Lesson 6 EBBA

International
Business
xin chào
09/01/2021 1
Session 1: Introduction to International Business--Globalization
Session 2: Communication, Culture, ethics, CSR and sustainability
Session 3: National Political, Economic and Legal Systems
Session 4: International trade and government Policies
Session 5: Industrial types, strategies in international business and risk
Session 6: Evaluation of countries and business

Session 7: Practical business planning, organization structure, strategies
and control
Session 8: Money, investment, finance & accounting
Session 9: Production and supply chains
Session 10: Global marketing
Session 11: Management, leadership, HRM and diversity
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1. How are you going to evaluate a country’s
cross-border businesses opportunities?
2. What factors must you consider to make a

good analysis?
3. What biases must you be aware of to avoid

mistakes?
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1. What
2. Why
3. When
4. Where
5. How
6. Who
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GEOGRAPHY – PLA
CE - LOCATION
G S W O R K
HO W T H I N PEO
PLE
S - DE
CE MO G
N RA P
A HICS
I N BUSINESS PRACTICE
-F S: S,
Y PS U E E F
M HI L
A EL I
N O N S V B
O IO E
R UR ES ,
EC AT O
C IO UD
L
RE AV TI T
H AT
BE
COMMUNICATION PROCESSES
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Consulting for NEU - EBBA 5
What business am I going to do with whom?
What are my objectives?
How do I use my resources effectively?

My
Intention What
Objectives does
Strategy this
market
offer?
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6 Factors to look at and critical
analyse and evaluate
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1. Evaluation of countries and
business opportunities (What –
Why – How - …)
2. Risk and reward factors
3. Resources
4. Risk analysis techniques- gaining
advantage
5. Strategy
6. FDI
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Questions I need to answer to find out business
opportunities (to evaluate opportunities)
• What are my objectives (goal) – locally and

company as a whole?
• What resources am I going to use? .. To what
extent?
• How am I going to get things done, what is my
business model, the functions, the structure and
implications?
• What is my (competitive) advantage? Is it price
or market penetration? USPs? ….?
• What local issues must I pay attention to? The
cultural, economic, political societal, environmental
issues …
09/01/2021 ©Provox Training and Consulting for NEU - EBBA 9

What are the risks?
What is your degree of risk taking?
• Cultures can be more or less risk averse.

(Male-female appetite for risk)
• Trade off (give and take)
• Are past patterns a guide?
• Competitive risk
• Foreign exchange and mobility of funds
risk
• Political risk
• Legal risk (?)

1. What
2. Why
3. When
4. Where
5. How
6. Who
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Do men or women
make better
entrepreneurs?
Why do you think

that?

5 areas where female entrepreneurs are
better than men
1) Female-owned firms generate higher

revenues
2) Female-owned firms create more jobs than
their male-owned peers
3) women executives significantly improve
start-up company performance
4) women are more effective in senior
leadership roles
5) women have a larger appetite for growth
(in SMEsaccording to US Census Bureau, Dow Jones and HBR)

Cultural groups more likely to take
risks
Take Less Risk Take More Risk
Japan, Israel, Austria, Pakistan …. India, USA, UK …

What biases are you aware of having?
Common biases:
Bandwagon effect / peer pressure (do things because many others do the
same)
Anchoring (over-reliance on one trait or piece of information when
making a decision)
Confirmation bias (search for, focus on, interpret and remember
information that confirms one’s preconceptions)
Focusing effect (tendency to place more emphasis and importance on one
aspect on an event, incidenct or process
Illusion of truth(tendency to identify as true statements one has previously
heard, or believe statements that are repeated and familiar to you already)
Stereotypical bias (memories distorted towards stereotypes)

How do they affect your judgements and
decision making processes?
a re
o a nd
ple d
p e o t s .
h a t e n
r e w d ge m
n s a n j u
c i si o e d o
De b a s

