Download - Country Evaluation and Selection
IAF 605 - International Business Management
Week 9
Country Evaluation and Selection
Agenda
Review Chapter 11
Chapter 12 – Country Evaluation and Selection
Burger King Beefs Up Global Operations
Review
Chapter Objectives
To grasp company strategies for sequencing the penetration of countries
To see how scanning techniques can help managers both limit geographic alternatives and consider otherwise overlooked areas
To discern the major opportunity and risk variables a company should consider when deciding whether and where to expand abroad
To know the methods and problems when collecting and comparing information internationally
To understand some simplifying tools for helping to decide where to operate
To consider how companies allocate emphasis among the countries where they operate
To comprehend why location decisions do not necessarily compare different countries’ possibilities
Companies lack resources to take advantage of all international opportunities.
Companies need to:
Determine the order of country
entry.
Set the rates of resource
allocation among countries.
In choosing geographic sites, a company must decide:
Where to sell. Where to produce.
Location, location, location
Location Decisions Affecting International Operations
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall
Figure 12.3: The Location-Decision Process
Scanning
aids managers in considering alternatives that might otherwise be overlooked
helps limit the final detailed feasibility studies to a manageable number of those that appear most promising
Source: kltprc.net
Escalation of Commitment
Source: jnrphotography.com
Scanning for Opportunities
Sales expansion - Economic and Demographic Variables
Source: zastavki.com
Scanning for Opportunities
Resource acquisition - Cost Considerations
Source: newsdesk.si.edu
Factors to Consider in Analyzing Risk
political
monetary
competitive
natural disaster*
perceptions of risk | opportunity | how to reduce | trade-offs
* See the Disaster Risk Index: http://www.nat-hazards-earth-syst-sci.net/9/1149/2009/nhess-9-1149-2009.html
Collecting and Analyzing Data
value (revenue gains or cost savings)
costs of information
Problems
with
research
results and
data?
Some Problems with Research Results and Data
Inaccurate Info
• The amount, accuracy, and timeliness of published data vary substantially among countries
Noncomparable Info
• Managers should be particularly aware of different definitions of terms, different collection methods, and different base years for reports, as well as misleading responses
Image sources: http://aznmusic.files.wordpress.com/2008/01/chinglish.jpg; http://www.flickr.com/photos/thebusybrain/2492945625/
External Sources of Information
Individualized Reports
Specialized Studies
Service Companies
Government Agencies
International Organizations and Agencies
Trade Associations
Reminder
July 27th
group assignment
due
Country Comparison Tools – Grids and Matrices
Allocating Among Locations
Reduce the risk of liability of foreignness by moving first to countries more similar to their
home countries.
Contract with experienced companies to handle operations for them, limit the resources they
commit to foreign operations, and delay entry to many countries until they are operating
successfully in one or a few.
The Usual Pattern of Internationalization – Gradual Commitments
Geographic Diversification versus Concentration
Strategies for ultimately reaching a high level of commitment in many countries are:
• Diversification—go to many fast and then build up slowly in each.
• Concentration—go to one or a few and build up fast before going to others.
• A hybrid of the two.
To Diversify or to Concentrate: The Role of Product and Market Factors (p461)
Reinvestment Versus Harvesting (Divesting)
A company may have to make new commitments to maintain competitiveness abroad.
Companies must decide how to get out of operations if:
They no longer fit the overall strategy.
There are better alternative opportunities.
Noncomparative Decision Making - one proposal at a time
Companies may need to:
• react quickly to proposals
• respond to competitive threats
• because multiple feasibility studies seldom are finished simultaneously
Unanticipated Prospects
Proposal C
Proposal B
Proposal A
Burger King Beefs Up Global Operations (p465-470)
1. By mid-2009, Burger King was not in any of the following five countries: France, India, Nigeria, Pakistan, and South Africa. Compare these countries as possible future locations for Burger King.
2. When entering another country, discuss the advantages and disadvantages that an international restaurant company, specifically Burger King, would have in comparison with a local company in that market.
3. About two-thirds of Burger King’s restaurants and revenues are in its Americas region (United States and Canada) and one-third elsewhere. Should this relationship change? If so, why and how?
4. The case mentions that Burger King prefers to enter countries with large numbers of youth and shopping centers. Why do you think these conditions would be advantageous?
5. How has Burger King’s headquarters location influenced its international expansion? Has this location strengthened or weakened its global competitive position?
6. Evaluate Burger King’s strategy of using the Brazilian experience to guide its entries into Russia.
Homework
review Chapter 12
do quiz (Blackboard)
read Chapter 13 – Export/Import strategies
read/be prepared to discuss p499-500A Dirty Dilemma: Exporting Hazardous Waste