Drivers of an African expansion in the South African banking sector
Date
2012-10-08
Authors
Rugonye, George
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Abstract
Banking markets in Africa are becoming increasingly international through financial liberalisation and general economic integration. It has become commonplace for companies to embark on world-wide expansion programmes in their desire to remain competitive, and improve profitability and shareholder returns.
Internationalisation poses great challenges for banks. Market selection is one of the most critical areas of strategic decision-making. Yet, despite its importance, the approaches taken by many organisations in identifying profitable new markets are often based on intuition, rather than a formal structured attempt to match the organisation with appropriate foreign target markets.
The purpose of this report was to identify the drivers behind a South African bank‘s continent-wide expansion, which led to it becoming the largest Bank in Africa, and to determine the mode of market entry and the factors which influenced its market selection. A qualitative case study of Standard Bank was made. Findings showed that although Standard Bank had good penetration in the South African banking sector, the Bank saw that its opportunity for sustainable long-term growth in its domestic market was limited. It determined that growth could be best achieved by robust expansion into African markets. These emerging markets, with their high population growth and per capita increase in wealth gave Standard Bank the leverage it needed to differentiate itself globally, boost profitability and deliver superior shareholder value.
By using qualitative case study methodology this research aimed to provide valuable on-the-ground information that could assist other institutions wanting to expand in Africa. It highlights the importance of clear strategy and sets out the key factors that determine effective market selection and appropriate modes of entry into the growing and ever-changing African marketplace.
Description
MBA thesis - WBS
Keywords
Banks and banking, Bank expansion