An exploration of strategies used by South African companies to expand into other African markets

Overall purpose of the study While literature highlights the growing importance of, and opportunities in, emerging markets (Joosub & Coldwell, 2016; Boateng, Wang & Wang, 2017; Oguji & Owusu, 2017), there is also significant research regarding the risks associated with these markets (Khanna & Palepu, 2010; Luiz & Ruplal, 2013). These risks arise from differences in geographies, cultures, institutions, governance, languages, performance and economic structures, making the internationalisation strategies of African multinationals into other African countries complex and challenging. Despite these difficulties, African countries still promote trade within the continent. The 2018 African Continental Free Trade Area agreement, for example, promotes intra-regional trade in order to stimulate economic activity and increase development on the continent. South Africa, being the most developed economy on the continent, seems to be leading in doing business with other African countries, having a number of its home-grown multinationals internationalising on the continent. Success stories such as MTN, Shoprite, SAB Miller and Pick’ n Pay have taken their operations into other countries in Africa, however what is not clear is how they have successfully applied their internationalisation strategies. Unlike research by Boateng et al. (2017) on how Chinese multinationals are using mergers and acquisitions as their entry mode, and Buckley’s (2018) findings on Indian firms targeting countries with English as their official language, little research has been conducted on how South African companies are expanding outside their national borders. This research thus sought to explore the processes by which South African companies implement their internationalisation strategies into other African countries. Research problem As firms internationalise, they choose markets that are physically and psychically close based on their internationalisation experience. Previous literature shows that larger firms are better able to absorb the initial cost of internationalisation and opt for a higher degree of control (Dunning, 1988), yet not much research have been done on the African continent to explore how companies deal with psychic distance, firm resources and strategic choice in their internationalisation strategies. Studies conducted outside the continent in psychically distant locations show that firms design boundaries to protect their internal resources and capabilities from unintended spill overs, and look for local partner organisations that wield substantial capability to fill voids (Dunning, 1988). In addition, Barney (1991) argued that firms seek to exploit their rare, valuable and inimitable resources to gain a competitive advantage. Psychic distance research has been conducted on Chinese (Boateng, et al., 2017) and Indian firms (Buckley, 2018), however in Africa, where the cultural, institutional, economic and geographic distances are huge, not much evidence is available. There is also a variety of research on firm resources and strategic choices for Chinese and Indian firms, including how they are using leadership, technical talent, cheap labour (Contractor, 2013), financial resources, government to government relationships (Cheru & Obi, 2011) and home knowledge to enter African markets (Khanna & Palepu, 2010). As some South African businesses have failed in their internationalisation strategies on the continent, it is thus important to understand how those companies that have succeeded, did so. Design of the study A multi-method sequential explanatory approach (Ivankova, Creswell & Stick, 2006), comprised of a survey followed by case studies of internationalising South African companies, was used. The survey participants and firms were purposefully selected based on their roles in the internationalisation strategies, and the results of the survey were used to identify cases for the second phase of the research. An insurer and a bank with a total market capitalisation of R442b (JSE, 2017), representing 41% of the survey population, were selected as case studies. These cases were adopted to understand the internationalisation phenomenon in specific companies, while the research questions focussed on South African multinational enterprises (MNEs) that already had operations in other African markets. Empirical evidence from both the survey results and the two case studies were used to address the research questions. Findings This study revealed that South African multinationals face intense competition from local competitors in the rest of Africa, so they have to craft and adapt specific strategies during their expansions. This research confirmed the findings of previous studies by showing that the internationalisation of banks and insurance companies follow largely similar patterns (Focarelli & Pozzolo, 2008). Further, the case studies indicate complexities such as the need for local legitimacy, the tacitness of local cultures, and protracted implementation periods that cannot be explained by traditional FDI theories. For these reasons, the companies develop non-market resources such as spending periods of time in the potential host country before setting up operations to gather information and build hands-on market intelligence based on the experiential knowledge of the host country market. The bank case study, whose first wave of internationalisation, as with other major banks, was in the late 1800, uses the ownership entry mode. While literature has shown that companies acquire local partners when there are high psychic distances, because bank services require a high degree of information, information transfer and trust (Mulder & Westerhuis, 2015, cited in Fischer & Hasselknippe, 2017), risk management is very important. Firm resources such as good governance and ethical leadership are key for success. This case study revealed that because bank values such as integrity and accountability are global, a subsidiary’s aptitude to demonstrate its ability to work within a country culture while retaining the values of the bank earns respect from regulators and customers and increases market share. In addition, it extended research conducted by Contractor (2013) on expatriates and Harvey, Speier & Novicevic (1999)’s findings on diasporas from home countries, by finding that the bank builds a pool of skilled African Diaspora, who are citizens of the host market, to manage and facilitate the integration process and bridge the cultural gap, thereby shortening the transient period. While literature has shown that banks and insurance companies follow similar internationalisation patterns (Focarelli & Pozzolo, 2008), the insurer, an internationalisation latecomer, adopted the partnership entry mode using learnings from “small deals” to achieve its ambition of being the Pan African financial services company. Although literature shows latecomers using entry modes such as mergers and acquisitions (Oguji & Owusu, 2017) and leapfrogging into innovation value chains (Ray, Ray & Kumar, 2017), this particular study indicates that the insurer used the partnership mode to minimise risks caused by the latecomer effect. While the bank has had experience in internationalisation for almost two centuries and has operations in 20 countries, the insurer only actively started internationalising 15 years ago but has operations in 35 countries. Focarelli and Pozzolo (2008) found that accessibility to domestic markets by foreign investors is greater for insurance companies than banks, while this study found that the insurer has greater accessibility to African markets through the adoption of the partnership model, which mitigates the risk of high cultural distances. These findings were not found in the literature reviewed for this study, and therefore offer opportunities for further research. Regardless of whether an ownership-based or a partnership-based