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The CAGE distance framework

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by

Anusha kalagiri

on 26 April 2014

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Transcript of The CAGE distance framework

The CAGE distance framework
By, Nandini and Anusha

How it helps
Easily assess the potential size, risks, and barriers to different international markets;
Eliminate the guesswork of choosing which countries to enter in which order;
Identify current products most easily transportable at minimum cost; and
Develop new products unique to global ventures.

The Four Dimensions
C
(cultural Distance)
A
(Administrative Distance)
G
(Geographic Distance)
E
(Economic Distance)


CAGE framework used for global strategy and entering foreign market
EXAMPLE OF CAGE CULTURE
Different Languages
Different ethnicity
-- lack of collective ethnic or social networks
Different religions
Different values, norms and dispositions

Cultural dimension
Greater cultural differences– leads to lower amount of cultural trade
Long lasting economic interactions– leads to weakening effect of cultural differences
More malleable over the long run than differences in language, ethnicity or religion

CAGE Analysis is an excellent tool for associations and businesses looking to develop international strategies.
CAGE Analysis identifies the middle ground between the one-size-fits-all and the mass-customization extremes that typify most global market strategies and product development efforts
Refers to
Laws
Policies
Govt. run institutions
International Organizations
Treaties the country either support or created
Factors impacting Foreign Direct Investment
- Country’s political stability
Tariffs
Non-tariff barriers
Quotas

Administrative Dimension
Physical distance-transportation and cost increases.
Size of the country-Geographical size, remoteness.
Weak transportation or communication-failure in delivery timelines
Lack of internal navigation-
difficulty in finding locations.

Geographical Dimension
This mainly affects industries related to
Products that are fragile or perishable.
Products that require communication and connectivity.
Products having low value or bulk ratio.
Local supervision and operational requirements.

Examples of geographic dimension
Economic Dimension
Economic size.
Difference in consumer income- rich and poor differences
Differences in cost and quantity of resources- human, financial, Natural.
Differences in infrastructure, information or knowledge.
Conclusion:
CAGE framework can be used to compare the chances of success of different countries in a given foreign market.
Companies can use the CAGE framework to choose where to invest.
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