Assessment of the factors influencing the selection of entry modes into foreign markets by SMEs : The case of Kinondoni district in Dar es Salaam

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Mzumbe University
This research was carried out to find out factors influencing SMEs’ selection of foreign market entry mode, objectives governed the research were: identifying various modes of SMEs foreign market entry, identifying factors influencing SMEs' selection of foreign market entry modes, discussing the significance of SMEs internationalization and assessing the impact of particular mode of foreign market entry to the performance of an SME. Research methods used to collect data were questionnaires; interview and documentary review, a respondents from Kinondoni Dar es Salaam were involved. The data was analyzed by using Statistical tool so as to give the meaningful information. The research findings shows that large number of Tanzanian entrepreneurs have not yet internationalized their business abroad due to number of factors including, lack of capital to expand their business abroad, lack of information regarding business opportunities abroad and complexity of procedure to be followed to get the approval of trading abroad, on the other hand few have been trading abroad and the report shows that most of the entrepreneurs are using exhibition as the most appropriate entry mode to the global market as they said it is the easiest one, other modes identified includes exporting, licensing, joint venture and sole venture. Regarding factors influencing the selection mode of entry to the global market it was observed that market attractiveness is the one mostly influence large number of entrepreneurs to choose the entry mode, other factors mentioned includes competition, country risk, psychic distance, organizational culture and size of the firm, Lastly the report shows that entry modes to the global market have great impact to the performance of the SMEs as explained in the previous pages. The researcher recommends that the financial institutions should to promote entrepreneurship by giving them loans and setting low (affordable) interest rates. This will help to encourage more entrepreneurs to get involved in entrepreneurial activities and those who are already doing business will get the chance to expand their businesses further, furthermore the government of Tanzania should establish a coordinating office for outreach services for entrepreneurs owned businesses. The study recommends that there is a need to establish the coordinating office for facilitating the assessments of the financial resources and educating the entrepreneurs. This could take the form of a network of small and medium enterprise centers in various regions across the country, or the appointment of a dedicated entrepreneur’s officer in government regional offices.
A Dissertation Submitted in Partial Fulfilment of the Requirement for the Degree of Master of Business Administration in Corporate Management (MBA) of Mzumbe University.
Entry modes, foreign markets, SMEs, Competitive Advantage Theory, Normative Decision Theory, Resource-based theory, Geographical, Cultural, Psychic, Economic and Political distance theory, Transaction Cost Theory, International Market Entry Modes, Classification of Market Entry Models, Factor Influencing the Choice of Entry Mode, Domestic market