International

Business
Environments & Operations
15e
Daniels

Radebaugh

Copyright 2015 Pearson Education, Inc.

Sullivan

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Chapter 13
Country Evaluation
and Selection

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Learning Objectives
Comprehend company strategies for
entering countries and resource allocation
Understand the use of scanning
techniques in strategy development
Know the methods and problems of
collecting and comparing international
information
Understand some simplifying tools for
helping decide where to operate
Comprehend and compare location
decisions of companies

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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 in investment
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Location Decision Process

The Location Decision Process

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Country Evaluation/Research-1
In country research/scanning we collect
information on opportunities, risk,
operations etc.
Opportunities

Sales expansion: obsolescence and leapfrogging of

products, prices, income elasticity, substitution, income
equality, cultural factors and taste, existence of a
trading bloc
Cost consideration: labor, infrastructure, ease of
transportation and communications, governmental
incentives and disincentives
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Country Evaluation/Research-2

Risks
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 of customers,
heading off competition
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Country Evaluation/Research-3
The Distance Sensitivity of Industries: Indicators

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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
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Country Comparison Tools

Analyzing data
Grids
may depict acceptable or unacceptable
conditions
rank countries by important variables
Matrices
decide on indicators and weight them
evaluate each country on the weighted
indicators
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Country Comparison Tools

Simplified Market-Penetration Grid

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Country Comparison Tools

Opportunity-Risk Matrix

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Allocating Among Locations

Allocating
Complementary strategies for
international expansion
Alternative gradual commitments
Geographic diversification versus
concentration
Reinvestment versus harvesting

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Alternative Gradual
Commitments
The Usual Patterns of Internationalization

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Geographic Diversification
versus Concentration

Diversification strategy

Concentration strategy

go to many markets fast and then build up

slowly in each
go to one or a few markets and build up fast
before going to others

A hybrid of the above two

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Geographic Diversification
versus Concentration
Diversify or Concentrate: The Role of Product and Market Forces

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Chapter 13: Discussion Questions

1.
2.

3.
4.

What factors should we consider to scan and

evaluate a country? Explain.
What problems do 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 help
company strategy.
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mechanical, photocopying, recording, or otherwise, without the prior
written permission of the publisher. Printed in the United States of America.
Copyright 2015 Pearson Education, Inc.

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