1. International Business Research
CHAPTER 11
Hao Zhuo
TFSU

2. Learning Objectives The Composition of BOP Accounts
How are the BOP Accounts Balanced
The Mechanics of International Economic Crises

3. The Process of Business Research
Setting Objectives
Collecting Data and Information
Making the Analysis

4. The Analysis on Foreign Business environment
country research
industry market research
company research

5. Source: http://www. mckinseyquarterly. com/article_page. aspx

6. Four Often-used Methods
The cold-and-hot evaluation
Risk Index on Foreign Business Environment
The Scoring Method for Assessing Foreign Business Environment
The dynamic analysis attaching importance to the changes of the business environment in a foreign nation

7. Table 11-1: Risk Index on Foreign Business Environment
Items
Weight
Score
Political stability
2.5
0~4
Economic growth rate
Currency conversion
Salary and labor productivity 2
Supply of short-term loans
Long-term loans and capital raising
Attitudes on foreign investment and profits
1.5
Policies on state-owned enterprises
Inflation
Balance of payments
Fulfillment of contracts
Bureaucracy 1
Professional business services
Source: Editorial committee on Elaboration of Harvard: The New Economy (2001),
International Business, China Business United Press.

8. The Scoring Method for Assessing Foreign Business Environment
Environmental Factors
Score
I. Capital Withdrawal
No limit
Limit on time
Limit on capital withdrawal
Limit on both capital withdrawal and profit remittance
Many limitations
Capital withdrawal is not allowed.
(0-12) 12 8 6 4 2
II. Foreign Equity
Permit and welcome wholly foreign-owned investment
Permit but not welcome wholly foreign-owned investment
Permit majority foreign ownership
Foreign ownership can not exceed 50%.
Only minority foreign ownership is allowed.
Foreign ownership can not exceed 30%.
Foreign ownership is not allowed. 10
III. Treatment and Control on Domestic firms and Foreign firms
The Same
Some limits, but no controls on foreign firms
No limits, but some controls on foreign firms
Both limits and controls on foreign firms
Strict limits and strict controls on foreign firms
Foreign investment is not allowed.
IV. Currency Stability
Freely convertible
The difference between the black market and the official quote is no greater than 10%.
The difference between the black market and the official quote is 10%-40%.
The difference between the black market and the official quote is 40%-100%.
The difference between the black market and the official quote is greater than 100%.
(4-20) 20 18 14

9. The Scoring Method for Assessing Foreign Business Environment
V. Political Stability
Long-term stability
Stability depends on the party in power
Some political splits but still in control
Influential political powers both inside and outside the country
Possibility for coup d'etat, overthrow and turbulence
Instability, great possibility for coup d'etat or turbulence
(0-12) 12 10 8 4 2
VI. Willingness to grant tax protection
Extensive tax protections
Substantial tax protections, esp. on new industries
Certain tax protections, mainly on new industries
Little or no tax protections
(2-8) 6
VII. Local Financing
Developed capital market, open security exchanges
Some local capital, speculative security market
Limited capital market, some available foreign capital
Capital deficiency, short-term capital
Strict capital control
High capital fleeing
(0-10)
VIII. Inflation in the last five years
Less than 1%
1%-3%
3%-7%
7%-10%
10%-15%
15%-35%
Greater than 35%
(2-14) 14
Total
(8-100)
Source: Editorial committee on Elaboration of Harvard: The New Economy (2001),
International Business, China Business United Press

10. Types of Research and Sources of Data
Office Research
Field Research: interviews, observations and surveys

14. The Information System
An information system is a channel to facilitate the free flow of data and information.
The mechanisms used include environmental scanning, Delphi studies and scenario building

15. Thank you!