Although the era of digitalization is The analysis of the CAGE Framework helps the company to identify the odds and gaps and thereby invest in the profitable foreign markets. This does not only involve physical geographical distance, but also figurative distances between various cultures, economies, and working methods. It is invisible in nature but it has a huge impact on the values and behaviors of the people of the country that affects the international strategy and sales of the firm. ( Log Out /  This website makes use of cookies to enhance browsing experience and provide additional functionality. The most important administrative differences are: The geographical differences are the third element in the CAGE Distance Framework, and involve the physical aspect of the distance between two countries.

Let's stay in touch :), Your email address will not be published. It can work as one of the biggest obstacles for the company to expand its business operations on the international level in particular countries.

For instance, a firm maybe most interested in markets with high consumer buying power, so it uses per capita income as the first sorting cue. The application and working of CAGE Framework help the company to identify the attractive and lucrative international markets based on the raw material costs, easy access to target markets and consumers, access to potential human resources, and other such crucial business criteria’s. He was convinced that one should look beyond mere sales potential and analyse the impact of distance. Although an acquisition solves some considerable distance, it still does not mean you can manage a foreign company. Meaning of Success ~ Quotes to Inspire & Enrich. The distance framework helps the management of the company to assess and identify the impact of the distance on various industries and their business operations. availability of resources and size of economy. Professor Pankaj Ghemawat, the developer of the framework, stresses that the differences between countries may be an opportunity, but could just as easily be the cause of an organisation’s failure. These cookies do not store any personal information. Application of the CAGE framework requires managers to identify attractive locations based frammework raw material costs, access to markets or consumers, or other key decision criteria. It also harps of the geographic distance between the two countries in terms of miles or kilometers that separates the company from the target market or suppliers. It helps to determine whether the relationship or association between the native country of the company and the particular international country will favor the business operations and the international expansion strategy or will act as an obstacle. This can even be infrastructure related, such as roads and supply chain networks. It’s also one of the subjects that are least clear to management.

toolshero: CAGE Distance Framework. Lean Production Explained. However, a strong international expansion strategy is required as a back up with the help of specific resources and capabilities of the firm, irrespective of how rosy the picture of CAGE Framework and analysis is. The CAGE Distance Framework helps the management of organisations that want to expand abroad to clearly identify differences beforehand in the areas of culture, administration, geography, and economy. As Ghemawat proposes on his article, Cases about Redefining Global Strategy, here are some uses for managers: However, there is more that you can do using this framework. Because a large amount of the population are illiterate, thus African companies typically place pictures of what’s inside the product on the outside packaging. When looking to expand our business into the foreign markets, any differences that arise are termed as the cultural differences between the two countries. The laws and regulations of the country can have a serious effect on the trade practices between the countries. By contrast, similarities along these dimensions suggest great potential. His description makes clear, among other things, how cultures may differ when it comes to avoiding uncertainty, individualism, orientation, and the balance of power on the job. Quite many researches from all over the world have done research on the significant cultural differences amongst the various countries and here are its dimensions.

It carefully analyses cultural, administrative, geographical, and economic forces, as well as determining how a comparable market would function in a different country. Reference : How to choose foreign countries, Ready to Secure your Financial Life? Das CAGE-Framework ist ein Tool zur Bestimmung von kulturellen (cultural), administrativen (administrative), geografischen (geographic) und wirtschaftlichen (economic) Distanzen zwischen verschiedenen Ländern, die Unternehmen beim Erstellen internationaler Strategien beachten sollten. Change ), You are commenting using your Twitter account. countries with different culture, norms and social values.

The administrative differences make up the second aspect of the CAGE Distance Framework.

distance between the two countries. The acronym CAGE stands for Culture, Administrative, Geographical, and Economic. Technology and the Internet, however, has shrunk distance in terms of transportation time, and now with digital products and services, almost entirely eliminated geographic distance as a constraint of trade between some markets. An example of a product that is designed with the needs of the very poor in mind is that of a shampoo that works best with cold water. Unilever has also developed strategies based on data from a country analysis, as opposed to, for example, a PEST analysis.

evaluate the affected countries in terms of their distances, or in other words their



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