Case Studies

Case Study 1 – Country Risk Assessment

Industry: Oil and Gas Services (Asia Pacific and Middle East).

Client: Medium sized company, listed on NYSE.

Objective: To determine the ideal location for the client's Regional Head Quarters based on an analysis of a number of locations in SEA, including Malaysia, Singapore and Thailand.

Results:
Considering the company culture and its national heritage, the type of industry and its size, and taking into account management feedback, we recognized a number of interesting issues which supported management in its belief that Singapore would be the best fit location.

The client was particularly concerned about replacing some segments of its value chain with equally effective but lower cost options eg project management, manufacturing, specialized installation. The client was also concerned about its distance to the target markets and the availability of competent and cost effective human resources.

Balfoort Consulting was able to provide detailed feedback and recommendations on all the concerns of the client as well as provide a number of other angles on the question of location. In the end analysis, the client was recommended to move to Singapore for the following reasons:

A better fit to its corporate culture. Singapore offered high standards of transparency and corporate governance making business transactions more efficient.

Very attractive incentives for FDI. Excellent incentives were available for vessel management, training in the oil and gas sector and corporate tax incentives.

Lower overall costs than KL or Thailand. Although at first glance costs appear to be higher a full comparison of salary costs at all levels indicated a substantially lower overall tax cost. The higher cost of doing business (rentals, utilities) was further offset by the very low corporate tax rates. When efficiency was taken into account (including the cost of corruption) the final result was markedly more positive than the client expected.
The client was extremely pleased with the final report.

Lesson learnt:
Sometimes perceptions and commonly held beliefs can be changed with solid and detailed market research, which can substantially influence an organization's chances of survival.

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