Risk and reward factors
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What are the risks Vs rewards
Short-term and long-term?
We need to get an idea of how to evaluate

business prospects (i.e. risk factors)
• Socio-economic conditions
• Demographic variables
• Cost considerations
• Geography, infrastructure, transport &
communication
• Government incentives / disincentives
• Management/leadership & administrative
variations
09/01/2021 ©Provox Training and Consulting for NEU - EBBA

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Example – Sales of a product/service
Case of Sales (objective: expand sales)
Demographic Issues that need to be considered

Market segment and target audience (market
share) for Procter and Gamble
Colgate-Palmolive
Unilever
Baby, feminine N. America Europe Asia
and family care
Beauty, hair &

personal care
Latin
America
Fabric & home
care
Africa, Middle
Health and East & India
grooming

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Case of Sales (selling products/services)
Factors to consider for evaluation -
• Obsolescence
• Prices and disposable income
• Income elasticity
• ai ls
Cultural factors and taste
d et
• Substitution m e
t s o
• a
ok inequality
Disposable income and income
l o
et ’s
L
Let’s look at the case of Sales (selling
products) - objective: expand sales
Obsolescence and technology leapfrogging.
Consumers in developing economy do not necessarily follow the
same patterns as those in higher-income countries. (mobiles in
China, from transistor In China, consumers have leapfrogged)
Prices. What is the disposable income of your target audience?

Have they already spent money on high priced essential items?
(expenditures on food in Japan are higher than expected, by either
population or income level, because food is expensive and work
habits promote eating out)
.

Income elasticity (a tool to predict total market potential).
Divide the % of change in product demand by the % of change in
income in a given country.
The more demand shifts in relation to income changes, the more

elastic it is. Demand for necessities such as food is usually less
elastic than for products such as flat-screen TVs.
Simply you need to know what people want and how much
money have they got?
Cultural factors and taste.

Irrespective of having similar GDPs countries may have different
preferences for products and services because of values or tastes.

Substitution.
Consumers in one country may have a substitute service
or product.
There are fewer automobiles in Hong Kong than expected, based
on income and population, because the crowded conditions make
the efficient mass transit system (MTR) a desirable substitute for
automobiles.
Similarly in Stockholm, due to good public services people use cars

less to travel to work in the city
In India, the demand for diesel and petrol powered cars fell when
the government changed fuel-costs. In Norway, there are legal and
environmental conscious factors that have led to the increase in
electric car sales.
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Disposable income and Income inequality.
There are markets where income inequality is high, the per capita
GDP figures are less important.
In a number of countries many people have little to spend, while

many others have substantial spending power, that is why luxury
goods, incl. Luxury cars sell well in China and India. Not to mention
the cultural status symbols.

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• Evaluation of countries and business
opportunities (What – Why – How - …)
• Risk and reward factors
• Resources
• Risk analysis techniques- gaining

advantage
• Strategy
• FDI
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Resources
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Resources
(objective: keeping costs down)
Costs – ‘provide a rough guide to possibilities’
When we need resources they are COSTS! (e.g. real estate to

build hotels, price of raw materials, HR, etc..)
Major common costs are:

• Labour
• Transportation and communications
• Infrastructure
• Government (dis)incentives

Labour
The total costs of employing someone is their total
remuneration package: Salary, wages, compensation, fringe
benefits. Once these have been added up, it may be
worthwhile using people in other places – e.g.
1. French, English (Software – India), Swedish (SAS –
Estonia) call centres
2. R & D centres in China, India with similar skills and lower
costs
3. Manufacturing in E. Europe (steel – press plants, electric
motors …)
Example: Clarks shoes – UK, Portugal, Vietnam, Cambodia

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35
Transport and Communication
It seems obvious to locate near your suppliers or

customers to reduce transport costs, to help the flow of
goods and people.
What if there are trade barriers and restrictions?
Easier if there is a trade agreement.

