Case Study

Evaluating the Risk of Entering New Markets

Company

Fortune 500 financial services company operating in 75+ countries.

Challenge

The client lacked a system and governance structure to evaluate the risk of entering international markets. The company had previously been unsuccessful in entering new markets and wanted to effectively expand their global footprint.  Furthermore, this system needed to be aligned to the ten-year forecasting process and the internal allocation of capital based on the expected returns for expansion.

Intervention

Bâton Global (B|G) developed a customized, industry and firm specific tool to assess overall market risk that expanded beyond solely economic and financial metrics.

Results

The design and integration of the tool provided more accurate pricing and capital allocation estimates in entering new markets. It also gave leaders on the executive team and in business units an opportunity to make more data-driven, strategic decisions.

Project Scope

The scope of this project includes four main areas of activity:

Insight

The Insight phase of the project focused on the development of justified and standardized definitions, understandings, and quantification of country risk across 10+ businesses supporting operations in 75+ countries.

  • Conducted internal review of concerns, objectives, and understanding of country risk through a review of internal strategic risk documents as well as interviews and focus groups with executive stakeholders.
  • Developed and implemented data collection, cleaning, and aggregation tools for secondary data.

Innovation

Innovation in the project included:

  • The development of the tool specifically aimed to include risks typically omitted from financial models including risks related to changes in the political environment, socio-cultural dynamics, and internal capabilities.
  • Developed a method to weight, aggregate, and synthesize the secondary data in accordance with firm priorities.
  • Developed an internal online survey to gather systematic perceptions of firm/unit strengths, weaknesses, resources, and capabilities. The survey was deployed across several countries in three languages.

Integration

The Integration phase of the project focused on supporting the internal team to manage the process and the executive team to rolling out the process across the enterprise.

  • Developed research deliverables for the client to support knowledge development and sharing for business unit heads, country leads, and senior executives.
  • Presented at company events to educate stakeholders and build support for the new processes.
  • Trained the internal team to take over management of the process once the first round of beta testing was completed.

Impact

Design of tool enables:

  • Improved pricing of global M&A activity, improved P&L projections, and more accurate cost of capital calculations through an increasingly robust analysis of both the internal and external environment.
  • More accurate country risk forecasting of impacts on financial and operational metrics.
  • Improved data-driven tactical and strategic decision making at the business unit and corporate levels of the organization.