Abstract:
There is increasing interest by businesses worldwide to expand their operations into emerging markets. Several African businesses are also determined to have their share of the growing market opportunities in Africa currently targeted by foreign multinationals. This increasing interest in international expansion invites analysis of business models that allow businesses to thrive in spite of the known challenges of doing business in a foreign market. Against this backdrop, the research aimed to establish why internationalising firms should achieve high degrees of similarity of business operations, whilst taking advantage of benefits of local adaption, and how these firms can achieve this replication-adaptation balance.
The research was undertaken as a comparative two case-study, with the aim of understanding the benefits of adopting flexible replication as a model for international expansion, the optimal mix of fixed and variable elements of a business model of an internationalising firm, and the circumstances and the timing of adopting the model. A qualitative research approach was adopted, comprising documentary research, eight semi-structured interviews with senior managers of the companies in the banking and retail sectors, and observations. The different sources of data were used to triangulate the findings.
The study found that internationalising firms that achieve high degrees of similarity of business operation, whilst taking advantage of benefits of local adaptation realise higher performance. Furthermore, the research showed that internationalising firms can achieve an optimal flexible replication by fixing the elements of the business model that are affected by integration pressures and allowing the elements that are affected by the responsiveness pressures to vary. The study recommended that, internationalising firms should consider transactional completeness pressures, when configuring their business models. The study also confirmed that internationalising firms having clarity of their winning attributes design a flexible replication model prior to operating in a foreign market.A model that encapsulates the key findings of this study was also developed.
