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| * Cultural Distance * Administrative Distance * Geographic Distance * Economic Distance |
* Cultural * Administrative * Geographic * Economic Cultural distance includes differences in language, aesthetics, and preferences. For example, products with relatively high lingual content (i.e. books) are especially sensitive to this dimension. Administrative distance includes the legal and paralegal institutions that can intervene in market entry. For example, the military industry complex must deal with the [[UnitedStates/DefenseSecurityCooperationAgency|FMS program]]. This is generally the most volatile form of distance. Geographic distance is the physical obstacle of distance. Not only the distance between home and destination countries, but the distance between major cities in the destination country. Economic distance is the difference in size of economies. Countries in similar states of economic development tend to have more lax international trade law with one another. |
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| == History == | == Reading Notes == |
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| The framework was developed by Pankaj Ghemawat. It is intended to aid in forming a strategy around international market entry, ''not'' a model for continuous international trade and/or commerce. | * [[RedefiningGlobalStrategy|Redefining Global Strategy]], Pankaj Ghemawat, 2007 |
CAGE Distance Framework
The CAGE distance framework is a model for adapting a business strategy from a home market to another, especially international, target market.
Formulation
The difference between two markets should be considered in four dimensions:
- Cultural
- Administrative
- Geographic
- Economic
Cultural distance includes differences in language, aesthetics, and preferences. For example, products with relatively high lingual content (i.e. books) are especially sensitive to this dimension.
Administrative distance includes the legal and paralegal institutions that can intervene in market entry. For example, the military industry complex must deal with the FMS program. This is generally the most volatile form of distance.
Geographic distance is the physical obstacle of distance. Not only the distance between home and destination countries, but the distance between major cities in the destination country.
Economic distance is the difference in size of economies. Countries in similar states of economic development tend to have more lax international trade law with one another.
Reading Notes
Redefining Global Strategy, Pankaj Ghemawat, 2007