Infrastructure
There may be an advantage in being near the customer or
supplier. But, what happens if your staff cannot get to work
easily, because of bad infrastructure, and their journeys add
extra hours to costs.
e.g. Cadbury in Nigeria (roads and transport)

Or
If there is no continuous electricty supply – making regular
stoppages on the assembly line.

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A. Globalisation of Production
Labour, energy, land, capital
W
m ew
lec uch ill lo
tu m ok
re or
3 e d at t
et his
ail in
in
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Energy
What gives a place an advantage (output:input)?
• Land
• Labour How much
does it
• Capital cost?
• Energy
Is it How is the
available energy
Can a
all the produced? Coal?
factory
time? Wind? Nuclear?
easily get
Oil? Hydro? Gas?
it?
Biofuel?

Government (Dis)incentives
Most countries seek foreign investment (FDI) because it will
create jobs, the competitiveness it will enhance and the
impact it will have on the country’s trade balance.
Governments use things like: tax breaks, deferred taxes (e.g. No

corporation tax for first 2 years), ease of starting a business, employee
training, loan guarantees, low-interest loans, exemption of import
duties, and subsidized energy and transportation.
Ease of border crossing, getting customs clearance delays.
Variations in corruption, difference is seen and unseen rules and

regulations, CSR, environmental protection, protection of intellectual
property.
Risk analysis techniques
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Threat to industry profitability
LOW MEDIUM HIGH
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HR
AC FC Q2 Target 2012 2013 2014 2015 2016
2010 2011 2012
FTE 1 908 1 875 1 900 1 906 1 850 1 855 1 830
Comments
• Decrease in numbers of FTE (incl. managers) due to BÄST - new ways of working supported by system
• A decrease in managers with 11,3 % other 3,5 % from FC 2011 to BP 2016
• A slightly decrease in external FTE’s (37 to 35 during the BP plan)
43 | BP Presentation | BU ERS Nordic | 2011.10.19

Confidentiality - High (C3)
Topic
Health and Safety Program
Target Measurement, steps Planned costs
Safety Culture development Climb the “safety ladder” 1 step in Run introduction WS for all units before Facilitators - 250.000 kr travel cost
program 2012 end of Q2 and 400.000 in lost revenues. 2
WS x 3 hours x 1900 employees x
500 kr per billable hour - already
planned APT meetings on 2 hours
Run one "tool" WS before end of Q4
per meeting gives 2 hours x 1900
within all units
employees x 500 kr =1,900,000 kr
in lost billable hours
OHSAS 18001 certification Maintain and keep the OHSAS Quality check-up by external auditor
18001 certification
Awareness programs Reach a higher reporting rate of Define action plans from Hearts & Mind Covered by the APT meetings that
incidents, and a lower accident WS and follow up. Secure that the new is indirect time = non billable hours
rate (-15%)* tool for APT will be used by Group
managers. 10 unannounced safety walks
performed by the management team of
Services Nordic on different locations
Health management Reduce the share of unfavorable Create clear roles and responsibilities Educate approx 25 top managers
answers in My Opinion: Work-life around the new roles in BÄST. Educate in Change management 500.000 kr
balance with 10 units compared to managers within Services in Change
2010. management. Improve communication
around changes and answers the
question WHY and how all initiatives are
linked together. Create a holistic picture
for both managers and employees. Look
into competence and skills development
per employee via performance contract
Confidentiality - High (C3) 44 | BP Presentation | BU ERS Nordic | 2011.10.19

