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Ghemawat emphasizes that different types of distance matter to different extents depending on the industry. Because geographic distance, for instance, affects the costs of transportation, it is of particular importance to companies dealing in heavy or bulky products. Cultural distance, on the other
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The table 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. One of the distinctions between the CAGE Framework and other country analysis frameworks is its
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identifies
Cultural, Administrative, Geographic and Economic differences or distances between countries that companies should address when crafting international strategies. It may also be used to understand patterns of trade, capital, information, and people flows. The framework was developed by
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To facilitate quantitative analysis based on the CAGE framework, Prof. Ghemawat has developed an online tool called the CAGE Comparator. The CAGE Comparator covers 163 home countries and 65 industries, and allows users to customize the impacts of 16 types of CAGE distance.
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It can be used to compare markets from the perspective of a particular company. 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
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It can shed light on the relative position of multinationals from different countries. For example, it can help explain the strength of
Spanish firms in many industries across Latin America.
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hand, affects consumers’ product preferences. 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.
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in linking interactions between countries to the product of their sizes (usually their gross domestic products) divided by some composite measure of distance."
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Other differences in cost or quality of natural resources, financial resources, human resources, infrastructure, information or knowledge
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It helps to pinpoint the differences across countries that might handicap multinational companies relative to local competitors.
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The impacts of CAGE distances and differences have been demonstrated quantitatively via gravity models. Such models "resemble
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Ghemawat offers some advice on how the CAGE Framework can help managers considering international strategies:
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Redefining Global
Strategy: Crossing Borders in a World Where Differences Still Matter
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346:, Pankaj Ghemawat and Jordan Siegel, Harvard Business Review Press, 2011, Chapter 1
280:, Pankaj Ghemawat and Jordan Siegel, Harvard Business Review Press, 2011, Chapter 2
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Professor
Ghemawat recommends using the CAGE framework together with the
334:, Pankaj Ghemawat, Harvard Business Review, 79, no.8, 2001, p137-147
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Different ethnicities; lack of connective ethnic or social networks
295:, Pankaj Ghemawat, Harvard Business Review Press, 2011, pp.54-60
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Distance still matters. The hard reality of global expansion.
322:, Pankaj Ghemawat, Harvard Business School Press, 2007, p.41
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Nonmarket/closed economy (home bias vs. foreign bias)
293:World 3.0: Global Prosperity and How to Achieve it
167:Lack of membership in international organizations
130:Differences in climates / disease environments
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189:Weak transportation or communication links
98:Different values, norms, and dispositions
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218:It makes distance visible for managers.
344:Cases about Redefining Global Strategy
278:Cases about Redefining Global Strategy
148:Countries (Unilateral / Multilateral)
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108:Lack of shared regional trading bloc
304:Pankaj Ghemawat official website:
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180:Lack of internal navigability
170:Weak institutions, corruption
38:Newton's law of gravitation
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127:Differences in time zones
80:Country Pairs (Bilateral)
306:http://www.ghemawat.com/
68:Administrative Distance
111:Lack of common currency
18:CAGE Distance Framework
363:International business
242:ADDING Value Scorecard
199:Low per capita income
186:Geographic remoteness
137:Rich/poor differences
105:Lack of colonial ties
33:in Barcelona, Spain.
27:University of Navarra
25:, a professor at the
71:Geographic Distance
31:IESE Business School
124:Lack of land border
114:Political hostility
92:Different religions
86:Different languages
74:Economic Distance
65:Cultural Distance
55:unilateral factors
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121:Physical distance
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95:Lack of trust
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53:as well as
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44:Components
51:bilateral
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16:The
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