Shaktikasa This has been one of the biggest barriers, for instance, in the way of U. Think of international expansion as a movement along a continuum from known markets to less-known markets; a firm can ghemawzt to more CAGE-proximate neighbors before venturing into markets that are portrayed as very different from a CAGE-framework perspective. The other day, a doctor was asking me about investment banking and why is it so hot. 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. Trade practices between countries can be significantly affected by laws and regulations enacted at the national or international level.
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Ghemawat offers some advice on how the CAGE Framework can help managers considering international strategies: It makes distance visible for managers. It helps to pinpoint the differences across countries that might handicap multinational companies relative to local competitors. It can shed light on the relative position of multinationals from different countries. For example, it can help explain the strength of Spanish firms in many industries across Latin America. It can be used to compare markets from the perspective of a particular company.
One method to conduct quantitative analysis of this type is to discount specifically, divide raw measures of market size or potential with measures of distance, broadly defined. Ghemawat emphasizes that different types of distance matter to different extents depending on the industry.
Because geographic distance, for instance, affects the costs of transportation, it is of particular importance to companies dealing in heavy or bulky products. It should be a crucial consideration for a consumer goods or media company, but it is much less important for a cement or steel business. The hard reality of global expansion.
GHEMAWAT CAGE FRAMEWORK PDF
At the time, Brazil had a fledgling audit services market. When the four firms set up branches in Brazil, they raised financial reporting and auditing standards across the country, thus bringing a dramatic improvement to the local market. Tarun Khanna, Krishna G. Finally, the firm can choose the strategy of staying away from a market with institutional voids. The Home Depot has decided to avoid countries with weak logistics systems and poorly developed capital markets because the company would not be able to attain the low cost—great service combination that is its hallmark. The division makes a single-cup espresso machine along with single-serving capsules of coffees from around the world.
CAGE Distance Framework explained
Jujind How to choose foreign countries. If you are in a Business school, invariably you will get references to Porter and theories on Business Strategies…. Lack of colonial ties Lack of shared regional trading bloc Lack of common currency Political hostility. This has been one of the biggest barriers, for instance, in the way of U. For example, it can help explain the strength of Spanish firms in many industries across Latin America.
CAGE Distance Framework
While globalization is continuously expanding, it is less relevant than we really think. However, what they soon found out was quite peculiar, the locals had thought they were selling baby food. Not food for babies. Naturally, their sales reflected this interesting mistake. An extremely weird mistake, but it does highlight an important point: There are significant differences between cultures that must be acknowledged. Most foreign ventures are created with high hopes, lured by the promise of an untapped market, high profits and low financial costs.