International Business, Arman Ghanbari Boosary

Harvard Business School (1997), Country Analysis: A Framework to Identify and Evaluate the
National Business Environment

The author introduces the term country analysis as a complement of analyses of industry dynamics
and the international environment in order to able to measure or benchmark a country. The framework
of this analysis consists of three interdependent components:

strategy
context
performance

These components simplify organizing information.

Identification
A nations strategy tells about goals and policies to achieve those goals. Goals are individual, national,
and have economic, political and social dimensions. Policies are the means to reach the set goals. They
are governmental actions that influence significantly the mobilization, allocation, and efficiency of
resource use and are likely to include fiscal, monetary, trade, exchange rate, and specific sector
policies. Two distinctive policies are at the one extreme the laissez faire economic policies, which aim
at decentralizing decision making, and at the other extreme the policies that seek to increase the role of
the state be centralizing decision making. The main features of the context are national resources,
players in the national system and the rules of the game, which influence what players, come into
existence, how they allocate resources, and how they evolve. By nature, the ability of nations to
achieve their strategic goals is constrained by the resources at a nations disposal. Resources can be
classified into human capital, physical capital, natural resource wealth, and technological skills.

Evaluation
Going beyond identifying, country analysts have to examine the interrelationships among components
by benchmarking performance against some standard, and drawing upon theory and knowledge of
similar empirical relationships. The result has to provide information on the affect of policies on
resource mobilization, allocation of resources across competing sectors and on the efficiency of
resource allocation within firms.