Country Evaluation and selection

International Business
 Introduction
• Because companies lack
the resources to take
advantage of all
international opportunities
they identify, they must
determine both the order
of country entry as well as
the rates of resource
allocation across countries.
 Steps Involved
• Choosing marketing and
production sites and
geographic strategy.
• Scanning for alternative
locations.
• Choosing and weighing
variables.
• Collecting and analyzing data.
• Country Comparison tool.
• Making final country
selection.
 Choosing marketing and production sites
and geographic strategy
• Developing a site location
strategy that helps a firm
maximize its resources
and competitive position
is very challenging, given
that many estimates and
assumptions about factors
such as future costs and
prices and competitors’
reactions must be made.
 Scanning for alternative locations
• Scanning is useful insofar
as a company might
otherwise consider either
too few or too many
possibilities. Through the
use of scanning, decision
makers can perform a
detailed analysis of a
manageable number of
geographic locations.
 Choosing and weighing variables
• To evaluate and compare
countries, scanning
techniques based on broad
environmental variables that
identify both opportunities
and risks should be used.
Ultimately, variables must be
weighed against each other to
effectively evaluate the
potential success of a
particular venture and to
compare various ventures.
 Choosing and weighing variables
Opportunities

• Market Size.

• Ease and Compatibility of

Operations.
• Costs and Resource
Availability.
• Red Tape.
 Choosing and weighing variables
Risks

• Risk and Uncertainty.

• Competitive Risk.

• Monetary Risk.

• Political Risk.
 Collecting and analyzing data
• Firms perform research to
reduce uncertainties in their
decision processes, to expand
or narrow the alternatives
they consider and to assess
the merits of their existing
programs. The costs of data
collection should always be
weighed against the probable
payoffs in terms of revenue
gains or cost savings.
 Country Comparison tool

• Two common tools for

analyzing information

collected via scanning are

grids and matrices

 Country Comparison tool

• Opportunity-Risk Matrix.

• Country Attractiveness-

Company Strength Matrix.

 Making final country selection
• At some point, firms must make
resource allocation decisions. For new
investments they will need to develop
detailed estimates of all costs and
expenses and consider whether to enter
a particular venture alone or with a
partner. For acquisitions, firms will need
to examine financial statements in great
detail. For expansion within countries
where they are already operating,
country managers will most likely
submit capital budget requests that
include details of expected returns. To
maximize expected gains, decisions
must be made in a timely fashion.