Business Risks (1/2)
Risk name TVaR in MSEK Explanations
Description: Rapid variations in new orders concerning ongoing service agreements, example
towards VF Eldistribution and VF Vattenkraft and in large projects. Redundancy risk.
Risk Response:
1. Redundancy of
employees due to 45 *Transfer redundant staff to other group company to secure that the new supplier will employ
lost orders them.
(+/-0)
[Sweden] *By using the BÄST system we get a good overview on which areas we need to do personnel
adjustments.
*Increase use of subcontractors. Set a guideline on the percentage of subcontractor use in our
business. Competence plans must be taken into consideration when deciding the level.
Description: Price reduction can occur due to new competitors (cross segment merchandising),
lower demand for maintenance, economic down-turn
2. Price reduction Risk Response:
(market 16
conditions) *Instead of new employments increase the use of subcontractors.
(+/-0)
[Sweden] *Reduce overhead costs: Thorough follow up on overheads to make sure that they don't increase
or stand still
* Alternative ways of purchase. Explore suppliers outside Sweden.
Description: Damage in customer facilities due to neglect and/or lack of competence from our side
causing an outage for the customer.
Risk Response:
3. Damage in
*Bank guaranties from subcontractors, sharing cost for penalties with subcontractors.
customer 11
facilities *Tender and contract templates
(+/-0)
[Sweden] *Strengthen our own organisation - tendering engineers and specialised purchasers concerning
project material
*Clarify and communicate procedures concerning bank guarantees and credit rating when
purchasing.

1. Redundancy of 45
employees due to
lost orders (+/-0)
Description: Price reduction can occur due to new competitors (cross segment merchandising),
lower demand for maintenance, economic down-turn
2. Price reduction 16 Risk Response:
(market
conditions) (+/-0) *Instead of hiring new employees, increase the use of subcontractors.
*Reduce overhead costs: Thorough follow-up on overheads to make sure that they don't increase
* Alternative ways of purchasing. Explore alternative suppliers.
3. Damage in 11
customer
facilities (+/-0)

TVaR in
Risk name Explanations
MSEK
Description: Price reduction can occur

due to new competitors (cross segment
merchandising), lower demand for
maintenance, economic down-turn
2.Price Risk Response:
reduction *Instead of hiring new employees,
16
(market increase the use of subcontractors.
conditions) *Reduce overhead costs: Thorough
follow-up of overheads to make sure that
they don't increase * Alternative ways of
purchasing. Explore alternative
suppliers.

TVaR in
Risk name Explanations
MSEK
Description: Price reduction can occur

due to new competitors (cross segment
merchandising), lower demand for
maintenance, economic down-turn
2.Price Risk Response:
reduction *Instead of hiring new employees,
16
(market increase the use of subcontractors.
conditions) *Reduce overhead costs: Thorough
follow-up of overheads to make sure that
they don't increase * Alternative ways of
purchasing. Explore alternative
suppliers.

4. Fixed price 11
project (+/-0)
Description: in some areas we lack specialist competence and there is always a risk that we lose
the competence we have. Example: engineers in construction, key personnel and project leader
5. Lack of 7,4 competence.
competence (+/-0) Risk Response:
*Yearly updates of competence plans including execution and follow-up of plans.
6. Technical failure 4,5

in computer
network (+/-0)

TVaR
Risk name in Explanations
MSEK
Description: in some areas we lack
specialist competence and there is
always a risk that we lose the
competence we have. Example:
5.Lack of engineers in construction, key
compete 7,4 personnel and project leader
nce competence.
Risk Response:
*Yearly updates of competence
plans including execution and
follow-up of plans.

TVaR
Risk name in Explanations
MSEK
Description: in some areas we lack
specialist competence and there is
always a risk that we lose the
competence we have. Example:
5.Lack of engineers in construction, key
compete 7,4 personnel and project leader
nce competence.
Risk Response:
*Yearly updates of competence
plans including execution and
follow-up of plans.

