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BRS Supplement:

Market Opportunity Rating (MOR)

EXPLANATION OF THE MOR RATINGS SYSTEM

The Market Opportunity Rating (MOR) measures the potential for sales quantity and the quality of the marketplace in a country.

Quantity. This publication provides a Quantity of Market Index (QMI, zero = no potential, 100 = maximum potential).  The index assumes that the United States is the largest market in the world and gives it a 100 rating.  Consequently, other countries are measured in relation to the quantity of U.S. sales.  Two fundamentals are involved:

1. All markets are measured in the IMF’s basket of currencies called Special Drawing Rights (SDRs). An overvalued currency inflates purchasing power. Iran is an extreme example. In 1992 the fixed exchange rate was SDR1=IR92.30, and the QMI was 15.96; the country went on an uncontrolled buying spree. The ensuing financial crisis in 1993 forced austerity and devaluation of the average official exchange rate to SDR1=IR2245.97. The open market rate was worse. The QMI dropped to 0.82 in that year. After some recovery in 2000-2002, it was 0.85 in 2003E when another devaluation took place.

2. If the American market is expanding faster than another country’s, the latter’s rating will decline. If the reverse is taking place, the rating will increase. Although all ratings are affected by exchange rates, the QMI will improve in a competently managed, dynamic economy with comparatively minor exchange rate changes against the SDR. For example, Thailand improved each year from 1.35 in 1990 to 2.15 in 1996, but mismanagement caused a drop to 1.63 in 1997 and 1.12 in 1998 despite currency appreciation. QMI was still 1.12 in 2003E.

The Japanese ratings were 32.57 in 1985, 50.00 in 1990, and 66.61 in 1995; QMI was 43.77 in 2000 because of economic stagnation. The 2003E rating was 35.82.

QMI is computed by:
(1) obtaining each year’s average for population (excludes China and India), GDP per capita in SDRs, and private consumption per capita in SDRs,
(2) establishing each average as a 0.5 percentile (1.0 is double the average), and
(3) applying the following formula (2003E French statistics are used as the example):


    Averages
French Data
Percentile
  Population 112.08 Million
60.14 Million
0.2683
  GDP per Capita 10933
21239
0.9713
  Private Consumption
    per Capita
6144
11643
0.9474

  Formula: 0.2683 (0.9713 + 0.9474) = 0.2574


France’s raw score of 0.2574 was 14.099% of the raw score for the U.S. (1.8256).
Therefore, the French QMI in 2003E was 14.099.
The computer software is Excel by Microsoft.

Quality. BERI S.A.’s Operations Risk Index (ORI) is used to identify the quality of the market. Refer to the Business Risk Service (BRS) User Guide or inquire about the methodology of this panel-based measure of the business operating environment. The range is based on a zero (prohibitively poor conditions) to 100 (optimum conditions). The ORI rating is converted to a decimal, and QMI is multiplied by the decimal. This produces the Market Opportunity Rating (MOR). For example, the United States’ QMI is 100, its ORI average in 2003E was 69, and the MOR is 69.

ORI ratings of 65 or more tend to be had by sophisticated markets that have (1) consumers seeking products in the upper range of technology and (2) companies in the advanced stage of restructuring that want highly evolved capital equipment and systems. Expectations for after-sale service are strong.

As ratings decrease from 65, the demand for the most advanced goods and services declines with such pragmatic limitations as lower numbers of educated middle class, higher percentages of labor-intensive production lines, etc. Countries with ratings between 55 and 64 are examples of evolving markets that have more demand for highly advanced goods and services than those with lower ratings.

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Country List for Market Opportunity Rating (MOR)


  Argentina
Australia
Austria
Belgium
Brazil
Canada
Chile
China (P.R.C.)
Colombia
Czech Republic
Denmark
Ecuador
European Union
France
Germany
Greece
Hungary
India
Indonesia
Iran
Ireland
Israel
Italy
Japan
Korea (R.O.K.)
Malaysia
Mexico
Morocco
Netherlands
Nigeria
Norway
Pakistan
Peru
Philippines
Poland
Portugal
Russia
Saudi Arabia
Singapore
South Africa
Spain
Sweden
Switzerland
Taiwan (R.O.C.)
Thailand
Turkey
United Kingdom
United States
Venezuela