The Peren–Clement index is a method of country-specific riskanalysis for businesses engaged in international trade and direct investment.[1][2][3] This instrument provides a guideline when deciding which foreign markets offer the possibility of additional business engagement and investment and the extent of an existing engagement or investment can be increased or should be reduced.[4]
The Peren-Clement index can be used as an early detection system, which evaluates probabilities and risks of an investment in a certain foreign market, which are determined by the political situation, its social, economical and judicial environment as well as its predictable or anticipated future developments of that country.
These kind of analyses are conducted amongst other things by international rating agencies, export credit insurances and international organisations. In many cases the analysed countries are brought into a country rating.[5]
Methods
The aim is the classification of countries in an order of precedence, for example in regard to their attractiveness for a financial investment. Because country risks are not an objectively certifiable commodity and are not directly observable, stable correlations between observable risk-determining and representative quantities must be searched for. Hereby, one must differentiate between qualitative (political situation) and quantitative (economic results) risk factors. The country-specific risk analysis also requires a retrospective observation, which attempts to discover the causes of risks and lay open the cause-and-effect relations. Thereafter, the factors which are to be predicted are deduced and indicators for a prognosis are determined, so that the next step leads to a cause-related and future-oriented risk evaluation.
The Peren–Clement index is a risk index for the evaluation of country-specific risks concerning direct investment. Besides the Business-Environment Risk Index, it is one of two established indexes for the country-specific risk analysis.[6][7] When looking at risk-indexes, it is normally the case that company-wide factors initially come to the fore. The Peren–Clement index also starts from this point, but orientates the factors towards a core statement that is relevant in practice. Similarly constructed Indexes (including the BERI Index, see German article) refrain from interrelating their risk analysis with corporate objectives in the course of events. But practical experience shows that the assessment of country-specific risks for direct investment can not be looked at separately from the particular existing motives. Empirical analyses show that especially cost- and production-dependent as well as marketing oriented motives dominate the decision for, or against, direct investments.[8][9]
The type of investment and the motives of the particular companies result in different site-related factors and different emphasis on the individual factors respectively. For a cost-oriented foreign investment one would lay a stronger emphasis upon the cost- and production-oriented factors and the choice of location would be made thereafter. In contrast, for marketing-oriented investments factors such as competitive environment and size of the market will be of higher importance. Peren–Clement’s risk-index is thus coined by three categories of influencing factors:
Company-wide factors
Cost- and production-oriented factors
Marketing-oriented factors
The index can be complemented, amongst others, by inclusion of additional motives. For instance companies that aim to secure their raw material base, will keep an eye on the accessibility of raw material sources. For this the political stability and compliance with stipulations play a role.
The total achieved score for the individual country can now be classified in the model. Hereby the respective country-specific risks can be graded into classes and an estimation of risks can be made.
References
^Beer, S.: China Sourcing. Einkauf im Land der Mitte, Hamburg 2012, p. 56. (in German)
^Schneider, A.; Schmidpeter, R.: Corporate Social Responsibility: Verantwortungsvolle Unternehmensführung in Theorie und Praxis, 2nd. ed., Berlin Heidelberg 2015, p. 1095. (in German)
^Apfelthaler, G.: Marktsegmentierung im internationalen Bereich, in: Pepels, W.: Marktsegmentierung - Methoden zur erfolgreichen Marktsegmentbearbeitung, 3rd. ed., Düsseldorf 2013, S. 272. (in German)
^Peren, F.W., Clement, R.: Globale Standortanalyse, Harvard Businessmanager, 6/1998, pp. 70–77 (in German)
^Reineke, Rolf-Dieter, and Bock, Friedrich (editors), Gabler Lexikon Unternehmensberatung, p. 248, at Google Books, Wiesbaden 2007, pp. 248–249. (in German)
^Wankel, C.: Encyclopedia of Business in Today's World, 2009, S. 137.
^Clement, Reiner; Peren, Franz W. (2017). Peren-Clement-Index: Bewertung von Direktinvestitionen durch eine simultane Erfassung von Makroebene und Unternehmensebene. Springer Gabler, Wiesbaden. doi:10.1007/978-3-658-17023-3. ISBN978-3-658-17022-6.
^ Pakusch, Christina; Peren, Franz W.; Shakoor, Markus Arian (2017). "The PCI - A Global Risk Index for the Simultaneous Assessment of Macro and Company Individual Investment Risks". Journal of Business Strategies. 33 (2): 154–173.