model is used, distance and cultural integration are important determinants for both the bank and the insurer (Focarelli & Pozzolo, 2008. Although the cases in this study revealed similar internationalisation patterns, such as starting in psychically close locations (Johanson & Vahlne, 1977), using financial resources to sponsor the protracted implementation of the strategy (Dunning, 1988) and having local management run the business in the host country (Barney, Ketchen & Wright, 2011), they differed in entry mode, timing of entry and decision-making processes. In addition, this study revealed that both companies’ inflection points were characterised by a continuous commitment of resources, hoping that they would get signals to either exit or scale up with minimal reputational damage. Contributions to research Theory A major contribution of this research pertains to the new research context of Africa. Most literature have focused on how global companies expanded into emerging markets (Enderwick, 2009; Khanna & Palepu, 2010), and more recently how companies from emerging markets like China and India (Boateng, et al., 2017; Buckley, 2018) have expanded globally. However, little has been done to understand how African corporates tackle such expansions. Africa, with its 56 countries and domestic institutions of a multi ethnic, multi-language (more than 500 for Nigeria alone), multi religious, multicultural and diverse colonial histories, offers a rich setting in which to study the influences of psychic distance and firm resources on internationalisation. The findings based on the African context for South African firms therefore provide important direct and practical implications for firms from other African economies. The conceptualisation of this study provides an insightful lens into the influence of psychic distance, firm resources and strategic choice on internationalisation processes, which is unexplored territory. With scant literature on Africa as an emerging continent, this study provides some empirical and case evidence for these propositions and contributes a basis for further research. Methodologically, this research extends the findings of Luiz and Ruplal (2013) by examining a number of sectors as opposed to a focus on mining companies alone. The research further contributes to a better understanding of internationalisation strategies by incorporating literature, case studies and a survey, as opposed to simply a survey as per Joosub and Coldwell (2016). The choice of case studies presented an opportunity to compare the internationalisation processes of an ownership-based first mover to a partnership-based latecomer, using firm resources as an enabler. Previous studies (Herrmann & Dotta, 2002; Wood, et al., 2011; Williams & Grégoire, 2014) have shown that MNEs send expatriates with international experience to manage operations in host countries. Harvey et al. (1999) provided a more nuanced view by observing that MNEs send people from diasporas to host countries as network agents, given their global consciousnesses and familiarity with the home cultures. This research, however, shows that due to the relationship-rich African cultures and the tacitness of host country knowledge, the bank (ownership model) specifically targeted and upskilled a pool of citizens of the potential host countries at the parent operation, who were subsequently deployed to bridge cultural gaps during implementation, thereby increasing the MNE’s internationalisation capability. Emerging market firms’ internationalisation is driven by intangible resources based on learning, linking and leveraging (Ray, et al., 2017). Although this study was exploratory in nature, the two case studies have shown a consistent pattern of an adaptive management cycle when setting up operations in other African countries. Due to the huge psychic distance encountered by these companies, they make use of repetitive and protracted planning and implementation processes. This increases the transient period and costs, yet the companies are willing to pay them to protect their reputations until they find signals to either exit or scale up. This finding regarding the existence of a transient period is not apparent in other literature. Even though Zhou and Li (2010), in their study of how strategic orientations influence dynamic capabilities, found that a firm's external interactions with customers and competitors in host countries affect its internal resource assortment and reconfiguration, they did not specifically deal with the issue of a transient period. Previous research indicated that firms look for partner organisations that wield substantial capability to fill voids (Dunning, 1988), that successful partnerships are built on trust which results in greater information sharing (Dyer, 1997), and that the selection of a local partner is informed by robust market assessment (Khanna & Palepu, 2010). This research confirms these findings by showing that spending time in the host country, doing due diligence on partner Board members, and providing a joint cultural induction of both partners’ executives in the parent organisation, ensures strategic alignment with partners from the onset. Practice Despite South African firms having huge resources, literature has not overtly mentioned the nonmarket capabilities that such EMNEs build when localising their businesses to suit local market conditions. Businesses utilising the ownership model combat the liability of foreignness by acquiring a local business with ethical leadership, whilst companies using the partnership model find partners with similar values. This research contributes to the existing body of knowledge on practical internationalisation strategies into developing markets with high psychic distance. Although it is an exploratory study, it clarifies the strategic considerations that EMNEs contemplate during planning, as well as when assessing their entry strategies, implementing and integrating their resources, and in rare cases, how they exit such markets. Limitations of the study Like most empirical studies that are exploratory in nature, there are limitations to the conclusions that can be drawn, which constrain the generalisability of this study: • The study was heavily weighted to certain industry sectors - primarily financial services - which have a presence in other African countries. The obvious question is to what extent its findings are relevant to other industries? • For the two cases, the knowledge of the participants regarding how their organisations plan and implement their strategies could have been diverse, but the information was limited to those interviewed. • The volatility of African markets is very high, so between the time of embarking on the research and consolidating the results and findings, some institutional context could have changed, such as the impact of the weakening of the resources sector on Nigeria and Angola. Suggestions for future research • The case studies were restricted to financial services, thus a study of more industry sectors using additional case studies would be valuable to extend the results of this research effort. • Hoskisson, Eden, Lau & Wright (2000) argued that the process “emerging economies” takes place over a long time and multinationals’ experimentation and learning is likely to be imperfect. Further research is thus needed to generate conclusive longitudinal empirical evidence theory in this area. • The growing Chinese FDI in Africa is often driven by the Chinese government’s “Going Out” policy, which was established to support firms as they internationalise. Although South Africa has a “Trade Invest Africa” policy, companies in the study were oblivious to this government support. It is not clear whether South African companies have an advantage on the continent and how competition from Chinese companies, being embraced by African governments, impact South African MNEs’ internationalisation strategies into the rest of Africa

