This week you are introduced to another analytical tool: PESTEL analysis, which is used to examine the external country environments you are considering for your client’s expansion—the Political, Economic, Social, Technological, Environmental and Legal characteristics that may represent either Opportunities (supporting your client’s entry or operations) or Threats (barriers to entry or risks to operating in country). PESTEL analysis provides the country level O and T needed in your SWOT matrix. While the SWOT matrix also contains the internal company characteristics (S and W), PESTEL provides the external O and T at the country level, similar to how Porter’s five forces (7 forces) identifies O and T at the industry level. The goal in weeks 3 and 4 is to augment the OT components of the SWOT by adding country level Opportunities and Threats to the industry level O and T that you identified with your Porters Five (7) forces analyses. After you complete your country analyses (weeks 3 & 4), you will update your draft SWOT matrix to include the country level O and T.
Week Three: Individual Country Analysis and SWOT
Required Reading and Multimedia:
How to Write an Executive Summary
Evaluating the External Environment (Industry five forces and PESTEL ): https://saylordotorg.github.io/text_mastering-strategic-management/s07-evaluating-the-external-enviro.html
PEST in SWOT: http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=ers&AN=89677606&site=eds-live&scope=site
SWOT analysis: https://www.boundless.com/management/textbooks/boundless-management-textbook/strategic-management-12/internal-analysis-inputs-to-strategy-88/swot-analysis-427-607/
SWOT template: http://www.businessballs.com/free_SWOT_analysis_template.pdf
MBA Reference Guide (to consider social factors of PESTEL): Hofstede Cultural Dimensions of International Business
MBA Reference Guides
Porter’s Diamond of National Advantage
Required Research Data bases:
(BTI) Bertelsmann Transformation Index (BTI) is a rich source for country reports http://www.bti-project.org/en/reports/country-reports/ Search individual countries.
ABI/Inform (in UMUC library http://www.umuc.edu/library/libresources/index.cfm#list): Select the ABI/Inform Complete database from the list. To get to country content from the ABI/INFORM Complete home page, click on the Browse link toward the top left-hand corner of the screen and then scroll down to the Country Reports section. You’ll then see links for:
· EIU Country Data
· EIU Country Finance & Forecast Reports
· EIU ViewsWire
· Oxford Analytica Daily Brief Service
· Oxford Analytica Country Profiles
· Oxford Economics by Country Industry Forecast
· Oxford Economics Country Economic Forecast
· The EIU ViewsWire link expands into several categories, which can be expanded into more sub-categories. (To find country risk ratings, for example, you can click on the ViewsWire link and then on Economy and then on Country risk rating and then on the link for the country/countries of interest. There are 128 documents for Brazil, for example, 126 for Russia, 128 for India, 128 for China, and 23 for the U.S.)
Other Country level research databases
There are a few different databases to find country and industry reports, the UMUC library has guides here: http://libcf.umuc.edu/instruction/CountryInfo.html and here: http://polaris.umuc.edu/library/BusinessResearch/industryoverview.html on how to use UMUC’s different databases to get the information.
Here are some direct links
The Global Competitiveness Report 2016-2017, World Economic Forum. https://www.weforum.org/reports/the-global-competitiveness-report-2016-2017-1
Ease of Doing Business Index. The World Bank. http://data.worldbank.org/indicator/IC.BUS.EASE.XQ
Global Talent Competitiveness Index. INSEAD Global Indices 2017. http://global-indices.insead.edu/gtci/
You can do a google search for most recent URL’s for these reports:
World Bank Development Index,
IMF (International Monetary Fund)
UNCTAD (United Nations Conference on Trade and Development).
WTO (World Trade Organization)
W3 individual country analysis paper
Hide Assignment InformationInstructions
Week 3 individual assignment country analysis (14% of course grade)
You have already identified industry opportunity (buyer size and growth trends) and industry threats for your client. Now you will turn to country level analyses to find countries with positive opportunity for your client, and trends and threats that your client would need to mitigate if it entered that country.
Each individual on a team will use the PESTEL framework to analyze the POLITICAL, ECONOMIC, SOCIAL, TECHNOLOGY, ENVIRONMENTAL AND LEGAL opportunity and threat factors and trends in the external environments of two countries agreed to and assigned by the team in its week 3 work plan.
The grading rubric is here and posted in the Grading Guidelines and Rubrics module in course content.
· PESTEL and SWOT articles in Required Readings
· How to write an Executive Summary.
· Research Databases listed in Required Readings:
Assignment Objectives: Your objective is to compare PESTEL Opportunity factors for your client and Threats to your client in two country markets; specify trends in those Opportunity and Threat factors that are likely to affect the country’s business and economic environment over the next 3-5 years; and recommend one country as the better new market for your client.
