Going Global: Where and How?
8 important questions on Going Global: Where and How?
What is the Cage distance Framework?
-Pankaj Ghemawat
What are the 4 Dimensions of the Cage Distance Framework?
o Administrative and political Distance
o Geographic Distance
o Economic Distance
CAGE: Cultural Distance
! Greater cultural distance increases liability of foreignness !
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CAGE: Administrative and political Distance
- Shared monetary/political associations
- Political Hostilities
- Weak/strong legal and financial institutions
CAGE: Geographic Distance
Determined by:
- Country's infrastructure (road, power, telecommunication networks,...)
Relevant when trading products with low value-to-weight ratios.
(ex. steel, cement, fragile and perishable products such as glass, meat, fruits)The costs to cross-border trade rise with geographic distance.
CAGE: Economic Distance
- Wealth
- Per capita income of consumers
Wealthy countries-- engage in more cross-border trade
Rich countries trade with other rich countries
Poor countries trade more with rich countries
How do MNEs Enter Foreign markets
What are Greenfield Operations?
(Preferred by MNEs)
The question on the page originate from the summary of the following study material:
- A unique study and practice tool
- Never study anything twice again
- Get the grades you hope for
- 100% sure, 100% understanding
