Countrys attractiveness
4-2
Managerial Implications
Two broad implications for IB - Political, economic, and legal systems of a country raise important ethical issues that have implications for the practice of international business - The political, economic, and legal environment of a country clearly influences the attractiveness of that country as a market and/or investment site
Attractiveness
Figure 2.1: Country Attractiveness
Benefits Size of Economy Likely Economic Growth Costs Corruption Lack of Infrastructure Legal Costs Overall Attractiveness
4-3
Risks Political Risks: Social Unrest/Anti-Business Trends Economic Risks: Economic Mismanagement Legal Risks: Failure to Safeguard Property Rights
Return
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4-4
Market or industry
Country LEARNING TASK 1: COUNTRY FACTOR ANALYSIS Country factors Benefits Risks Costs Trade off
Economic
Legal Political Cultural Religious
McGraw-Hill/Irwin International Business, 6/e
Return
2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
Educational
4-5
Low
High
McGraw-Hill/Irwin International Business, 6/e
Risks
Low
4-6
4-7
4-8
RESOURCES - Is the country a critical source of + Skilled personnel? + Raw materials? + Components? + Labor? + Technology? + Innovation? - Quality of infrastructure supporting services - Location
COMPETITION
COUNTRY MARKETS AND INDURTRIES OPPORTUNITIES + Intensity of rivalry + Entry barriers + Bargaining power of suppliers & customers - Is the business + Profitable short-term? + Profitable long-term?
INCENTIVES
+ Tax + Subsidies + Infrastructures + Government contracts + Does a presence in this country 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. increase competitiveness?
4-9
4 - 10
Kidnapping
COMPETITIVE RISKS
BUSINESS LOGICS: Corruption Cartels Networks REGULATIONS
OPERATIONAL RISKS
INFRASTRUCTURE
- Nationalistic preferences
- Constraints on local capital, local content, local employment 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. -Taxes