^Christina Pakusch, Franz W. Peren, Markus Arian Shakoor. Peren-Clement-Index – Eine exemplarische Fallstudie; in: Gadatsch, A. et al. (ed.): Nachhaltiges Wirtschaften im digitalen Zeitalter. Ein Leitfaden für innovative Führungspersönlichkeiten. Springer Gabler, Wiesbaden 2017. pp. 105–118.{{cite book}}: CS1 maint: multiple names: authors list (link)
Further reading
Franz W. Peren, Reiner Clement: Peren-Clement Index – PCI 2.0: Evaluation of Foreign Direct Investments through Simultaneous Assessment at the Macro and Corporate Levels. Passau: MUR-Verlag, 2019. ISBN978-3-945939-19-2
External links
Peren-Clement-Index, Gabler Lexikon (in German)
Springer Fachmedien Wiesbaden (ed.): 333 Keywords Marktforschung: Grundwissen für Manager, 2013, P. 137. (in German)
peren, clement, index, method, country, specific, risk, analysis, businesses, engaged, international, trade, direct, investment, this, instrument, provides, guideline, when, deciding, which, foreign, markets, offer, possibility, additional, business, engagemen. The Peren Clement index is a method of country specific risk analysis for businesses engaged in international trade and direct investment 1 2 3 This instrument provides a guideline when deciding which foreign markets offer the possibility of additional business engagement and investment and the extent of an existing engagement or investment can be increased or should be reduced 4 The Peren Clement index can be used as an early detection system which evaluates probabilities and risks of an investment in a certain foreign market which are determined by the political situation its social economical and judicial environment as well as its predictable or anticipated future developments of that country Contents 1 Users 2 Methods 3 References 4 Further reading 5 External linksUsers EditThese kind of analyses are conducted amongst other things by international rating agencies export credit insurances and international organisations In many cases the analysed countries are brought into a country rating 5 Methods EditThe aim is the classification of countries in an order of precedence for example in regard to their attractiveness for a financial investment Because country risks are not an objectively certifiable commodity and are not directly observable stable correlations between observable risk determining and representative quantities must be searched for Hereby one must differentiate between qualitative political situation and quantitative economic results risk factors The country specific risk analysis also requires a retrospective observation which attempts to discover the causes of risks and lay open the cause and effect relations Thereafter the factors which are to be predicted are deduced and indicators for a prognosis are determined so that the next step leads to a cause related and future oriented risk evaluation The Peren Clement index is a risk index for the evaluation of country specific risks concerning direct investment Besides the Business Environment Risk Index it is one of two established indexes for the country specific risk analysis 6 7 When looking at risk indexes it is normally the case that company wide factors initially come to the fore The Peren Clement index also starts from this point but orientates the factors towards a core statement that is relevant in practice Similarly constructed Indexes including the BERI Index see German article refrain from interrelating their risk analysis with corporate objectives in the course of events But practical experience shows that the assessment of country specific risks for direct investment can not be looked at separately from the particular existing motives Empirical analyses show that especially cost and production dependent as well as marketing oriented motives dominate the decision for or against direct investments 8 9 The type of investment and the motives of the particular companies result in different site related factors and different emphasis on the individual factors respectively For a cost oriented foreign investment one would lay a stronger emphasis upon the cost and production oriented factors and the choice of location would be made thereafter In contrast for marketing oriented investments factors such as competitive environment and size of the market will be of higher importance Peren Clement s risk index is thus coined by three categories of influencing factors Company wide factors Cost and production oriented factors Marketing oriented factorsThe index can be complemented amongst others by inclusion of additional motives For instance companies that aim to secure their raw material base will keep an eye on the accessibility of raw material sources For this the political stability and compliance with stipulations play a role The total achieved score for the individual country can now be classified in the model Hereby the respective country specific risks can be graded into classes and an estimation of risks can be made References Edit Beer S China Sourcing Einkauf im Land der Mitte Hamburg 2012 p 56 in German Schneider A Schmidpeter R Corporate Social Responsibility Verantwortungsvolle Unternehmensfuhrung in Theorie und Praxis 2nd ed Berlin Heidelberg 2015 p 1095 in German Apfelthaler G Marktsegmentierung im internationalen Bereich in Pepels W Marktsegmentierung Methoden zur erfolgreichen Marktsegmentbearbeitung 3rd ed Dusseldorf 2013 S 272 in German Peren F W Clement R Globale Standortanalyse Harvard Businessmanager 6 1998 pp 70 77 in German Reineke Rolf Dieter and Bock Friedrich editors Gabler Lexikon Unternehmensberatung p 248 at Google Books Wiesbaden 2007 pp 248 249 in German Wankel C Encyclopedia of Business in Today s World 2009 S 137 Clement Reiner Peren Franz W 2017 Peren Clement Index Bewertung von Direktinvestitionen durch eine simultane Erfassung von Makroebene und Unternehmensebene Springer Gabler Wiesbaden doi 10 1007 978 3 658 17023 3 ISBN 978 3 658 17022 6 Pakusch Christina Peren Franz W Shakoor Markus Arian 2017 The PCI A Global Risk Index for the Simultaneous Assessment of Macro and Company Individual Investment Risks Journal of Business Strategies 33 2 154 173 Christina Pakusch Franz W Peren Markus Arian Shakoor Peren Clement Index Eine exemplarische Fallstudie in Gadatsch A et al ed Nachhaltiges Wirtschaften im digitalen Zeitalter Ein Leitfaden fur innovative Fuhrungspersonlichkeiten Springer Gabler Wiesbaden 2017 pp 105 118 a href Template Cite book html title Template Cite book cite book a CS1 maint multiple names authors list link Further reading EditFranz W Peren Reiner Clement Peren Clement Index PCI 2 0 Evaluation of Foreign Direct Investments through Simultaneous Assessment at the Macro and Corporate Levels Passau MUR Verlag 2019 ISBN 978 3 945939 19 2External links EditPeren Clement Index Gabler Lexikon in German Springer Fachmedien Wiesbaden ed 333 Keywords Marktforschung Grundwissen fur Manager 2013 P 137 in German Country specific Risk in German Wiesbaden Springer Fachmedien ed Kompakt Lexikon Marketingpraxis 2 200 Begriffe nachschlagen verstehen anwenden Springer Verlag 2014 in German Retrieved from https en wikipedia org w index php title Peren Clement index amp oldid 995390820, wikipedia, wiki, book, books, library,
