Module 2 -1

Country Evaluation and Selection

12-1

Learning Objectives

To grasp company strategies for sequencing the penetration of countries To see how scanning techniques can help managers both limit geographic alternatives and consider otherwise overlooked areas To discern the major opportunity and risk variables a company should consider when deciding whether and where to expand abroad To know the methods and problems of collecting and comparing international information To understand some simplifying tools for helping decide where to operate To consider how companies allocate emphasis among the countries where they operate To comprehend why location decisions do not necessarily compare different countries possibilities
12-2

Introduction

When making country selection decisions companies must consider

Where to locate sales, production, and administrative and auxiliary services The sequence for entering different countries The portion of resources and efforts to allocate to each country where they operate

12-3

Introduction
The Location Decision Process

12-4

Introduction
Location Decisions Affecting International Operations

12-5

Introduction
Learning Objective 1: To grasp company strategies for sequencing the penetration of countries

12-6

How Does Scanning Work?

Learning Objective 2: To see how scanning techniques can help managers both limit geographic alternatives and consider otherwise overlooked areas

12-7

How Does Scanning Work?

Scanning allows to examine most or all countries broadly and then narrow them to most promising one. Step 1:

Scanning comparing country information that is readily available, inexpensive, and fairly comparable
Onsite visits
12-8

Step 2:

What Information Is Important in Scanning?

Learning Objective 3: To discern the major opportunity and risk variables a company should consider when deciding whether and where to expand abroad

12-9

What Information Is Important in Scanning?

Opportunities

Sales expansion obsolescence and leapfrogging of products, prices, income elasticity, substitution, complimentary products, income equality, cultural factors and taste, existence of a niche or trading bloc Resource Acquisition Cost consideration
labor, infrastructure- industrial, business and Social, governmental incentives and disincentives
12-10

What Information Is Important in Scanning?

Risks Political risk analyzing past patterns, analyzing opinions, examining social and economic conditions Foreign exchange risk exchange rate changes, mobility of funds Competitive risk making operations compatible, spreading risk, following competitors of customers, heading off competition
12-11

What Information Is Important in Scanning?

The Distance Sensitivity of Industries: Indicators

12-12

Collecting and Analyzing Data

Learning Objective 4: To know the methods and problems of collecting and comparing international information

12-13

Collecting and Analyzing Data

Problems with data Inaccurate information Non-compatibility Limited resources Misleading data Reliance on legally reported market activities Poor research methodology
12-14

Collecting and Analyzing Data

Where can companies collect data? Sources of information External government agencies, specialized services, and trade associations Internal

12-15

Country Comparison Tools

Learning Objective 5: To understand some simplifying tools for helping decide where to operate

12-16

Country Comparison Tools

Analyzing data Grids

may

depict acceptable or unacceptable conditions rank countries by important variables

Matrices
decide

on indicators and weight them evaluate each country on the weighted indicators
12-17

Country Comparison Tools

Simplified Market-Penetration Grid

12-18

Country Comparison Tools

Opportunity-Risk Matrix

12-19