Country selection and evaluation

INTERNATIONAL BUSINESS, DIVERSIFICATION, COUNTRY SELECTION AND EVALUATION, STEPS REQUIRED IN COUNTRY SELECTION AND EVALUATION, TYPES OF RISKS, COUNTRY COMPARISON TOOLS, NON COMPARATIVE DECISION MAKING, CASE STUDY of Ford

1. COUNTRY SELECTION AND EVALUATION .

2. INTERNATIONAL BUSINESS

3. DIVERSIFICATION

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5. COUNTRY SELECTION AND EVALUATION This process determines the geographical opportunities firms choose to pursue and the challenges of marketing and production site location . It goes on to carefully examine the process by describing the choice and weighing of variables used for opportunity and risk analysis as well as the inherent problems associated with data collection and analysis of a particular country .

6. 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.

7. CONTD.. To know the methods and problems when collecting and comparing information internationally. To understand some simplifying tools for helping to decide where to operate .

8. STEPS REQUIRED IN COUNTRY SELECTION AND EVALUATION

9. SCANNING Through the use of scanning, decision makers can perform a detailed analysis of a manageable number of geographic locations .

10. IDENTIFICATION OF IMPORTANT FACTORS AFFECTING COUNTRY SELECTION AND EVALUATION The Environmental climate of the host country could significantly affect an enterprise’s success or failure , therefore the combination of the two factors that determine what actions should be taken should be kept in mind:

11. OPPORTUNITIES Opportunities are determined by competitiveness and profitability factors. These includes:

12. MARKET SIZE Market size is determined by sales potential . Data such as GNP, per capita income, population, income distribution, economic growth rates, and levels of economic development will also be useful.

13. EASE AND COMPATIBILITY OF OPERATIONS Companies are naturally attracted to countries that are located nearby , share the same language and offer market conditions similar to those in their home countries . Beyond that, proposals may then be limited to those countries that offer, among other factors, the appropriate plant size , the local availability of resources and the sufficient repatriation of profits .

14. COSTS AND RESOURCE AVAILABILITY Costs are a critical factor in production location decisions . Productivity related factors include:

15. CONTD.. The quality of a country’s infrastructure can be very important in location decisions. Firms often need to locate in an area that will allow them to move supplies and finished product s very efficiently .

16. RED TAPE AND CORRUPTION Red Tape includes: unnecessary paperwork having multiple people or committees to approve a decision, and, various low-level rules that make conducting one's affairs slower, more difficult, or both.

17. CONTD.. It usually involves the difficulty of: getting permission to operate, obtaining licenses to produce and market goods and satisfying government agencies on matters such as taxes, labor conditions and environmental compliance.

18. CONTD.. Government corruption may include requirements of payments to win a contract or receive government services , such as visa issuance . Although not always a directly measurable cost, red tape and corruption increase the cost of doing business .

19. RISK Firms usually experience higher risk and uncertainty when they operate abroad . Given the same expected return, most decision makers prefer a more certain outcome to a less certain one . As part of a feasibility study, the degree of acceptable risk should be determined so a firm does not incur unacceptable costs.

20. TYPES OF RISKS

21. COLLECTION AND ANALYSIS OF DATA Firms perform research to reduce uncertainties in their decision processes, to expand or narrow the alternatives they consider and to assess the merits of their existing programs .

22. COUNTRY COMPARISON TOOLS

23. GRIDS Here country comparison is done on the basis of potential returns and perceived risks present in the country. Countries are ranked in order of these factors . The present situation and objectives of different firms can be determined through this ranking.

24. MATRICES Here the countries are arranged by managers in the: Order of perceived value of opportunity offered by the country, and Order of expected level of risk associated with operating in that country. Weights and scores are given and on those basis country is selected .

25. ALLOCATING AMONG LOCATIONS Over time, most of the value of a firm’s FDI comes from reinvestment. Thus, in deciding where to invest, firms must consider whether to reinvest or harvest , to what degree there is interdependence among their locations and whether they should diversify or concentrate their activities.

26. NON COMPARATIVE DECISION MAKING Companies often examine one opportunity at a time rather than ranking a set of foreign operating proposals using predetermined criteria. Companies need to respond to opportunities as they arise . Decision makers often need to react quickly for both offensive and defensive motives .

27. MAKING FINAL COUNTRY SELECTIONS For new investments companies develop detailed estimates of all costs and expenses and consider whether to enter a particular venture alone or with a partner . For acquisitions , firms will need to examine financial statements in great detail . To maximize expected gains , decisions must be made in a timely fashion.

28. SELECTION AND EVALUATION PROCESS FOR OUTSOURCING IN I.T. BUSINESS

29. CONTD.. SELECTION When considering offshore operations firms have to look at , what is called, in the context of offshore outsourcing, low cost countries . These types of countries are usually developing countries, countries in transition, third world countries or emerging economies.

30. CONTD.. Low cost countries have:

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34. CONTD.. EVALUATION After reviewing country resources and pre-selecting a number of prospective outsourcing destinations it is time to evaluate those countries more in detail . Before constructing the country evaluation grid a good inventory of resources is created .

35. CONTD.. The resource inventory include: General country information, references and research, Third party sector research, Web resources, Trade and industry association, and Government resources.

36. ADVANTAGES Country Selection and Evaluation helps in determining: the geographical opportunities, challenges of marketing and production site location, the order of country entry, the rates of resource allocation across countries,

37. CONTD.. Where to market and where to produce.

38. CASE STUDY

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40. CONTD.. Ford Motor Company is an American multinational corporation and the world's fourth largest automaker based on worldwide vehicle sales. It emphasised on 100% control over foreign expansion .

41. CONTD.. While Ford attained international status in 1904 with the founding of Ford of Canada , it was in 1911 the company began to rapidly expand overseas . By the end of 1919 , Ford was producing 50% of all cars in the United States , and 40% of all British ones By 1920 , half of all cars in the U.S. were Model Ts .

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43. CONTD.. Soon there was opening of assembly plants in England and France, followed by Denmark (1923), Germany (1925), Austria (1925) and Argentina (1925)and also in South Africa (1924) and Australia (1925) as subsidiaries of Ford of Canada due to preferential tariff rules for Commonwealth countries.

44. CONTD.. By 1930 Ford was manufacturing or  assembling automobiles in 20 foreign countries. By 1998, Ford sold in over 200 countries and territories and had production in 30 different countries.

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46. CONCLUSION It helps in determining the geographical opportunities firms choose to pursue. It helps in determining challenges of marketing and production . It helps in determining site location . Both the order of country entry as well as the rates of resource allocation across countries can be determined through this process .

47. CONTD.. It is due to this process that careful examination is done by describing the choice and weighing of variables used for opportunity and risk analysis . Decisions regarding whether to continue investing in a particular operation or to harvest the earnings (and possibly divest the assets) and use them elsewhere are taken with the help of country evaluation.

48. CONTD.. It promotes cross border transactions of goods, services, resources between two or more nations. It helps in the transaction of economic resources including capital, skills, people etc. for international production of physical goods and services.

49. THANK YOU