they limit their own investigations; instead, they simply watch their competitors' moves and go where they go, assuming that- the competitors have done their homework. Other firms go to considerable lengths to gather data carefully and examine options in the global arena.
Ideally, the firm should conduct global environmental analysis on three different levels: the multinational, regional, and national levels. Analysis on the multinational level provides a broad assessment of significant worldwide trends - through identification, forecasting, and monitoring activities. These trends would include the political and economic developments of nations around the world as well as global technological progress. From this information, managers can choose certain appropriate regions of the world to consider further.
Next, at the regional level, the analysis focuses in more detail on critical environmental factors to identify opportunities (and risks) for marketing the company's products, services, or technology. For example, one such regional location ripe for investigation by a firm seeking new markets is the European Union.
Having zeroed in on one or more regions, the firm must, as its next step, analyze at the national level. Such an analysis explores in depth specific countries within the desired region for economic, legal, political, and cultural factors significant to the company. For example, the analysis could focus on the size and nature of the market, along with any possible operational problems, to consider how best to enter the market. In fact, in many volatile countries, continuous monitoring of such environmental factors is a vital part of ongoing strategic planning. In Peru in 1988, inflation had soared to 2000 percent, and leftist terrorists were kidnapping
or murdering business leaders. Though key managers fled and many multinational companies pulled out of Peru, Procter &Gamble remained to take advantage of a potentially large market share when competitors left. “Everybody should be dying to come here - you couldn't go to a better business school [than what you learn by managing here],” saki Susana Elesperu de Freitas, the 34-year-old Peruvian manager of Procter & Gamble's subsidiary, who was flanked by armed bodyguards wherever she went. Since then, Procter & Gamble, a consumer- products company, has expanded and is now a major force in Peru.
This process of environmental scanning, from the broad global level down to the local specifics of entry planning is illustrated in Exhibit 6-4. The first broad scan of all potential world markets results in the firm being able to eliminate from its list those markets that are closed or insignificant or do not have reasonable entry conditions. The second scan of remaining regions, and then countries, is done in greater detail - perhaps eliminating some based on political instability, for example. Remaining countries are then assessed for competitor strengths, suitability of products, and so on. This analysis leads to serious entry planning in selected countries; managers start to work on operational plans, such as negotiations and legal arrangements.
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