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Foreign brands and the challenge of country of origin effect - Uche Nworah


In International marketing, firms are faced with critical decisions on their market entry strategy, whether to license locals as franchisees, set up fully as an expatriate brand or adopt a blended model of both entry strategies. Many brands after careful study chose to remain in their home countries and appoint foreign distributors and agents.


Choosing to go abroad in the first place is because either the home market is saturated, competition has become tougher or as a result of the desire to increase revenues which only foreign virgin markets can provide.


An international brand wishing to locate in a foreign market brings along its brand’s strengths, weaknesses and associated country of origin effects (negative and positive).

The current volatile social and economic protests, and xenophobic attacks by South Africans against foreigners which has led to the killing of foreigners in that country including Nigerians, and the looting of their shops has kickstarted copy - cat protests across some African nations.

In Nigeria for example, there have been reported reprisal looting and destruction of offices and assets of perceived South African owned businesses. Some Shoprite locations have been looted and vandalised including MTN offices and masts.

While the Nigerian and South African authorities grapple to contain the escalating situation, one can’t help but ponder on the dangers of international market entry strategy using home country brand names.


Whereas MTN and Shoprite are South African brands, however their footprints and imprints in Nigeria have since been coloured by varying degrees of indigenous shareholding and ownership. Nigerians are now working and managing these enterprises and they also patronise indigenous suppliers. This means that any material damages and financial loses from the vandalisation of their shops and assets will also directly impact on the Nigerian co-owners and employees.

Unfortunately, those who are perpetrating these vandalism acts have no way of discerning the ownership structure.

In hindsight, as a way of forestalling such occurrences and resultant loses in the future, could there be a counter strategy of shedding the toga of foreign brand, and adorning the cloak of an indigenous brand for some of these South African brands and others operating in Nigeria? This is for the brands to decide. Though such a strategy surely will have its disadvantages too.

Could these attacks have been avoided if some of the South African brands operating in Nigeria have done more to ‘indigenise’ and deepen their operations and footprints? We will never know but clearly, it appears that a lot has to be done still.

Perhaps, the present occurrences in South Africa and Nigeria are good case studies for business schools as they discuss market entry strategies and inherent challenges especially in developing economies.

uchenworah@yahoo.com


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