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International Business

International Business

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International Business

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  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

  7. Opportunity-Risk Matrix

  8. 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.