9. Tool: Country Analysis

Managers need to be able to make predictions about a country’s future if they think about expanding. A country analysis, as developed at the Harvard Business School, is a four-step process that attempts to organize all available economic, social, political, and geographic data for strategy development.

Step 1: Analyze the Past Performance
In a first step, management should analyze all available measures, e.g. the exchange rates, GNP, inflation, employment, investment, consumption, population growth, education level, etc.

Step 2: Identify the Country’s Strategy
After analyzing the past performance, management should try to identify the main goals of the country’s government (linked to the productivity of the economy) as well as the fiscal, monetary, trade, and social policies.

Step 3: Analyze a Country’s Context
In a third step, management has to evaluate the “basic facts” about the country, e.g. several physical indicators (size, population, geography), political indicators (government type, stability, corruption) and international indicators (trade advantages, competitiveness).

Step 4: Make a Prediction
Now management should be able to combine all important information and make a prediction based on steps 1, 2 and 3.