Consulting for GUST 52
Take 1-3 examples of the risks in your
project and structure them:
Risk name ‘Cost’/ Description Response

danger
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Risk analysis template
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Change is implicit in risk
.. It is not just the
changing landscape but
Change
how you perceive the

risk!
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Factors that need to be remembered about risk
1. Companies and their managers differ in their

perceptions of what is risky, how tolerant they are of
taking risk, the returns they expect and the portion of
their assets they are willing to put at risk.
2. One company’s risk may be another’s opportunity.
3. Companies may reduce their risks by; e.g. avoiding
locations, insuring, etc., but they also cost.
4. There are trade-offs among risks. Avoiding a country
where political risk is high may leave a company more
vulnerable to competitive risk, if another company
earns good profits there.
Returns are generally higher where risk is higher!60

3 kinds of Risks
Political risks
Exchange and fund risks
Competitive risks
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Let’s look Political risks
Risks – providing a rough guide to possibilities

Analyzing past patterns –
What has happened and been happening in that country
China 1980’s onwards
Vietnam 1986 doi moi
Analyzing and assessing opinions

Companies may rely on commercial-risk assessment services rather
than generating their own risk analyses
Analysing and assessing examining risky social and economic

conditions.
Which are often related to political processes (BREXIT)
Let’s look Exchange and fund risks
Foreign Exchange
Argentina – 2016 (Peso – 1 £ = 22)
Argentina – 2019 (Peso – 1 £ = 96)
What is the effect if you are doing business?
Mobility of funds
Can you get funds out … or is it better to have a liquidity
preference, i.e. to keep some holding as liquid assets? Capital
markets and governments have large impacts on both these.
e.g. BREXIT
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Let’s look at Competitive risks
• Making operations compatible
• Spreading risk
• Following competitors or customers
• Heading off competitors
Compatibility
Is where operations are similar and a company feels ‘at home’ and
confident and is less affected by ‘liability of foreignness’. If a
company understands the local situation it will do better.
USA in Canada or UK ……Swedes in the Nordic region
There are often historical, economic, linguistic, cultural,
administrative reasons for compatibility.
e.g. Failure: Blockbuster failed in Germany because they could not

trade in the evening, on Sundays or public holidays.
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Gain advantages
How?
Spread risks and consider customers
& Competitors
09/01/2021 65
Spreading risks
Risks can be spread by operating in different
geographical areas.
It allows an organisation to smooth variations in sales and
profits, a ‘down’ can be balanced against an ‘up’ somewhere
else.
Knowledge can be gained and spread from one place to another,

e.g. technology know how.
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Crowd the market
Companies may deliberately crowd a market to

prevent competitors from gaining advantages
that can be used to use to competitive
advantage in other places. (China now has over
160 automobile producers). Is it sustainable?
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Following Competitors or Customers - Clusters
Companies may gain advantages by locating where
competitors are, as competitors may have already performed
the costly task of evaluating locations and building market
acceptance for a particular type of product.
Silicon valley California. Tech centre in N. Baltic, N. Spain,
Bangalore (India)
Think of what was happening in the old guilds!

Guild (36) streets of Hanoi – 36 trades
Hang Bac (silversmiths street) and Hang Ma (Votive papers)
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B. Following Competitors or Customers - Clusters
Companies may gain advantages by locating where competitors
are, as competitors may have already performed the costly task of
evaluating locations and building market acceptance for a
particular type of product.
Silicon valley California
Tech centres in N Baltic
Tech centres in N Spain.
Think of what was happening in the old guilds!

Guild (36) streets of Hanoi – 36 trades
Hang Bac (silversmiths street) and Hang Ma (Votive papers)
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Heading off or stopping the competition
• Be first on the market

A company may try to reduce competitive risk
- by getting a strong foothold in markets before competitors do
- by avoiding strong competitors altogether, or, when its
innovative advantage may be short-lived
• Build good relationships with officials, e.g. VW in China
• Get best partners, best suppliers and or best location.
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Fake news and incorrect data
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Utilising information is difficult, if it is false
(wrong) information – You must have the
BEST data/information posssible
1. Governmental resources may limit accurate data collection.

