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International Business
R. M. Joshi

Learning Objectives

To explain the basic approaches to country

evaluation and selection
To discuss the concept of international
business research
To elucidate different approaches for
country evaluation
To explain various tools for country
evaluation and selection

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International Business
R. M. Joshi

Significance of Country Evaluation &

Selection
International expansion of a firms
activities
requires
identification
of
business opportunities across the borders,
evaluating, and selecting one or a few
countries for its operations. A business
enterprise needs to deploy its finite
resources most gainfully in countries
where it gets optimum returns to fulfill its
goals and objectives.

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International Business
R. M. Joshi

Approaches for Identifying and Evaluating

Business Opportunities

Reactive approach

Systematic approach

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International Business
R. M. Joshi

International Business Research

The business research conducted in more
than one country, which involves systematic
gathering, recording and analyzing of data
to resolve business problems.

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International Business
R. M. Joshi

Identifying Sources of Information

Secondary

information:

Since

carrying

out

overseas field surveys involves considerable cost

and time which is saved considerably by secondary
information
Limitation of secondary information include:
Availability
Reliability
Comparability
Validity
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International Business
R. M. Joshi

Preparing Research Design

Research design is the conceptual structure
within

which

research

is

conducted;

it

constitutes the blueprint for the collection,

measurement and analysis of data.

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International Business
R. M. Joshi

Types of Business Research

Designs

Exploratory research: To gather preliminary

information

that

will

help

better

define

problems and suggest hypothesis.

Descriptive research: To describe business

problems, situations, business environment or
markets

Causative research: To test hypothesis to

establish cause and effect relationship
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International Business
R. M. Joshi

Collecting Primary Information

Primary Information:
The information collected by the researcher for
the first time.
It may be collected by conducting field surveys,
observations or conducting experiments. Various
tools used to conduct field surveys include
telephone interviews, mail surveys, electronic
surveys and personal surveys.
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R. M. Joshi

Country Evaluation

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R. M. Joshi

10

Scanning the Global Economic

Environment

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R. M. Joshi

11

Population
The population of a country broadly gives
a rough estimation of availability of
work-force

and

market

potential,

although it has to be used with some

other indicators.

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R. M. Joshi

12

Income
Consumption patterns in a country are
significantly influenced by level of income.
The Gross Domestic Product of a country
provides a better estimate of the market
size compared to its population.

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13

Country Classification
on the basis of 2006 Per capita GNI*
Low-income countries
: US $ 905 or less
Lower-middle-income countries : US$ 906-3,595
Upper-middle-income countries : US$ 3,59611,115
High-income countries
: US$ 11,116 or more

*World Development Indicators, World Bank as on July, 2007

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R. M. Joshi

14

Macroeconomic Overview
Distribution
highly

of

skewed

resources
among

and

the

wealth

nations.

is
30

advanced countries in the world with only

15.3 per cent of worlds total population
accounts for about 52 per cent of the worlds
total GDP and 67.3 per cent of exports of
goods and services.
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R. M. Joshi

15

Assessing Market Potential

Countries with high marketing potential
are often preferred locations for business
operations.

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R. M. Joshi

16

Evaluating Country Competitiveness

Competitiveness

not

only

affects

countrys

economic growth and long-term prosperity but

also

significantly

influences

the

business

prospects for an international firm.

Competitiveness of a nation is referred to a set of
institutions, policies, and factors that determine
the level of productivity of a country.
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17

Factors Influencing Country

Competitiveness
Institutions

Infrastructure

Macro-economic stability

Health and primary education

Higher education and training

Goods market efficiency

Labour market efficiency

Financial market sophistication

Technological readiness

Market size

Business sophistication

Innovation
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R. M. Joshi

18

Stages of Development and Country

Competitiveness
Factor-driven economies: Such countries principally
compete based on their factor endowments, primarily
unskilled labour, and natural resources.
Efficiency-driven economies: Wages rise as a result
of economic growth and countries are required to
develop more efficient production processes, thereby
moving into the efficiency-driven stage of development.
Innovation-driven economies: As the countries move
to the innovation-driven stage, higher wages and
associated standard of living can be sustained only if
their businesses are able to compete with new and
unique products.
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19

Global Competitive Index (GCI)

Provides a useful comprehensive tool to measure
different aspects of doing business in a particular
country, such as costs of dealing with
bureaucracy, costs of poor infrastructure, costs of
an uneducated and unhealthy workforce, costs of
dealing with violence, costs of hiring and firing
workers, costs of not having access to an efficient
financial sector, costs of not having suppliers or
networks, costs of not being able to rely on
universities, costs of not having the best available
technology, etc. Copyright @ Oxford University Press
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International Business

R. M. Joshi

Business Competitiveness Index

(BCI)
Brought out by the World Economic Forum, BCI
provides a conceptual framework to rank business
competitiveness across countries. The BCI is
based on two sub-indices:

Company operation and strategy

National business environment

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21

Assessing Business Environment

A crosscountry comparison of business
environment

facilitates

international

managers not only in country selection

but

also

in

development

of

business

strategy across countries.

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22

Factors Affecting Ease of Doing

Business

Starting a business

Dealing with licenses

Employing workers

Registering property

Getting credit

Protecting investors

Paying taxes

Trading across borders

Enforcing contracts

Closing a business
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R. M. Joshi

23

Assessing Overall Ease of Doing

Business
Singapore is the friendliest place for doing
business,

followed

by

New

Zealand,

United

States, Hong Kong, Denmark, United Kingdom,

and Canada whereas Japan ranks at 12th, China
at 83rd, Russia at 106th, India at 120th, and
Brazil at 122nd place.

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24

Country Evaluation for Services

Location
In order to strategically choose global
locations, the decisions should be based
on maximising the long-term benefits of
offshoring while offsetting rising wages
and other developments.

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25

Tools for Country Evaluation and

Selection
Trade analysis and analogy methods
Market size = Production + Imports Exports

In the analogy method, a country at similar stage of

economic

development

and

comparable

consumer

behaviour is selected whose market size is known.

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26

Opportunity-Risk Analysis

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27

Products- Country Matrix Strategy

With

an

objective

to

examine

market

and

commodity diversification, the product-country

matrix

strategy

is

employed.

Under

this

approach, previous trade statistics are analysed

to

identify

the

major

markets

and

major

products, based on which a suitable marketing

strategy is developed.
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28

Market Focus Strategies

In view of market potential of a region, market
focus strategies can be formulated. Under this
technique, the market potential, generally on a
regional basis is determined and major product
groups that needs to be focused are identified.
Subsequently, strategies for increasing exports
to the identified markets can be formulated.
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29

Growth-Share ( BCG) Matrix

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Country Attractiveness-Company Strength

Matrix

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R. M. Joshi

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