CINEMA 7 Lecture Notes - Lecture 16: Pankaj Ghemawat
Document Summary
A lot of companies become so dazzled by the sheer size of untapped markets that they lose sight of the vast difficulties of pioneering new, often very different territories. The most prominent tool to evaluate an expansion is the country portfolio analysis tool (cpa), the hoary but still widely used technique for deciding where a company should compete. By focusing on national gdp, level of consumer wealth, and people"s propensity to consume, cpa places all the emphasis on potential sales. Cpa ignores the costs and risks of doing business in a new market. Most of the costs and risks results from barriers created by distance, and not only geographic separation. A company is likely to trade ten times as much with a country that is a former colony, for instance, than with a country to which it has no such ties.
