Diploma in Global Business 2012/2013
Diploma Project: A Scorecard for Global Expansion of the PDC Drill Bit Business
Submission date: 22 March 2013
Project scope was to develop a scorecard, inspired by Ghemawat’s CAGE framework (below), to select countries for market entry by Ulterra.
Literature review covered distance-based factors for country selection and work on factors relating to market size and effectively to Porter’s five market forces.
Literature also found evidence that mode of entry is equally important, even though this had not been part of the original project proposal.
Based on the literature search, and covering market, distance and value factors, a scorecard was proposed for country selection.
Having defined likely factors for the scorecard, a set of industry experts was chosen for lengthy interviews to explore further.
The interviewees agreed on the importance of some country selection factors, and advised on possible sources of intelligence to populate a scorecard.
The interviewees disagreed on the importance of other factors, especially distance-based factors, and this appeared to be related to their specific experience of choice of entry mode. They also suggested that adaptation be considered. Further literature review then suggested that externalization, in order to reduce the burden of variation caused by distance, should be strongly considered.
Scores and weightings for each country in the Middle East and North Africa (MENA) were created based on the research results, and validated against Ulterra’s revenue in each of these markets. Scorecard factors based on market size or market forces showed a good correlation. Distance-based factors did not, suggesting that they may be closely related to the choice of entry mode, as had been predicted by the literature.
Countries in the Asia Pacific region were scored using the scorecard and prioritized for possible entry.
Further work should explore the relationship between scorecard factors and possible entry mode creating an improved model to inform the entry mode decision.