International

Business
Environments & Operations
15e, Global Edition

Daniels ● Radebaugh ● Sullivan

Copyright © 2015 Pearson Education Ltd.

12-1
Chapter 13
Evaluation of
Countries for
Operations
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13-2
 Learning Objectives
 Grasp company strategies for sequencing
the penetration of countries
 See how scanning techniques can help
managers both limit geographic
alternatives and consider otherwise
overlooked areas
 Discern the major opportunity and risk
variables to consider in deciding whether
and where to expand abroad
 Know the methods and problems of
collecting and comparing international
information
13-3
Copyright © 2015 Pearson Education Ltd.
 Learning Objectives
 Understand some simplifying tools for
helping decide where to operate
 Consider how companies allocate
emphasis among the countries where they
operate
 Comprehend why location decisions do not
necessarily compare different countries’
possibilities
 Fathom the conditions that may cause
prime business locations to change in the
future
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13-4
 Introduction
 When making country selection
decisions companies must consider
 Where to locate sales, production, and
administrative and auxiliary services
 The sequence for entering different
countries
 The portion of resources and efforts to
allocate to each country where they
operate
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Introduction
The Location – Decision Process

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 Introduction
Location Decisions Affecting International Operations

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How Does Scanning Work?
Learning Objective:
See how scanning techniques can help
managers both limit geographic
alternatives and consider otherwise
overlooked areas

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 How Does Scanning Work?
 Step 1:
 Scanning
 comparing country information that is

readily available, inexpensive, and fairly

comparable
 Step 2:
 Onsite visits

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 What Information Is
Important in Scanning?
Learning Objective:
Discern the major opportunity and risk
variables to consider in deciding whether
and where to expand abroad

Copyright © 2015 Pearson Education Ltd. 13-10

 What Information Is
Important in Scanning?
 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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 What Information Is
Important in Scanning?
 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

Copyright © 2015 Pearson Education, Inc. 13-12

 What Information Is
Important in Scanning?
The Distance Sensitivity of Industries: Indicators

13-13
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Collecting and Analyzing Data
Learning Objective:
Know the methods and problems of
collecting and comparing international
information

Copyright © 2015 Pearson Education Ltd. 13-14

 Collecting and Analyzing Data
 Problems with data
 Inaccurate information
 Non-comparability
 Limited resources
 Misleading data
 Reliance on only legal and reported
market activities
 Poor research methodology

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 Collecting and Analyzing Data
 Where can companies collect data?
 Sources of information
 External

 government agencies, specialized

services, and trade associations
 Internal

 Observation and questionnaires

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Country Comparison Tools
Learning Objective:
Understand some simplifying tools for
helping decide where to operate

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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
Learning Objective:
Consider how companies allocate
emphasis among the countries where they
operate

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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

13-23
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 Geographic Diversification
versus Concentration
 Diversification strategy
 go to many markets fast and then build up
slowly in each
 Concentration strategy
 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

13-25
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Reinvestment and Harvesting
 Reinvestment
 making new commitments to maintain
competitiveness
 Harvesting
 reducing commitments because they do not fit
the overall strategy or because there are more
attractive alternatives

13-26
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 Non-Comparative
Decision Making
 Learning Objective:
 Comprehend why location decisions do not
necessarily compare different countries’
possibilities

13-27
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 Non-Comparative
Decision Making
 Go-no-go decisions
 need to respond quickly
 interdependent operations

13-28
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