recent increase in international retail activity within Africa has plunged the continent into a retail revolution. At

Revisiting the African supermarket revolution: The case of Windhoek, Namibia

“…While the supermarket revolution model projects the inevitable spread of South African supermarkets into the rest of the continent, it did not fully take account of various obstacles and challenges to replicating the South African model in different regions, particularly those more distant from the country itself (Dakora & Bytheway, 2014). Dakora et al (2010) argue that cross-national systems connectivity, variable development levels of local production and supply, imports and freights, labour disputes/ issues, land issues in managing franchisees, complex international supply chains, import duties/paperwork, and domestic competition all present challenges for South African food retail expansion into other African countries.…”

Service trade restrictiveness and internationalisation of retail trade

“…A wholly owned subsidiary is always associated with FDI, either as greenfield investment (a new entity being built from scratch), a cross-border acquisition of a local business or the merger with a local business. In the retail trade sector, acquisition-based mergers are a very commonly used form of mergers in the internationalisation process, as one retailer buys or takes over another and incorporates it into an existing business model (Dakora and Bytheway, 2014).…”

“…3 Actually, the latter two modes of entry favour the franchisor, since most of the work to enter into an foreign market is done by the master franchiser or area developer (Quinn and Alexander, 2002). This makes the expansion easier and more cost efficient, because the master franchiser has a better understanding of the local market conditions and can better handle cultural differences, language barriers as well as bureaucratic and political problems (Dakora and Bytheway, 2014).…”

“…They are normally linked to long-term plans and objectives in order to improve the competitiveness of the participating firms. Dakora and Bytheway (2014) point out that strategic alliances must be mutually beneficial and have common objectives, so that power and control are not necessarily important. International joint ventures are also agreements between two or more independent retailers in different countries to pool their capabilities and resources in order to operate in one country.…”

The expansion of regional supermarket chains: Implications for local suppliers in Zambia

“…This FDI has largely shaped supermarket chains in selling foods, apparel, electronics, and other home products. The saturation of the South African retail sector, and the need for growth into newer markets such as Zambia to improve profits, is also among the major reasons for the spread of supermarkets into the region (Dakora and Bytheway 2014). In particular, Zambia's retail market offered greater demand for South African products as the economy continued to grow after emerging from a closed market system.…”