2. Governments may purposely publish misleading (EU was
unhappy with Greece in 2010 for falsifying public finance data).
3. Respondents may give false information to data collectors.
4. Official data may include only legal and reported market
activities and not including other ‘real’ data.
5. Poor methodology and inaccuracies in data collection, or
only based on estimates and sampling.
Also what are definitions of factors that will be included under: family
income, depreciation, literacy, etc.
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Strategy:
Decisions based on analysis and

judgement
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Strategy:

judgement
09/01/2021 75
Is our perception good?
Do we see things as they are?
Do we make good judgements?
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Perception and understanding
Do we see things in the same way?
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Are these blocks the same shade of grey?
Use your
finger to
cover the
middle line.
Light plays an
important part
in seeing
(‘interpreting’
colours .
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Perception - interpretation
What we see influences what we interpret (our
reality)
You are going to see a picture:
Who do you think is the visitor?
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How many children are in the picture?
How many pictures are on the wall?
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How many children are in the
picture?
How many pictures are on the wall?
8
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Holistic or Specific
Strategy:

judgement
09/01/2021 87
Strategy:
What to do?
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Should a business concentrate on
where it is or diversify more widely?
3 main choices are:
Concentrate
Diversify
Hybrid
1. Concentrate - Become a sizable presence in

one market:
The company moves to one or a few foreign countries

and develops a very strong involvement and
competitive position in each.
2. Diversify - Committed to multiple markets:
A company spreads itself geographically, often quickly,
but gradually increasing commitment in each location.
While paying special attention to the widespread
allocation of resources.
The company will eventually increase its involvement

by taking on activities that it first contracted to other
companies.
3. Hybrid
Moves to many markets but commits to (is really
focused on) only a few.

.
It all depends on 7 factors

1. Growth Rate
When growth rate in each market each market is fast or needs
to be high, a company should usually concentrate on a few
markets because it will cost a lot to expand output in each one.
If growth rate is slow a company may have enough resources to

build and maintain a market share in several different countries.
2. Sales stability
A company can smooth its earnings and sales across operations
in different markets. The more stable the sales and profits within
each market, the less advantage gained from a diversification
strategy.
Other factors to consider
91
3. Competitive Lead
If a company has a long lead time over competitors, it may be able to follow a
concentration strategy and still beat competitors into other markets. Or it
should give up leadership in some countries to competitors or follow a
diversification strategy.
4. Spill-over effects
Where marketing in one place ‘spills-over’ to another, i.e. they become
aware of the product from the original country. This means reaching
additional customers with little cost (e.g. word of mouth, internet, etc.)
5. Adaptation Companies
May have to change products and methods of operating abroad due to the
cost, this benefits a concentration strategy. The cost of adaptation may limit
the resources the company has for expanding in many different markets.
Additionally, if adaptation of products or services are unique to each country,
the company cannot easily spread the costs over sales in more than one
country, and therefore reduce total unit costs.
92
6. Programme Control requirements
The more a company needs to control its operations in a foreign market, the
more favourable is a concentration strategy. This is a consequence of a
company needing to use more of its resources to maintain that control, such
as by taking a larger percentage of ownership in the operation if it is worried
a partner will become a competitor.
7. Product diversification
When a company adds new products to its portfolio it must decide where and
how quickly to introduce them in its foreign markets. If the products are
related to their existing products, especially those they are already selling
abroad, the quicker they can get them onto different markets.