Population genetic studies of Fasciola species from cattle and selected wildlife species in Zimbabwe and localities of KwaZulu-Natal and Mpumalanga provinces of South Africa.

M. Sc. University of KwaZulu-Natal, Durban 2014.The objective of the study was to confirm the species and determine the genetic diversity of the confirmed Fasciola species from cattle and selected wildlife hosts from Zimbabwe and KwaZulu-Natal and Mpumalanga provinces of South Africa. This was based on analysis of DNA sequences of the nuclear ribosomal internal transcribed spacer (ITS) and mitochondrial cytochrome oxidase 1 (CO1) regions. Flukes were collected from livers of 57 cattle at four abattoirs in Zimbabwe and 47 cattle at four abattoirs in South Africa. DNA was extracted from each fluke and 3 wildlife, alcohol preserved, duiker, antelope and eland samples from Zimbabwe. The ITS and CO1 regions of individual flukes were amplified by the polymerase chain reaction (PCR) and sequenced. Aligned sequences (ITS 506 base pairs and CO1 381 base pairs) were analyzed by neighbour-joining, maximum parsimony and bayesian inference methods. The phylogenetic trees revealed the presence of Fasciola gigantica in cattle from Zimbabwe and F. gigantica and Fasciola hepatica in the samples from South Africa. Fasciola hepatica was more prevalent (64%) in South Africa than F. gigantica. Fasciola gigantica was the only species found in Zimbabwe save one sample and an antelope and a duiker which were found to be F. hepatica. This is the first molecular confirmation of Fasciola species in Zimbabwe and South Africa. Knowledge on the identity and distribution of these liver flukes at molecular level will allow disease surveillance and control in the studied areas

An outbreak of Psoroptic mange infestation and its management in re-introduced African Buffaloes (Syncerus caffer) at Umfurudzi Safari Area in Zimbabwe

An outbreak of Psoroptic mange infestation and its management in re-introduced foot and mouth disease-free African buffaloes (Syncerus caffer) at a safari area in Zimbabwe is described. Between 2012 and 2013, 170 buffaloes were re-introduced into Umfurudzi Safari Area, Shamva District of Zimbabwe. One cow exhibited non-pruritic, widespread alopecia all over its body and appeared to recover after being treated with injectable ivermectin acaricide. Subsequently, an outbreak of severe non-pruritic alopecia ensued in the buffalo herd at the onset of winter May 2013. Laboratory diagnosis confirmed Psoroptes mites infestation in one of five animals tested. Clinical mange was evident in 103 (81.7%, n= 126) of the animals captured and treated. The buffalo herd responded well to two treatment regimes. This incident highlights the need to include mange in the screening and prophylactic treatment regimes of translocated wildlife