The document discusses factors to consider when evaluating countries for international business operations. It outlines key objectives like leveraging competencies and sustaining markets. Environmental factors like political, economic and competitive landscapes must be scanned. Tools like grids and matrices can compare countries on important variables to identify high return, low risk opportunities. A gradual approach with diversification or concentration strategies can help allocate resources among locations and reduce risks. Scanning gathers both internal and external data to inform feasibility analyses and location decisions for international expansion.

1. EVALUATION OF COUNTRIES
FOR OPERATIONS

2. INTRODUCTION
 Most important factor which leads to the success of the
International business is location.
 We must be careful in following decision makings:
1. The location of sales, production and administrative
and auxiliary service
2.The sequence for entering different countries
3.The portion of resources and efforts for allocate to
each country where they operate .

3. OPERATING
ENVIRONMENT
PHYSICAL AND
SOCIAL FACTORS
• Political policies
and legal practices
• Cultural factors
• Economic forces
• Geographic
influences
COMPETITIVE
FACTORS
• Major advantage in
price, marketing,
innovation, or other
factors
• Number and
comparative
capabilities of
competitors
• Competitive
differences by country
OBJECTIVES
OPERATORS
MEANS
Structure &
Implementation
• Choice of countries
• Organization & control
mechanisms

4.  Where can we best leverage our existing competencies?
 Where can we go to best sustain, improve or extend our
competencies?
 Which market should we serve?
 Where should we place production to serve them?

5. OBJECTIVES
STRATEGY
Overlaying Tactic Choice of
Countries
Choosing new locations
• Scan for alternatives
• Choose and weight variables
• Collect and analyze data for
variables
• Use tools to compare variables and
narrow alternatives
Allocating among locations
• Analyze effects of reinvestment versus harvesting in
existing operating locations
• Appraise interdependence of locations on
performance
• Examine needs for diversification versus
concentration of foreign operations
Making final decisions
• Conduct detailed feasibility study for new locations
• Estimate expected outcome for reinvestments
• Make location and allocation decisions based on
company's financial decision-making tools

7. WHAT ENVIRONMENTAL
SCANNING?
 Is the acquisition and use of information about
events, trends, and relationships in an organization's
external environment, the knowledge of which would
assist management in planning the organization's
future course of action.

8. HOW DOES SCANNING WORK?
 Managers use scanning techniques to examine and
compare countries on broad indicators of
opportunities and risks.
 Without scanning a company may,
-Overlook opportunities and risks.
-Examine too many or too few possibilities.

9. SCANNING VS DETAILTED
SCANNING
Scanning
 Scanning is the process by which managers examine many
countries broadly and then narrow them down to the most
promising ones.
 Basically we analyze publicly available information such as from
the internet.
Detailed Analysis
 After managers narrow down the most promising countries they
need to compare the feasibility and desirability of each.
“Normally detailed analysis is done after the scanning”
Eg: Intel use scanning techniques to limit visits to a few Latin
American countries.

10. WHAT INFORMATION IS
IMPORTANT IN SCANNING??
 Managers should consider country conditions that
could affect their companies’ success or failure.
 This conditions should reveal both opportunities and
risks.

11. OPPORTUNITIES
 Sales expansion
-Expansion of sales is probably the most important
factor motivating companies to engage in
international business, because most sales will lead to
more profit.
-Managers would like to have sales figures for the type
of product they want to sell, but such information may
not be available specially if the product is new.

12. There are several economic and demographic variables
that affect sales expansion. They are,
1. Obsolescence and leapfrogging of products
2. Prices
3. Income elasticity
4. Substitution
5. Income inequality
6. Cultural factors and taste
7. Existence of trading blocs

13. •Resource acquisition
-Companies undertake international business to
secure resources that are too expensive or not
available in their home countries.
-When acquiring resources companies have to
consider about costs.
-A company’s total cost is made up of numerous sub
costs.
-The factors affecting these sub costs are,
1. Labor
2. Infrastructure
3. Ease of transportation and communication
4. Government incentives and disincentives

14. The Company’s expansion strategy includes
expansion into various countries around the world.
While the Company endeavors to limit its exposure
by entering only countries where the political,
social and economic environments are conducive
to doing business, there can be no assurances that
the respective business environments will remain
favorable.

