International firms must evaluate countries carefully due to limited resources. Key factors to consider include market size and sales potential, costs and resource availability, and political, competitive, and monetary risks. Primary research is costly and risky, while secondary sources vary in accuracy, reliability, and recency. Common secondary sources include government data, international organizations, trade groups, and consultants. Evaluation grids and matrices incorporate weighted indicators to rank countries and plot risks versus opportunities to guide resource allocation decisions.

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

8. Opportunity-Risk Matrix

9. 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.