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Differences across

countries

Presented by :

Group 8

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There are no foreign lands. It is the traveler only who is

foreign.-Robert Louis Stevenson

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CAGE Cultural

Administrative

Geographical

Economic

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Google in Russia C relatively difficult language

A differences in administrative and policy framework

G - trouble adapting and setting up offices

E underdevelopment of payment infrastructure.

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Wal-Mart

C - Language (Canada & UK)

A - Free Trade Agreement (Canada & Mexico)

G - Geographically close capital cities

E Tough task in poor countries.

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Gravity ModelsTrade between two countries

- Directly proportional to economic sizes

- Inversely proportional physical distance between them

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Framework for Country Analysis

Unilateral attributes

Finance, Technology, Labor, Management

Multilateral attributes

Tariffs, Hidden import barriers

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The CAGE Framework at theCountry Level

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Cultural Distance AdministrativeDistance

GeographicDistance

EconomicDistance

Country-pairs(bilateral) - Languages- Ethnicities- Religions

- Lack of colonialties

- Lack of

common currency

- Political hostility

- Physicaldistance

- Lack of land

border

- Differences in

time zones

- Rich-poordifferences

- Differences in

cost or quality of

natural resources,

human resources

etc

Countries(unilateral ormultilateral)

- Insularity

- Traditionalism

- Non market or

closed economy

- Weak

institutions;

corruption

- Land locked

geography

- Weak

transportation &

communication

links

- Economic size

- Low Per-Capita-

Income

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Example: India Versus Chinafrom a U.S. Perspective

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Cultural Distance AdministrativeDistance

GeographicDistance

EconomicDistance

India - Englishlanguage

- Westernized

elites

- Commoncolonizer

- Common law

- Political

friendship

- Physicaldistance

- Lack of land

border

- Differences in

time zones

- Specialized labor- Profitability

- Firm Strategy &

upgrading

China - Linguistic &ethnic

homogeneity

- Diaspora

- Ease of doing

business

- Enclaves

- Closed to US

west coast

- East Asian

production

network

- Large market

- Higher income

- Labor input &

productivity

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The CAGE Framework at theIndustry Level

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Cultural Distance AdministrativeDistance

Geographic Distance Economic Distance

Products have

high linguisticcontent (TV

programs)

Products matter to

cultural or national

identity (food) Product features

vary in terms of

Size,

Standards

Products carry

country-specific

quality associations

(wines)

Producers of staple

goods (electricity) Producers of

other entitlements

(drugs)

Large employers

(farming) Large suppliers to

government (mass

transportation)

Products have a

low value to weightor value to

bulk ratio (cement)

Products are fragile &

perishable (glass, fruits)

The nature of demand

varies withincome level (cars)

The economics of

standardization or

scale are limited

(cement) Distribution or

business systems

are different (insurance)

Companies need

to be responsive

and agile (home

appliances)

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Applications

Making differences visible

Understand the liability of foreignness

Assessing natural owners and comparing foreign competitors

Discounting by distance

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Conclusion Global generalizations

Semiglobalization

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Thank you