Notes on Data analysis:
1.The data you collect and analyze should be clearly relevant to your client. For example, if the mountainous nature of the country is not relevant to your client, leave it out; otherwise, describe what that terrain means for your client (e.g., there will be high costs of distributing the products across country).
2. Compare the same Opportunity and Threat factors/trends for each of the countries and ensure that any ratings, rankings or aggregate measures you use are measuring the same underlying factors in both countries.
3. Whenever you use a country rating from a source, include a brief summary of the main country conditions (PESTEL factors) that contribute to the ratings. For example:
. “Business Environment” may be rated more favorably in one country. But what specifically is being measured: the POLITICAL, ECONOMIC, SOCIAL, TECHNOLOGICAL, and/or LEGAL indicators are more informative and may be morerelevant to your client than the summary measure would indicate.
Similarly, if you use a “Risk” Rating (e.g, “Political” risk) based primarily on government regulations a higher risk rating may not be as important as the types of risk that are being aggregated into a summary ranking (e.g, lack of contract law or unreliable legal system). Know the components of the rating summary so you can determine their relevance to your client.
For example, if “Business Environment” or “Risk” is rated better in one country primarily because of legal protections for IP (which shape the overall better rating), but your client has no IP to protect in its expansion, then the more favorable ranking in one country is not relevant to your client, and both countries might be considered equally attractive IN SPITE of the better overall ranking of one..
Assignment format and requirements:
The Introduction to this paper should consists of (a) your statement of purpose; and (b) a description of your clientcompany and industry (from your team’s W2 analyses); (c) a description of the kinds of BUYER your client will need for its product/service, as you identified in your company profile, (e.g., high income buyers for luxury items; positive attitudes towards green technology if your client is selling that kind of product/service; (d) a list of your company NEEDS to operate in country; e.g., what kind of infrastructure, any intellectual property protection, characteristics of a needed in-country workforce, as you have also identified in your company profile. Since you will need these Buyers and supportive requirements in country, they will give focus to the data you collect for your PESTEL analyses.
The body of the paper (approximately 10-15 pages double spaced) should be organized around Opportunity factors and trends first, and then Threat factors and trends: Do not organize by country, but compare the countries on each Opportunity and Threat factor. (e.g, Economic Opportunity: country A vs. Country B. See the example paper for Country Selection Rationale provided in this module).
I. Opportunity factors and Trends.
A. Economic Market Opportunity and potential growth:ALWAYS START WITH THE $’S WORTH OF OPPORTUNITY! Will this country have the buyers and the buyer capability to purchase what your client is selling.
As an initial comparison, you can start with macro level measures from Five Year Economic Forecast, including GDP and Personal Disposable Income (PDI) as indicators of ECONOMIC opportunity—the Buyers’ potential ability to purchase your company’s product/service. However, you should try to get as close as possible to indicators of opportunity for your client’s particular product/service;: For example, if you are selling software to hospitals, look for health care spending; if your client is selling cybersecurity services, look for cybersecurity spending to compare across the two countries. Collect the same information for both countries in order to compare them!
B. Opportunity support factors are those PESTEL factors and trends that support the Economic market opportunity for your client; e.g..,
1. Political support may consist of existing or pending trade agreements or positive trade relations with the client’s home country; government policy that supports funding/advancement of your client industry
2. Economic support may consist of tax benefits that will help your client, low or trending lower tariffs relevant to your client’s product/service;
3. Social support may consist of favorable attitudes towards U.S. companies or growing interest in your client’s type of product (e.g., green technology, luxury goods)
4. Etc…. for Technological, Environmental , and Legal support factors and trends
5. Specifically include supports for your client’s operational needs
II. Threat factors and trends
Country PESTEL Threats and trends should be ranked by degree of threat, along with an explanation for your assessment/ ranking; e.g., if you consider political instability to be a greater threat in the country than currency fluctuation (Economic threat), explain why.
Include under the appropriate PESTEL the Threats to your client’s operational needs. For example, if a technologically sophisticated workforce is required for your client to operate successfully in country, a country that lacks such social (education) support will be a significant risk for your client’s operational success.
III. The Opportunity and Threat factors/trends can be shown in a summary table, but the text should explain how you weighted the factors/trends in order to compare Opportunity and Threat in the two countries.
IV. Conclude with a summary recommendation for one country as the better entry option.
VI. Write an Executive Summary for the entire paper (include company and industry description). Aim for approximately 2 pages, double spaced.
VII. Include a Title Page (with your name!) and a Table of Contents placed just after the Executive Summary. Pages should be numbered, starting with page one as the Body of the paper (your statement of purpose), The Executive Summary can be unnumbered or numbered as i, ii…but it is not a part of the body of the paper.
VIII. Include a Reference list, using proper APA format for references and all in-text citations.
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