15. Factors to consider in analyzing risk
 Companies and their managers differ in their
perceptions of what is risky
 One company’s risk may be another's opportunity
 Companies may reduce their risk by means other than
avoiding locations
 Trade-offs among risks

16. Categories of risk assessment
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 or
customers
• Heading off
competitors

17. COLLECTING AND ANALYZING DATA
 Information is needed in all levels of control. It helps managers to
improve corporate performance. For that managers should compare
the estimated cost of information with the probable payoff it will
generate in revenue gains or cost savings.
 In many countries the researches are expensive to undertake because
of the lack, obsolescence and in accuracy of data. There are two basic
problems;
1. Inaccuracy
2. Non comparability

18. • INACCURACY
Reasons for inaccuracy
 Government resources may limit accurate data collection.
 Governments may purposely publish misleading
information.
 Respondents may give false information to data collectors.
 Official data may include only legal and reported market
activities
 Poor methodology may be used.
 NON COMARABILITY
Reasons for non comparability
 Differences in definitions and base year.
 Distortion in currency conversion.

19. External sources of information
 Information is need for decision making, for scanning
purpose we use internet to collect most of the
information.
 Major types of information sources are,
 Individualized reports
 Specialized studies
 Services companies
 Government agencies
 International organizations & agencies
 Trade associations

20. INTERNALLY GENERATED DATA
 Collecting information through observations,
investigations and by asking many questions.
 Traditional analysis methods would not reveal
such facts.

21. Country comparison tools
 There are two common tools
1. Grid
2. Matrices
01. GRID
 Grid is used to compare countries on whatever factors they
deem important.
 This may depict acceptable or unacceptable conditions.
 Rank countries by important variables.
 This technique can be used even without comparing.
 This will be complex when number of variable increase.

22. Simplified Market-Penetration Grid
variables weigh
t
C-1 C-2 C-3 C-
4
C-5
1. Acceptable(A), unacceptable(U) factors
a. allows 100% ownership - U A A A A
b. allows licensing to majority-owned
subsidiary
- A A A A A
2. Return (higher number= preferred rating)
a. size of investment needed 0-5 - 4 3 3 3
b. direct cost 0-2 - 2 0 1 1
c. market size present 0-4 - 3 2 4 1
d. market size 3-10 years 0-3 - 2 1 3 1
Total 11 6 11 6
3. Risk ( lower number= preferred rating)
a. market loss 3-10 years 0-4 - 2 1 3 2
b. exchange problems 0-3 - 0 0 3 2
c. political unrest potential 0-3 - 0 1 2 3
Total 2 2 8 7

23. How to construct a
Grid
 in above mentioned grid
chart it pinpoints country
2 (C-2) as high return-low
risk, C-3 as low return-
low risk, C-4 as high
return- high risk and C-5
as low return- high risk
 Most attractive country is
C-2 (high return-low risk)
 C-1 is eliminated by
managers immediately
(why ?)
 In real world company
chooses the variables that it
regards as most important
and may weight some as
more important than others
 First, managers may immediately
eliminate certain countries from
CONSIDERATION, because of the
characteristics they find
acceptable.
 Then managers assign values &
weights to the variables.
 So, they rank countries according
to attributes of relative
importance to the company
 Both variables & weight differ by
product & company depending on
the company’s internal situation
and its objectives.

