The aim of the Graf Spee was to escape British naval forces, not to engage them. Therefore it went to the South Atlantic to try to intercept and take inidividual, unescorted merchant vessels. This surface commerce raiding was an attempt to replicate the campaign of Admiral Graf Spee (the person) in World War I.

EDIT: The "pocket battleship" theory came out of limitations placed on the German navy by the Versailles treaty. Germany was not allowed to build battleships above a certain tonnage, so the idea was to make a cruiser with the armament and armor of a battleship. They were also fitted with diesel engines instead of the traditional coal or oil engines to get around supply problems. Of course, such a vessel had design trade-offs, and could not directly engage British ships of the line. Instead, they were intended to operate as individual commerce raiders, either intercepting lone British merchants, or attacking convoys (which were usually escorted by nothing larger than a cruiser or two). This was the Graf Spees mission, and she was instead engaged by a force of British heavy cruisers, and put into Montevideo for repairs. The German captain believed there was a large naval task force waiting for him outside the harbor, and therefore scuttled the ship rather than try to fight his way out against what he thought were impossible odds. The pocket battleships were never intended to fight against heavy British vessels, and this action shows that the men aboard did not think they could either.

Can you explain what you mean by the second part of the question? As in after the battle why did he go South, or rather why did he go South where he later scuttled?