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Strategic Country Evaluation Framework for International Business Expansion

Learn the key factors and tools for evaluating countries in international business, including risk analysis, resource allocation, and market potential. Explore strategies for conducting effective research and making informed decisions to optimize global market entry.

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Strategic Country Evaluation Framework for International Business Expansion

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  1. International Business Chapter Twelve Country Evaluation and Selection

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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 firm’s 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

  7. Opportunity-Risk Matrix

  8. Chapter 12: Discussion Questions • 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.

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