session 5 - country evaluation & selection - spring 2011

8/2/2019 Session 5 - Country Evaluation & Selection - Spring 2011

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International Business

Session five

Country Evaluation & Selection


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Is it good time for IKEA to open in

Qatar?


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To be covered in this session

strategy for selecting countries

evaluation of country opportunities risk variables associated with going

abroad International information collection


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Choosing Where to Operate


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Choosing Where to Operate -Objectives

Move into a city, country, or a region


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Choosing Where to Operate -Strategy

Export, Ownership or Partnership


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Choosing Where to Operate -Tactics

In choosing markets, two issues areimportant:

1. Which market to enter (NokiaNetworks project)

2. Allocating of resources (e.g. casefor investment, interdependence,concentration, diversification)


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Choosing Where to Operate Harvesting and Reinvestment

Pakistan

India


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Choosing Where to Operate Concentration Vs. Diversification

Diversification Concentration


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The Environmental Climate:Country Opportunities

Factors that have the greatestinfluence on country selection are:

market size [sales potential] ease and compatibility of operations

(e.g. BLOCKBUSTER in Germany)

costs and resource availability (BT in India ) red tape and corruption (Global corruption

Ranking )
http://www.blockbuster.com/http://www.bt.com/http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_tablehttp://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_tablehttp://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_tablehttp://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_tablehttp://www.bt.com/http://www.blockbuster.com/


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Market Attractiveness

Market size, i.e., sales potential, is probably the mostimportant market selection variable ( Millionaires inIndia )

Market size predictors include: past and present sales data socioeconomic data [GDP, per capita income,

population size, population growth rates, etc.]

Other factors to be considered include: the obsolescence and leapfrogging of products price levels and elasticity substitutability of products taste and other cultural factors
http://www.thaindian.com/newsportal/world-news/growth-of-millionaires-in-india-fastest-in-world_10064367.htmlhttp://www.thaindian.com/newsportal/world-news/growth-of-millionaires-in-india-fastest-in-world_10064367.htmlhttp://www.thaindian.com/newsportal/world-news/growth-of-millionaires-in-india-fastest-in-world_10064367.htmlhttp://www.thaindian.com/newsportal/world-news/growth-of-millionaires-in-india-fastest-in-world_10064367.html


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Country Opportunities:Costs and Resource AvailabilityBe aware of adverse effects of reducing costs:


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Country Risks: Reducing associatedrisk Firms may reduce the associated risks by:

first entering countries similar to their homecountries

enlisting experienced intermediaries to handl eoperations for them ( Al-Bahar Group for CAT )

using operational forms that require a lowercommitment of foreign resources

initially moving to fewer, rather than more,foreign countries
http://www.albahargroup.com/http://www.albahargroup.com/http://www.albahargroup.com/http://www.albahargroup.com/http://www.albahargroup.com/


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Country Risks: Reducing associatedrisk Country Similarity

Kuwait Oman Jordan


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Country Risks: Reducing associatedrisk Using experienced local

intermediaries


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Pattern of Internationalization


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Types of Country Risks:

Competitive Risk ( e.g. Qtel effected by Vodaphone)

Monetary Risk ( e.g. currency depreciation )

Political Risk ( war, government change etc )


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External Sources of Information The major types of external, secondary information

sources include: individualized reports from market research and business

consulting firms [commissioned for a fee]

e.g. Dunn & Bradstreet specialized studies from research organizations regarding

countries, regions, industries, issues, etc. e.g. CIA CountryFactfile

government agency socioeconomic and other reports e.g.Diabetes UK Report ; US Census Bureau international organization and agency reports

[e.g. World Bank Economic Report ]
http://www.dnb.com/us/http://www.dnb.com/us/https://www.cia.gov/library/publications/the-world-factbook/https://www.cia.gov/library/publications/the-world-factbook/http://www.diabetes.org.uk/Documents/News/Heartache_report07.pdfhttp://us%20census%20bureau/http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/0,,menuPK:476823~pagePK:64165236~piPK:64165141~theSitePK:469372,00.htmlhttp://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/0,,menuPK:476823~pagePK:64165236~piPK:64165141~theSitePK:469372,00.htmlhttp://us%20census%20bureau/http://www.diabetes.org.uk/Documents/News/Heartache_report07.pdfhttps://www.cia.gov/library/publications/the-world-factbook/https://www.cia.gov/library/publications/the-world-factbook/http://www.dnb.com/us/http://www.dnb.com/us/