Chapter 13 : Evaluation of countries for operations (Geographic…
Chapter 13 : Evaluation of countries for operations
First case : Burger King story
Three important factors for business succes
The sequence for entering different countries.
The portion of ressources and efforts to allocate to each country where they operate.
The location of sales, production, and administrative and auxiliary services.
How does scanning work ?
Step 2 Detailed Analysis : Now the company have a list of prosperous countries, managers need to compare the feasibility and desirability of each.
Step 1 Scanning : It is the process by which companies examine a big amount of countries in order to find the best for business.
What information is important in scanning ?
Ressource aquisition : Does it is easy to acces ressources in this country ?
Risks (Political, Foreign exchage, competitive ...)
Some problems with research results and data
Inaccuracy : Governmental resources may limit accurate data collection, govermments may purposely publish misleading information, respondents may give false information to data collector ...
Non-comparability : Countries do not necessarily publish report such as censuses, output figures ...
External sources of information
International Organizations and Agencies
Geographic diversification VS concentration
Sales stability in each market
Competitive lead time
Growth rate in Each market
Need for product, communication and distribution adaptation
Program control requirements
Subsequent product diversification
Reinvestment and harvesting
Harvesting : Companies commonly reduce commitments in some countries because those countries have poorer performance prospects than do other.
Reinvestment decisions : Companies treat decisions to replace assets or to add to the existing stock of capital from earnings abroad somewhat differently from investment decisions.