Role of product and market factor on decision
to concentration on one market or diversification in many
Product or market Diversification Concentration
factor
Growth rate in each Low High
market
Sales stability in Low High
each market
Competitive lead Short Long
time
Spillover effects High Low
Need for product,
communication Low High
and distribution
change
Programme control
requirements Low High

Rewards – Income / Profits
A company has a choice what to do with its earnings
• Take Profit
• Reinvest (back into the business)
If it is Reinvest, then a decision has to be made how

much to allocate to each location.
It could be FDI and a transfer of financial capital, as it
already has HR capital and a physical presence
(location capital) already in place.
FDI (Foreign Direct Investment)
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FDI Foreign direct investment
97
Some facts about FDI
• 1992-2013 FDI increased by 900% from all investing
countries
• World trade increased by value – 400%
• World output – 60%
• FDI can get round trade barriers
• A lot of increase in FDI are because of political and
economic changes
• China attracted $60bn of FDI in 2004, $124bn in 2011
• Main sources of FDI are USA, UK, Netherlands,
Germany, Japan, France

2 Types (Greenfield and acquistion)
• Greenfield (establish new operation in a country)
• Acquisition (acquire or merge … strategic alliance)

99
Why choose FDI when you could;
a) Export
b) License a product (service)?
Simply, because a) and b) have limitations for capitalising

foreign market opportunities

100
Limitations of export or licensing
Export Licensing
Transportation costs 1. May give away valuable

especially with products with technical know-how
low value to weight/volume
ratio) and can be produced 2. Takes away tight control of
almost anywhere, e.g. cement manufacturing, marketing and
strategy to maximise
Trade barriers and profitability
protectionism
Real or threatened … e.g. 3. If company’s competitive
Japanese car companies in advantage is on management,
1980s and 1990s marketing and manufacturing,
e.g. Lean production - Toyota 101
1952
15 countries manufacturing
Germany
USA
Argetina
Russia
China
India
…….
Patterns of FDI advantages
• FDI is used strategically to out-manoeuvre

competitors so a competitor does not have a
commanding position
• Location specific advantages, to utilise

resources/assets in a foreign location, e.g. oil

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Benefits and disadvantages for host country
Host country advantages
1. FDI contributes to the economy by supplying – financial
capital, technology, management resources.
2. Job creation e.g. Nissan in UK, Toyota in France
3. Balance of payments (money in and out of a country). FDI

counts as a substitute for import of goods or services .
Nissan supplying a European market from UK (within the
EU).
4. Greenfield FDI increases competition and consumer

choice (increased productivity, growth, innovation) e.g.
Carrefour, Tesco, Walmart in Korea
09/01/2021 ©Provox Training and Conseconomiculting for NEU - EBBA 104
Disadvantages
• Adverse effect on competition, e.g Foreign companies

e.g. Tesco, Carrefour may be too big for local
supermarkets to compete
• Balance of Payments – outflow of earning to foreign

based companies, or too many components imported
from abroad, e.g. Toyota in USA
• Loss of national sovereignity and autonomy
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105
Benefits and costs for home country
Avantages (+)
• Balance of Payments benefit from inflow of foreign
earnings
• Foreign subsidiary creates demands for home country
exports
• Learns skills from its exposure abroad
Disadvantages (-)
• Initial capital outflow
• No direct exports

106
Government instruments
1. At any one time governments play with tools
(instruments/policies) to get their balance of payments
stabilised.
2. Regulations and restrictions that restrict repatriation of

funds back to investor countries.
3. Encourage or restrict inward FDI, including tax

concessions, low interest loans, grants or subsidies
4. Countries can be restricted from certain fields, e.g.

tobacco and mining in Sweden, certain natural resources
in Brazil, Finland
107
Activity
Design a grid that Managers can use to compare

countries decide what factors/data you need to:
Help managers decide whether a particular
market is worth investing in or doing business
in.
Prioritise the variables depending on how they

will help to determine any final decision.