24. 02. Matrices (Opportunity-Risk Matrix)
 With an opportunity-risk matrix, a company can,
1. Decide on indicators and weight them.
2. Evaluate each country on the weighted indicators.
 Key element of this kind of matrix is and one that managers do not include in
practice is the “ projection”
 Above mentioned matrix,
-managers will choose countries E & F ( high opportunity& low risk)
-managers may sometimes have to choose a country between A& B ( WHY?)
A
E
F
D
C
B
DecreasedRisk
Increased Opportunity

25. Allocating Among Locations
This scanning tool just described are useful for
narrowing alternatives and allocating operational
emphasis among countries. There are 3
complementary strategies for international expansion:
 Alternative Gradual Commitments
 Geographic Diversification versus
Concentration
 Reinvestment and Harvesting

26. Alternative Gradual Commitments
Companies may reduce risks from the liability of
foreignness by:
• Going first to countries with characteristics similar to those
of their home countries.
• Having experienced intermediaries handle operations for
them.
• Operating in formats requiring commitment of fewer
resources abroad.
• Moving initially to one or a few, rather than many, foreign
countries.

27. The usual patterns of
Internationalization

28. Geographic Diversification versus
Concentration
Diversification strategy
Go to many markets fast and then build up slowly in
each. (Company moves rapidly into many foreign markets, and
gradually increasing its commitment in each market)
Concentration strategy
Go to one or a few markets and build up fast
before going to others. (Company moves to one or a few foreign
markets until its develops a very strong involvement and competitive
position then move to others)
A hybrid of the above two

29. Major variables a company should
consider when deciding which
strategy to use;
 Growth rate in each market
 Sales stability in each market
 Competitive lead time
 Spillover Effects
 Need for product, communication, and distribution
adaptation
 Program control requirements
 Subsequent Product Diversification

30. Diversify or Concentrate: The Role
of Product and Market Factors
Product and Market Factors Prefer
Diversificatio
n if;
Prefer
Concentrate
if;
Growth rate in each market Low High
Sales stability in each market Low High
Competitive lead time Short Long
Spillover Effects High Low
Need for product, communication, and
distribution adaptation
Low High
Program control requirements Low High

31. Reinvestment and Harvesting
 FDI-financial capital and has physical and human
capital invested abroad
 Depending on the success of the investment, the
company may reinvest or consider using the capital
elsewhere

32.  Reinvestment decisions—involve replacing depreciated assets or
adding to the existing stock of capital
 Most of the value of a foreign investment comes from reinvestment
once committed to a locale, company may not have option to
move its assets elsewhere
 Experienced personnel in a country best judges of what is needed
in the locale
may be delegated certain investment decisions
 Harvesting (divesting)—advisable when investment outlook is
better in other countries
 Reduces commitments in countries with poorer performance
outlooks
 Ought to be planned
 Takes place by selling or closing facilities
 Government may require performance contracts that make
divestment difficult

33. NON COPARATIVE DECISION MAKING
 Companies examine proposals one at a time and accept them if
they meet minimum threshold criteria.
 This situation occurs because of the limited resources of
companies which peruse them to maintain storehouse of foreign
operating proposal.
 They make go- no go decision by examining one opportunity at a
time and perusing it if tit meets some threshold criteria.
 According to the interdependence of the country the companies
sometimes need to respond quickly to prospects that they had
not anticipated.
 Many proposal might be;
- To sell abroad
- Sign join ventures
- Licensing contracts

34.  This initiate exports actively passively/ indirectly.
 This undertaking proposals are one time possibilities say “yes” or
“no” for the proposal.
 There is a competitive advantage of moving to foreign market,
for both customers and competitors.
 Three factors inhibit companies from comparing investment
opportunities
- cost
- time
- interrelation or operations on global performance
 Cost relate to the overseeing of operations in an host countries.
 Time relate with the feasibility studies of proposals. Waiting
compare the proposal means a cost to the company.
 Management would have to make assumptions about the
changed profits for the companies total global operations.

35. CONCLUSION
 As a conclusion, for the better success of a company there
should be environmental scanning. In this we have to
overlook the risks and opportunities.
 IB needs information at all levels and problems may occur
when collecting and analyzing them. To be successful,
companies must overcome them.
 Due to the limited resources of countries, they get the
support through trade agreements and
proposals.Cost,time,interrelation,global performance are
the factors that companies consider in investing in foreign
countries.

36. Thank you