288 33 Powerpoint Slides Chapter 10 Country Evaluation Selection

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International Business R. M. Joshi Chapter 10: Country Evaluationand Selection

International BusinessRakesh Mohan Joshi

Professor & Chairperson, IIFT New Delhi

1




International Business R. M. Joshi Chapter 10: Country Evaluationand Selection

COUNTRY EVALUATIONAND SELECTION

Chapter 10



Copyright @ Oxford University PressInternational Business R. M. Joshi Chapter 10: Country Evaluationand Selection

Learn ing Objec t ives

To explain the basic approaches tocountry evaluation and selection

To discuss the concept of international

business research To elucidate different approaches for

country evaluation

To explain various tools for countryevaluation and selection




Sign i f icance o f Coun try Evaluat ion & Select ion

International expansion of a firm’s activities requires identification of business opportunities across theborders, evaluating, and selecting one ora few countries for its operations. Abusiness enterprise needs to deploy itsfinite resources most gainfully in

countries where it gets optimum returnsto fulfill its goals and objectives.




App roaches for Ident i fy ing and Evaluat ing

Bus iness Oppo rtuni t ies

Reactive approach

Systematic approach




In ternat ional Business Research The business research conducted in more

than one country, which involves systematic

gathering, recording and analyzing of data

to resolve business problems.




Ident i fy ing Sources of Info rmat ion

Secondary information: Since carrying outoverseas field surveys involves considerable cost

and time which is saved considerably by secondary

information

Limitation of secondary information include:

• Availability

• Reliability

• Comparability

• Validity




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.




Types of Bus iness 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




Col lect ing Primary In format ion 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.




Equ ivalences in Cross-coun try

Research

Equivalences refer to whether the particular

concept being studied is understood and

interpreted in the same manner by people in

different countries.




Construct Equivalence Whether the business/marketing constructs (that

is, product functionality, interpretation of

marketing stimuli and classification schemes)

under the study have same meaning across

countries.



Copyright @ Oxford University PressInternational Business R. M. Joshi

Chapter 10: Country Evaluationand Selection

Types of Cons truct Equivalence

Functional equivalence: whether the function or purpose served orperformed by a given concept or behaviour isthe same across national boundaries.

Conceptual equivalence:The extent of variation in individualinterpretation of objects, stimuli, or behaviouracross cultures.

Category equivalence: The category in which the relevant objects orother stimuli are placed.





Measurement Equivalences

Establishing equivalence in terms of procedures

used to measure concepts or attitude.





Types of Measu rement Equivalence

Calibration equivalence:

Equivalence of scale or scoring procedure and equivalence of

response to a given measure in different countries.

Translation equivalence:

Equivalence in meaning while translation of the instrument

across different languages.

Metric equivalence:Equivalence of scale or procedure to establish as measure and

equivalences of responses of given measure in different countries





Sampl ing Equ ivalence

It involves comparability of samples and

samples’ representativeness to the

population.





Equ ivalence of Data Analys is

The country–culture biases needs to be

taken into account while applying uniform

analytical techniques.





Country Evaluation





Scanning the Global Economic

Environment





Populat ion

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.





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.





Coun try Class i f icat ion

on the basis o f 2006 Per capita GNI *

Low-income countries : US $ 905 orless

Lower-middle-income countries : US$ 906-3,595

Upper-middle-income countries : US$3,596-11,115

High-income countries : US$ 11,116 ormore

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





Macroeconom ic Overv iew

Distribution of resources and wealth is

highly skewed among the nations. 30

advanced countries in the world with only

15.3 per cent of world’s total population

accounts for about 52 per cent of the

world’s total GDP and 67.3 per cent of

exports of goods and services.





Assess ing Market Poten t ial

Countries with high marketing potential

are often preferred locations for business

operations.





Evaluating Coun try Compet it iveness Competitiveness not only affects country’s

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.

F t I f l i C t





Facto rs Inf luenc ing Country

Compet i t iveness 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

St f D l t d C t





Stages of Development and Coun try

Compet i t iveness

Factor-driven economies: Such countries principally

compete based on their factor endowments, primarilyunskilled labour, and natural resources.

Efficiency-driven economies: Wages rise as a resultof economic growth and countries are required todevelop more efficient production processes, therebymoving into the efficiency-driven stage of development.

Innovation-driven economies: As the countriesmove 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 andunique products.





Global Competitive Index (GCI)

Provides a useful comprehensive tool to measuredifferent 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 ornetworks, costs of not being able to rely on

universities, costs of not having the best available

technology, etc.




Chapter 10: Country Evaluation

and Selection

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




International Business R. M. Joshi


and Selection

Assess ing Bus iness Env i ronment A cross–country comparison of business

environment facilitates international

managers not only in country selection

but also in development of business

strategy across countries.






and Selection

Facto rs A ffect ing 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

A i O l l E f D i






and Selection

Assess ing Overal l 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.






and Selection

Country Evaluat ion fo r Serv ices

Locat ion

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.






and Selection

Too ls for Country Evaluat ion 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.






and Selection

Oppo rtuni ty-Risk Analys is






and Selection

Products - Country Matr ix 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.






and Selection

Market Focus Strateg ies

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.






and Selection

Grow th -Share ( BCG) Matrix




Inte national B siness R M Joshi


and Selection

Country A ttract iveness -Company Streng th

Matrix

Documents

288 33 Powerpoint Slides Chapter 10 Country Evaluation Selection