Know the reasons why CAGE analysis emphasizes distance. Pankaj “ Megawatt” Ghemawat is an international strategy guru who developed the CAGE . Pankaj Ghemawat. What Are the Real Pankaj Ghemawat. How Global Are The CAGE Distance Framework. Cultural. Distance. Culture happens to be the first facet of CAGE, in terms of the acronym, but it also CAGE Framework, MBA discussions, Pankaj Ghemawat.

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Whatever it is… there is no denying the fact that…. Ghemawat offers some advice on how the CAGE Framework can help managers considering international strategies:.

It makes distance visible for managers. One of the distinctions between the CAGE Framework and other country analysis frameworks is its inclusion of bilateral as well as unilateral factors. This has been one of the biggest barriers, for instance, in the way of U. 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.

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. 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.

British politician and statesman known for his leadership of the United Kingdom during the….

Pankaj Ghemawat: Differences and the CAGE Distance Framework

Related Posts 18 Jul. Is value creation by Venture Capitalists a reality or myth? By contrast, similarities along these dimensions suggest great potential.


For example, it can help explain the strength of Spanish firms in many industries across Latin America. Each dimension of CAGE is described below.

CAGE Distance Framework

This page was last edited on 12 Septemberat Comment Name Email Website. How to choose foreign countries. Sir Winston Churchill — 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 ghmeawat very different from a CAGE-framework perspective.

The other day, a doctor was asking me about investment banking and why framewok it ghemawatt hot. 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.

Lack of colonial ties Lack of shared regional trading bloc Lack of common currency Political hostility. The more two countries differ ghe,awat these dimensions, the riskier the target foreign market. The impacts of CAGE distances and differences have been demonstrated quantitatively via gravity models. 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 far apart are trading partners in physical terms: Ghemawat emphasizes that different types of distance matter to different extents depending on the industry.

The hard reality of global expansion.

The CAGE Framework – Distance Matters in Globalization!!!

By analyzing the possible impact of dis- tance—in all its dimensions—you sweeten the odds of investing in profitable foreign markets. Because they affect fundamental business practices, they often affect the competitive position of firms as well. Different languages Different ethnicities; lack of connective ethnic or social networks Different religions Lack of frsmework Different values, norms, and dispositions.


Trade practices between countries can be significantly affected by laws and regulations enacted at the national or international level.

Landlockedness Lack of internal navigability Geographic size Geographic remoteness Weak transportation or communication links.

CAGE Distance Framework – Wikipedia

The frameworkk [4] [5] shown below provides more detail on each of the CAGE categories, and how they can manifest themselves depending on whether one is comparing a pair of countries or looking at one in isolation. The cultural, administrative, geographic, and economic CAGE distance framework helps managers identify and assess the impact of distance on various industries.

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Also, types of distance af- fect industries differently. Because geographic distance, for instance, affects the costs of transportation, it is of particular importance to companies dealing in heavy or bulky products. Around 2, years ago, Greek philosopher Heraclitus of Ephesus had pronounced: Facebook has more than million users that makes it the 3rd largest country in the world. 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.