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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The hard reality of global expansion. The complete article reference is here: Whatever it is… there is no denying the fact that…. Distinct cultural differences are observed around the following dimensions: Around 2, years ago, Greek philosopher Heraclitus of Ephesus had pronounced: How far apart are trading partners in physical terms: Trade practices between countries can be significantly affected by laws and regulations enacted at the national or international level.

Ghemawat offers some advice on how the CAGE Framework can help managers considering international strategies:.

The impacts of CAGE distances and differences have been demonstrated quantitatively via gravity models. The cultural, administrative, geographic, and economic CAGE distance framework helps managers identify and assess the impact of distance on various industries.

It makes distance visible for managers. 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. Different languages Different ethnicities; lack of connective ethnic or social networks Different religions Lack of trust Different values, norms, and dispositions. The more two countries differ across these dimensions, the riskier the target foreign market.


For example, it can help explain the strength of Spanish firms in many industries across Latin America.

Landlockedness Lack of internal navigability Cave size Geographic remoteness Weak transportation or communication links. How to choose foreign countries. 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.

Each dimension of CAGE is described below. Retrieved from ” https: Views Read Edit View history.

Pankaj Ghemawat: Differences and the CAGE Distance Framework

A Financial Statement can be…. The CAGE Distance Framework identifies Cultural, Administrative, Geographic and Economic differences or distances between countries that frqmework should address when crafting international strategies.

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.

The other day, a doctor was asking me about investment banking and why is it so hot. Because they affect fundamental business practices, they often affect the competitive position of firms as well. 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.

Leave a Reply Cancel reply Your email address will not be published. Also, types of distance af- fect industries differently.

This has been one of the biggest barriers, for instance, gehmawat the way of U. Ghemawat emphasizes that different types of ghemawqt matter to different extents depending on the industry. 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.


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Pankaj Ghemawat

Application of guemawat CAGE framework requires managers to identify attractive locations based on raw material costs, access to markets or consumers, or other key decision criteria. By analyzing the possible impact franework dis- tance—in all its dimensions—you sweeten the odds of investing in profitable foreign markets. 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.

Comment Name Email Website. Is value creation by Venture Capitalists a reality or myth? This page was last edited on 12 Septemberat Related Posts 01 Jun. One of the distinctions between the CAGE Framework and other country analysis frameworks is its inclusion of bilateral as well as unilateral factors. Lack of colonial ties Lack of shared regional trading bloc Lack of common currency Political hostility. By contrast, similarities along these dimensions suggest great potential.

The cxge [4] [5] shown below provides more detail on each of the CAGE categories, and how they can manifest themselves depending gjemawat whether one is comparing a pair of countries or looking at one in isolation. If you know the enemy and know yourself, you need not fear the result of a hundred battles.