International Business International Business

Chapter TwelveChapter Twelve

Country Evaluation and Country Evaluation and SelectionSelection

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Rationale for Country EvaluationRationale for Country Evaluation

Concept of country scanning and Concept of country scanning and evaluation: scanning vs. detailed analysis evaluation: scanning vs. detailed analysis

Because firms lack sufficient resources to Because firms lack sufficient resources to pursue all opportunities, they must:pursue all opportunities, they must:• determine the order of country entrydetermine the order of country entry• establish the resource allocation across establish the resource allocation across

countriescountries• find specific geographic locations to find specific geographic locations to

produce or market their productsproduce or market their products• take a Portfolio approach take a Portfolio approach

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Country EvaluationCountry Evaluation

What factors should we consider to What factors should we consider to evaluate a country?evaluate a country?

Return (opportunity) IssuesReturn (opportunity) Issues• market size [sales potential]market size [sales potential]• ease and compatibility of operationease and compatibility of operation• costs and resource availabilitycosts and resource availability

Risk IssuesRisk Issues• Political RiskPolitical Risk• Competitive riskCompetitive risk• Monetary riskMonetary risk

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Risks RevisitedRisks Revisited

Competitive RiskCompetitive Risk• Imitation lagImitation lag• Oligopolistic reactionOligopolistic reaction

Monetary RiskMonetary Risk• Liquidity preferenceLiquidity preference• Capital controlsCapital controls• Exchange rate stabilityExchange rate stability• Balance-of-payments accountsBalance-of-payments accounts• Inflation ratesInflation rates• Government spendingGovernment spending

Political RiskPolitical Risk• Operational issuesOperational issues• NationalizationNationalization• Government PolicyGovernment Policy

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International Business ResearchInternational Business Research

Business Research: Primary vs. SecondaryBusiness Research: Primary vs. Secondary Problems with primary data: cost, availability, risk Problems with primary data: cost, availability, risk

Problems with secondary data: scarcity, accuracy, Problems with secondary data: scarcity, accuracy,

reliability, comparability, and how recentreliability, comparability, and how recent Common Secondary SourcesCommon Secondary Sources

• Government SourcesGovernment Sources • International OrganizationsInternational Organizations • Chamber of CommerceChamber of Commerce • Trade AssociationsTrade Associations • Professional Services: consultantsProfessional Services: consultants

Country Research and InternetCountry Research and Internet

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Country Comparison ToolsCountry Comparison Tools

Grids can be used to:Grids can be used to:• depict acceptable or unacceptable conditionsdepict acceptable or unacceptable conditions• rank countries according to selected, weighted rank countries according to selected, weighted

variables variables Matrices can be used to:Matrices can be used to:

• incorporate weighted indicators of a firm’s incorporate weighted indicators of a firm’s risks and opportunities in specific countriesrisks and opportunities in specific countries

• plot the scores to more clearly reveal plot the scores to more clearly reveal respective positions for comparative purposesrespective positions for comparative purposes

Strategies for resource allocationStrategies for resource allocation• Commitment-reinvestment or harvestingCommitment-reinvestment or harvesting• Geographic issues-diversification vs. Geographic issues-diversification vs.

concentration concentration

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Opportunity-Risk MatrixOpportunity-Risk Matrix

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Chapter 12: Discussion QuestionsChapter 12: Discussion Questions

1.1. What factors should we consider to scan and What factors should we consider to scan and evaluate a country? Explain.evaluate a country? Explain.

2.2. What problems companies face with What problems companies face with international business research and data international business research and data collection? Explain.collection? Explain.

3.3. What are the common sources for collecting What are the common sources for collecting international data? Explain.international data? Explain.

4.4. What is country evaluation grid and What is country evaluation grid and opportunity-risk matrix? Explain how they opportunity-risk matrix? Explain how they evaluate a country.evaluate a country.