Decision Framework
How high are Low
EXPORT
transportation costs?
High
Can know-how be licensed? No

FDI
Yes
Is tight control over foreign
operation required? Yes FDI
No
How high are No FDI
transportation costs?
Yes
09/01/2021 ©Provox Training and Conseconomiculting for NEU - EBBA 109

Mid-course test
● You will all receive a document attached to an e-mail.
● You need to complete the questions on the two pages of the

document by yourself, you should get no help from anyone.
● You must send your answers back to me by e-mail and I

must receive them before 22.15 Hanoi time today.
● Any documents you send after that time will be scored 0

(zero).
● If you have a technical issue send me an e-mail as soon as

you notice a problem.
● If you copy answers from the internet you are

plagiarising and you will receive 0 (zero) for that
answer. The test is to find out what you know form the
lectures and the course as a whole.
Consulting for GUST 111
Business, Trade (export), Manufacturing
facilities, investment opportunities …
• Rough guide – brainstorm/ scan possibilities
• Detailed analysis.
• Example 1 – sales (product/service)
Choose a product or service and

brainstorm some ideas that you
should consider

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International

Session 6: Evaluation of countries and business

2. What factors must you consider to make a

3. What biases must you be aware of to avoid

How do I use my resources effectively?

• What are my objectives (goal) – locally and

09/01/2021 ©Provox Training and Consulting for NEU - EBBA 9

• Cultures can be more or less risk averse.

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Why do you think

09/01/2021 ©Provox Training and Consulting for NEU - EBBA 13

1) Female-owned firms generate higher

(in SMEsaccording to US Census Bureau, Dow Jones and HBR)

Take Less Risk Take More Risk

Japan, Israel, Austria, Pakistan …. India, USA, UK …

09/01/2021 ©Provox Training and

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We need to get an idea of how to evaluate

09/01/2021 ©Provox Training and Consulting for NEU - EBBA

Case of Sales (objective: expand sales)

Demographic Issues that need to be considered

Beauty, hair &

09/01/2021 ©Provox Training and

Prices. What is the disposable income of your target audience?

09/01/2021 ©Provox Training and Consulting for NEU - EBBA 27

The more demand shifts in relation to income changes, the more

Cultural factors and taste.

09/01/2021 ©Provox Training and Consulting for NEU - EBBA 28

Similarly in Stockholm, due to good public services people use cars

In a number of countries many people have little to spend, while

09/01/2021 ©Provox Training and Consulting for NEU - EBBA

• Risk analysis techniques- gaining

Costs – ‘provide a rough guide to possibilities’

When we need resources they are COSTS! (e.g. real estate to

Major common costs are:

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09/01/2021 ©Provox Training and Consulting for NEU - EBBA

It seems obvious to locate near your suppliers or

What if there are trade barriers and restrictions?

Easier if there is a trade agreement.

09/01/2021 ©Provox Training and

e.g. Cadbury in Nigeria (roads and transport)

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09/01/2021 ©Provox Training and Consulting for NEU - EBBA 39

Governments use things like: tax breaks, deferred taxes (e.g. No

Ease of border crossing, getting customs clearance delays.

Variations in corruption, difference is seen and unseen rules and

FTE 1 908 1 875 1 900 1 906 1 850 1 855 1 830

43 | BP Presentation | BU ERS Nordic | 2011.10.19

Confidentiality - High (C3) 44 | BP Presentation | BU ERS Nordic | 2011.10.19

Confidentiality - High (C3) 45 | BP Presentation | BU ERS Nordic | 2011.10.19

Confidentiality - High (C3) 46 | BP Presentation | BU ERS Nordic | 2011.10.19

Description: Price reduction can occur

Confidentiality - High (C3) 47 | BP Presentation | BU ERS Nordic | 2011.10.19

Description: Price reduction can occur

Confidentiality - High (C3) 48 | BP Presentation | BU ERS Nordic | 2011.10.19

6. Technical failure 4,5

Confidentiality - High (C3) 49 | BP Presentation | BU ERS Nordic | 2011.10.19

Confidentiality - High (C3) 50 | BP Presentation | BU ERS Nordic | 2011.10.19

Confidentiality - High (C3) 51 | BP Presentation | BU ERS Nordic | 2011.10.19

Risk name ‘Cost’/ Description Response

how you perceive the

1. Companies and their managers differ in their

Returns are generally higher where risk is higher!60