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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.

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This page was last edited on 12 Septemberat From Wikipedia, the free encyclopedia. Culture happens to be the first facet of CAGE, in terms of the acronym, but it also can be the most practically perplexing facet for managers. This has been one of the biggest barriers, for instance, in the way of U.

The CAGE Framework – Distance Matters in Globalization!!!

Because they affect fundamental business practices, they often affect the competitive position of firms as well. For example, it can help explain the strength of Spanish firms in many industries across Latin America.

How far apart are trading partners in physical terms: The hard reality of global expansion. Lack of colonial ties Lack of shared regional trading bloc Lack of common currency Political hostility. Also, types of distance af- fect industries differently. The more two countries differ across these dimensions, the riskier the target foreign market. If you know the enemy and know yourself, you need not fear the result of a hundred battles.


One method to conduct quantitative analysis of this type cags to discount specifically, divide raw measures of market size or potential with measures of distance, broadly defined.

A Financial Statement can be…. Distinct cultural differences are observed around the following dimensions: Gyemawat 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.

It makes distance visible for managers.

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.

How to choose foreign countries. Ghemawat emphasizes that different types of distance matter to different extents depending on the industry.

The CAGE Framework – Distance Matters in Globalization!!! | EnrichWise

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. Landlockedness Lack of internal navigability Geographic size Geographic remoteness Weak transportation or communication links. Comment Name Email Website. The complete article reference is here: Related Posts 01 Jun. By analyzing the possible impact of dis- tance—in all its dimensions—you sweeten the odds of investing in profitable foreign markets.

Each dimension of CAGE is described below. Retrieved from ” https: Around 2, years ago, Greek philosopher Heraclitus of Ephesus had pronounced: The other day, a doctor was asking me about investment banking and why is it so hot. Ghemawat offers some advice on how the CAGE Framework can help managers considering international strategies:.


Trade practices between countries can be significantly affected by laws and regulations enacted at the national or international level. Whatever it is… there is no denying the fact that….

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. Views Read Edit View history. 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.

Because geographic distance, for instance, affects the costs of transportation, it is of particular importance to companies dealing in heavy or bulky products.

Leave a Reply Cancel reply Your email address will not be published. The CAGE Distance Framework identifies Cultural, Administrative, Geographic and Economic differences or distances between countries that companies should address when crafting international strategies.

Different languages Different ethnicities; lack of connective ethnic or social networks Different religions Lack of trust Different values, norms, and dispositions.

By contrast, similarities along these dimensions suggest great potential.