International Business

Chapter Twelve

Country Evaluation and Selection

Rationale for Country Evaluation

Concept of country scanning and evaluation: scanning vs. detailed analysis Because firms lack sufficient resources to pursue all opportunities, they must: determine the order of country entry establish the resource allocation across countries find specific geographic locations to produce or market their products take a Portfolio approach
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Country Evaluation

What factors should we consider to evaluate a country? Return (opportunity) Issues market size [sales potential] ease and compatibility of operation costs and resource availability Risk Issues Political Risk Competitive risk Monetary risk
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Risks Revisited

Competitive Risk Imitation lag Oligopolistic reaction Monetary Risk Liquidity preference Capital controls Exchange rate stability Balance-of-payments accounts Inflation rates Government spending Political Risk Operational issues Nationalization Government Policy

International Business Research

Business Research: Primary vs. Secondary Problems with primary data: cost, availability, risk Problems with secondary data: scarcity, accuracy, reliability, comparability, and how recent Common Secondary Sources Government Sources International Organizations Chamber of Commerce Trade Associations Professional Services: consultants Country Research and Internet
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Country Comparison Tools

Grids can be used to: depict acceptable or unacceptable conditions rank countries according to selected, weighted variables Matrices can be used to: incorporate weighted indicators of a firms risks and opportunities in specific countries plot the scores to more clearly reveal respective positions for comparative purposes Strategies for resource allocation Commitment-reinvestment or harvesting Geographic issues-diversification vs. concentration
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Opportunity-Risk Matrix

Chapter 12: Discussion Questions

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What factors should we consider to scan and evaluate a country? Explain. What problems companies face with international business research and data collection? Explain. What are the common sources for collecting international data? Explain. What is country evaluation grid and opportunity-risk matrix? Explain how they evaluate a country.