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The strategy that was used by MTN Group to expand to different parts of the African and Middle Eastern markets - Essay Example

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Introduction “The way South Africans communicate changed significantly in 1994” (Oxford Business Group, 2008 p115). This is attributed to the country's Apartheid system which kept the Black majority of the nation under strictly restricted conditions was abolished…
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The strategy that was used by MTN Group to expand to different parts of the African and Middle Eastern markets
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"The strategy that was used by MTN Group to expand to different parts of the African and Middle Eastern markets"

Download file to see previous pages In 1994, the government authority granted a license to Vodacom and Mobile Telecommunication Network (MTN) to operate mobile phone networks in South Africa (Oxford Business Group, 2008). The MTN Group had the vision “to be the leading provider of telecommunications in emerging markets” (Erasmus and Shenk, 2008 p61). This has been the watchword of MTN and the group is now operational in 21 countries in Africa and the Middle East (Banhegyi, 2007). In all these countries, MTN has access to over 488 million people and has over 28 million subscribers (Banhegyi, 2007). It is now listed on the Johannesburg Stock Exchange. In Africa, MTN has operations in Botswana, Cameroon, Cote D'Ivoire, Nigeria, Congo, Rwanda, Swaziland, Uganda and Zambia amongst other nations. MTN Group has its headquarters in South Africa where it all started. This paper examines the strategy that was used by MTN Group to expand to different parts of the African and Middle Eastern markets. It will examine the strategies from the context of dominant theories and ideas relating to international business. The second part of the research will examine the strategies for further expansion of MTN into other markets around the world. MTN Group Expansion Strategy In order to examine the expansion of MTN to different countries around the world, important elements and aspects of International Business will be examined. This include: Entry Mode Entry Timing Firm Size Institutional Matters Entry Mode Entry mode describes the methods and systems used by a business to expand into a foreign country (Andexer, 2008). It describes the various approaches that a business uses to create a presence in a foreign land. Popular methods include franchising, licensing and joint ventures (Ireland et al, 2011). According to Singh (2008), MTN expanded to other countries through a mixture of Greenfield Investments and Mergers/Acquisition. A Greenfield Investment is the “establishment of completely new operations in a foreign land” (Paul, 2009 p357). In some countries, MTN created new telecommunication companies that were meant to provide services. This was particularly popular in smaller and war thorne African countries that had limited infrastructure. This involved investing and creating new infrastructure from the scratch. Through this, MTN exported their resources to these new venues. They applied principles from South Africa and learnt about the local environments. Through this, they built brands and new systems in the foreign nations that they operated within. In other countries, MTN expanded through mergers and acquisitions. Mergers and acquisitions involve forming strong partnerships or acquiring other businesses in order to being operations in a new country (Johnson and Turner, 2009: MacDonald et al, 2011). MTN Group purchased other companies like Areeba and Spacefon technologies in several parts of the continent (Bridge, 2009). These two companies were sprawling brands in the Middle East and Sub-Saharan Africa (Pan, 2011). MTN just purchased these companies and took over their assets and began to operate in their capacity as an independent company in these foreign countries (Venter et al, 2009). Through this mixture of mergers and acquisitions and greenfield investments, MTN was able to set up different operations around the world. The shareholders of the South African company expanded their scope of control and took over these foreign and new markets. The mergers were mainly ...Download file to see next pagesRead More
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