Executive Report on Strategies in Azerbaijan

Countries covered: Azerbaijan The primary audience for this report is managers involved with the highest levels of the strategic planning process and consultants who help their clients with this task. The user will not only benefit from the hundreds of hours that went into the methodology and its application, but also from its alternative perspective on strategic planning in Azerbaijan. This report helps executives evaluate strategic investments in Azerbaijan. As the editor of this report, I am drawing on a methodology developed at INSEAD, an international business school (www.insead.edu). The methodology decomposes a country’s strategic potential along two key dimensions: (1) latent demand, and (2) trade indicators. With this perspective, this report provides a strategic profile of Azerbaijan. The reader new to Azerbaijan can quickly understand where Azerbaijan fits into a firm’s strategic perspective. In Chapter 2, I report my findings on the real economic potential, or latent demand, represented by Azerbaijan when defined as an area of dominant influence. Chapter 2 is followed by trade indicators for key industries, categories, and products in Azerbaijan.

Additional Information

Product's ISBN number 049735568X. How to Strategically Evaluate Azerbaijan

Perhaps the most efficient way of evaluating Azerbaijan is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries

Demand/Market Potential Driven Firm



















Relative Accessibility





Accessibility/Supply Averse Firm





















Relative Accessibility
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities.

Latent Demand in Azerbaijan

This report provides an extremely detailed overview of factors driving latent demand in Azerbaijan. Latent demand is largely driven by economic fundamentals. In Chapter 2, I summarize the economic potential for Azerbaijan over the next five years for hundreds of industries, categories, and products. The goal of this chapter is to report my findings on the real economic potential, or latent demand, represented by Azerbaijan when defined as an area of dominant influence. The data presented are the result of various spatial econometric and time-series forecasting models which, for each category presented, are applied to forecast and allocate latent demand across all countries of the world and major distribution centers or centers of dominant influence within each country. This is accomplished knowing that economic fundamentals (e.g. income) generally vary from one country to another within a given country over time. In this chapter, I report the allocation for each category for Azerbaijan as an area of dominant influence in the Middle East and, potentially, the world.

The report concludes with trade indicators for Azerbaijan. Often, the amount of trade flowing into and out of a country is a strong indicator of trading partners, trade openness, and related latent demand. Trade indicators are purely statistical in nature. Although international trade is not a direct measure of latent demand, it does provide an indicator of general market conditions with respect to trade flows and trade openness in Azerbaijan.

As a whole, this report presents a strategic assessment of Azerbaijan by considering an extremely broad set of factors.

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