Country evaluation & selection

Chapter 12

Location is important
Location for: sales, production, administrative
(After-sales, call / help centers) & auxiliary
services (R & D)
Sequence for entering different services
How much resources and efforts to be
devoted to each country
MOST IMPORTANT DECISIONS:
WHERE TO SELL? WHERE TO PRODUCE?
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Where to sell? Where to produce?

Same country for production and sale Hotel, constructions, etc.
2 different locations for production and
sale - Automobile & steel industries
Multi-functional, multi-country- For
different resources different countries
Flexibility with time and future
opportunities/challenges is crucial
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How does scanning work?

Managing the alternatives: neither overlook
nor give away to pressures for forced action
Scanning versus detailed analysis:
Scanning: for large group of countries, collect
information crucial to your business (PESTELI
& Porters models) that is readily available,
inexpensive and comparable
Detailed analysis: shortlisted countries to be
personally visited to decide and operationalize
outsourcing v/s self-production 4

Important information for scanningSales expansion

Sales expansions: past & current of similar or

complementary products
Economic / demographic data: GDP, GDP per
capita, income inequality, concentration of
specific groups of people
Leapfrogging of products (Chinese no
telephone to cellular phones), prices
(essential versus other products), income
elasticity, substitution (Hong-kong mass
transit), income inequality, cultural factors and
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tastes, trading blocks and its impact

Important information for scanningResource acquisition

Due to availability and cost constrains
Can get from suppliers or own sources
Cost considerations:
Labor
Infrastructure
Ease of transportation and communications
Government incentives
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 LABOR capital v/s labor intensive

production, labor market size, labor
compensation, minimum wages,
customary and required fringe benefits,
unemployment rates (labor is nonhomogenous: Philippines for US and
Senegal for US), skilled labor availability
-ives of labor advantage: competitors can
follow and little first mover advantage,
costs rise due to wage pressure rise and
exchange rates
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 INFRASTRUCTURE- Cadbury
Schweppes in Nigeria- bad roads fo rlabor
and supplies, power failures, unavailable
phone lines (p 462)
EASE OF TRANSPORT AND
COMMUNICATION- important when it is
crucial to connect product, process and
production technologies to speed up new
products delivery to avoid competitors any
opportunity to copy. Location of the
country time and shipment costs, trade
restrictions, HQs near financial &
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commercial hub

 GOVERNMENTAL INCENTIVES AND

DISINCENTIVES- lower taxes, exemption
from import duties, low-interest loans, loan
guarantees, subsidized energy and
transportation, ease or difficulty of starting a
business, entering and enforcing contracts,
hiring/firing labor, getting credit, closing a
business, legal transparency and corruption.
(Japan, Ireland in Europe)

Risks

Political risks
Socio-economic risks
Competitive risks

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Grids and matrix

Scanned and selected countries

Criteria as per the firms requirements
When and how much resources
Location on the globe crucial

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