INT 113 Notes on Chapter 13
Chapter 13 of Introduction to International Business: Objectives for Assessing and Choosing
Countries How Important Location Is Companies must use caution while selecting a nation since
they have limited resources: oThe site of administrative and ancillary services, such R&D, as
well as sales, manufacturing, and those. The procedure for entering various nations. The amount
of resources and energy to devote to each nation in which they conduct business. Companies lack
the resources necessary to seize all global possibilities. A business may start by deciding whether
to focus on home or foreign markets. For instance, General Electric wants to sell 60% of its
products abroad. After that, a business can order its entrance by nation or area. As soon as it
begins to operate in several nations, it must divide its efforts among them. Where to sell is a
decision a firm must make when selecting geographic areas. What to create where Several
service sectors, including restaurants (like Burger King), construction, and retailing, are required
to situate the majority of their manufacturing facilities close to their international clients.
Large-scale capital-intensive manufacturing technologies, such those used in the manufacture of
steel and autos, promote production in a small number of nations and exporting to everybody
else.
Complexities in production sites include procuring components and raw materials from many
nations and distributing operational tasks among them (e.g., headquarters in one, a call center in
another, an R&D facility in still another, and so on). A business must seize fresh chances and
pass on less lucrative ones. Comparing Nations Using Scanning Managers assess and compare
nations based on broad indications of opportunities and dangers using scanning methodologies.
Exactly why is scanning crucial? Scanning is helpful in that it prevents a business from
considering either too few or too many options. It's like sowing broadly and then culling away
potential candidates. Without scanning, businesses might not take all alternatives into account or
could obsess them.
First step: scanning Using information that is easily accessible, affordable, and widely similar,
managers scan a large number of nations in order to focus more in-depth investigation and visit
just the most promising ones. They may take into account a huge collection of nations, such as
all those in a worldwide region, because they employ information that is generally simple to
come by. Through "yes" or "no," direct data, indirect indications, and qualitative assessment,
scanning provides answers to queries. Step 2: Comprehensive Study Following screening, on-site
visits are a step in the final location selection process. Managers, for instance, must choose
where to place the greatest emphasis on sales. They'll probably need to travel to the nations that
made the short list to examine the markets and meet with distributors. If outsourcing, they would
wish to look at the facilities of possible contractors. If they want to build their own facilities,
they must gather particular local data on things like the cost and availability of materials and
land. Companies are more inclined to embrace an alternative, regardless of its merits, the more
time and money they devote to researching it. This is referred to as escalation of commitment. A
feasibility study should include distinct decision points so that management can end the
commitment before investing excessive amounts of money.
Danger and advantage determinants Managers must first decide which national circumstances
they will not tolerate. They make scanning easier by excluding nations with intolerable
conditions. Companies must then take into account opportunity and risk indicators that might
have a big impact on whether they succeed or fail. Just so you know, some circumstances could
be seen by one organization as an opportunity but a risk by another. Opportunities: expansion of
sales The main draws of a possible site are usually the expectation of a sizable market and sales
growth. Managers would want to obtain nation sales numbers for the products they wish to
market, but they may not have access to such data, particularly if they wish to launch a new
product. When this occurs, they can guestimate commercial viability by looking at how sales of a
comparable or related brand have fared.
