International Business

Chapter Twelve

Country Evaluation and

Selection

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
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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
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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
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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

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 firms 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
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Opportunity-Risk Matrix

Chapter 12: Discussion Questions

1.

2.

3.

4.

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.
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