Pankaj Ghemawat, “Distance Still Matters,” Harvard Business Review 79, no. As summarized in Table “The CAGE Framework”, the CAGE (cultural. Pankaj Ghemawat. What Are the Real Pankaj Ghemawat. How Global Are The CAGE Distance Framework. Cultural. Distance. rated into the CAGE framework for understanding the differences be- . by Pankaj Ghemawat and Ken Mark, “Wal-Mart’s International.
Application of the CAGE framework requires managers to identify attractive locations based on raw material costs, access to markets or consumers, or other key decision criteria. The table   shown below provides framesork detail on each of the CAGE categories, and how they can manifest themselves depending on whether one is comparing a pair of cahe or looking at one in isolation.
Whatever it is… there is no denying the fact that…. The more two countries differ across these dimensions, the riskier the target foreign market.
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Also, types of distance af- fect industries differently. It makes distance visible for managers. Lack of colonial ties Lack of shared regional trading bloc Lack of common currency Political hostility.
Think of international expansion as a movement along a continuum from known markets to less-known markets; a firm can move 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.
The impacts of CAGE distances and differences have been demonstrated quantitatively via gravity models. Landlockedness Lack of internal navigability Geographic size Geographic remoteness Weak transportation or communication links.
If you know the enemy and know yourself, you need not fear the result of a hundred battles. By analyzing the possible impact of dis- tance—in all its dimensions—you sweeten the odds of investing in profitable foreign markets.
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Such models “resemble Newton’s law of gravitation in linking interactions between countries to the product of their sizes usually their gross domestic products divided by some composite measure of distance.
The CAGE Distance Framework identifies Cultural, Administrative, Geographic and Economic differences or distances between countries that companies should address when crafting international strategies.
Around 2, years ago, Greek philosopher Heraclitus of Ephesus had pronounced: Different languages Different ethnicities; lack of connective ethnic or social networks Different religions Lack of trust Different values, norms, and dispositions.
Trade framswork between countries can be significantly affected by laws and regulations enacted at the national or international level. For example, it can help explain the strength of Spanish firms in many industries across Latin America. 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.
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. Ghemawat emphasizes that different types of distance matter to different extents depending on the industry. How to choose foreign countries. Distinct cultural differences are observed around the following dimensions: Is value creation by Venture Capitalists a reality or myth?
CAGE Distance Framework
The complete article reference is here: One of the distinctions between the CAGE Framework and other country analysis frameworks is its inclusion of bilateral framewprk well as unilateral factors. By contrast, similarities along these dimensions suggest great potential. Because geographic distance, for instance, affects the costs of transportation, it is of particular importance to companies dealing in heavy or bulky products.
Views Read Edit View history. A Financial Statement can be…. Retrieved from ” https: How far apart are trading partners in physical terms:
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