Country Evaluation and selection of International Business

1. Country Evaluation and selection
International Business

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. Choosing and weighing variables
Opportunities
• Market Size.
• Ease and Compatibility of
Operations.
• Costs and Resource
Availability.
• Red Tape.

8. Choosing and weighing variables
Risks
• Risk and Uncertainty.
• Competitive Risk.
• Monetary Risk.
• Political Risk.

9. 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.

10. Country Comparison tool
• Two common tools for
analyzing information
collected via scanning are
grids and matrices

11. Country Comparison tool
• Opportunity-Risk Matrix.
• Country Attractiveness-
Company Strength Matrix.

12. 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.