CAGE Distance Framework - Definition and useful examples. (2023) (2023)

What is the CAGE Distance Framework?

The CAGE Distance Framework is a tool that helps companies adapt their corporate strategy or business model to other regions.

When a company goes global, it needs to know thatwhat works in one country may not work in another.

This box examines the factors that characterize countriesto maximize the companies' potential to go global.

  • These factors are called "distances", referring to what separates two different countries.

Your name in an acronym for4 Distancesfocus on doing that:

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  • to docultural.
  • INadministrative.
  • Gbiography.
  • meconomic.

The four distances of the CAGE frame

Cultural:What characterizes the culture in the country.

  • For example:
    • Language.
    • Religion.
    • Values.

Administrative:This is how the national administration works.

  • For example:
    • Levels of bureaucracy.
    • If it is a centralized or decentralized country.
    • What requirements must be met for it to work.

geographical:What characterizes the country's geography.

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  • For example:
    • The size of the country.
    • Sua Horografia.
    • The weather.

Economic:How is the country's economy?.

  • For example:
    • The financial model.
    • The growth rate.
    • Its GDP per inhabitant.

CAGE Distance Framework - Definition and useful examples. (2023) (1)

CAGE Distance diagram

Since we know this all sounds obvious, let's look at a real-life example that shows how important this structure can be:

CAGE structure example

CAGE Distance Framework - Definition and useful examples. (2023) (2)

O Almightystarbucks failed miserableto expand its operations in Australia.

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How is it possible?

The company assumed thatsince the USA and Australia have similar culture and history,Starbucks could work the same way.

They tried to grow fast and failed.

Let's use the CAGE Framework to find outwhat Starbucks should have considered in its business model:

Cultural Dimension

Australians don't like the same kind of coffee as Americans..

  • Americano coffee is too sweet for them.

Australians are used to coffee imported by Greeks and Italians in the mid-1990s.

Administrativ dimension

maybeAustralian Administration e especiallybanker (if we consider them part of the administration)they are not used to doing business in the red(losing money).

  • In the US, credit is much more accessible.

This is probably why the Australian Starbucks had to be funded by the US.

Geographical dimension

This is also a hypothesis, but maybeThe Size and Size of Australia population spread contributed to the lack of momentum in its popularity.

  • Australia has most of its population spread over a few large cities.

economic dimension

Starbucks coffee was too expensive for Australians.

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  • In comparison, they charged much more than the local cafes.

We got this information from a short documentary on CNBC:

This framework can be used to adapt corporate strategies and business models.

  • In the previous example, we used it to analyze the business model.

However, there are somethings you need to know if you want to use it proper:

How to use the CAGE frame

Focus on the biggest differences.

  • The different is what will cause problems for you.

Don't spend too much time on similarities.

  • All countries have things in common that do not make their markets equivalent.

Don't be soft when analyzing a country.

  • If a country has corrupt institutions, point it out. Otherwise you will have problems.

Don't underestimate values ​​and beliefs.

  • Some countries take their traditions very seriously. Much more than your job.

Hire or work with locals and listen to them.

  • If your only source of knowledge about a country is Hollywood movies, you will fail.

(Video) How difficult is the "distance" of the global corporate field (CAGE distance chart)

As we always say, the best way to understand the CAGE Framework and how you can use it is by sharing some examples with you:

Examples of CAGE structure

As you already know,we are a team made up entirely of Europeans.

However, we have worked with many different countries during our professional career.

Her,we will highlight some of the most interesting things to consider when doing business:

  • America (OS).
  • Europa (We know Europe is very different).
  • Depth.

We have created this list based on our own professional experience,Don't expect 100% accuracy.

Let's begin:

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Doing Business in the USA - Example of a CAGE Framework

CAGE Distance Framework - Definition and useful examples. (2023) (3)

civilisation

  • Americanshe believed in Godmuch more than Europeans.
  • In general,they don't live that close to their family like Europeans(due to high internal mobility).
  • The therethey attach great importance to money. Much more than Europeans.
  • Americansconsider failure a part of success.
  • They are Americansvery enterprising and hardworking people.
  • Prefer toDo-then-analysis instead of Analyze-then-do.

Management

  • management isproactively to promote the business.
  • Generally there isfew rules.
  • The rules are transparentand business friendly.
  • As a federal republic there issignificant differences between states.

Geography

  • The United States isa very large country, much bigger than it looks.
  • Ofthe climate is tropical in the southecold in the north.
  • Othe population is concentrated(except Illinois and Texas)on the back.
  • A 3 hour trip is not considered too long.

Economy

  • it isthe largest and most important economy in the world(don't underestimate this).
  • Credit is very affordable.
  • Peoplespend a lot and save a little.
  • The erparticularly good at creating and developing businesses. The best in the world, by the way.

(Video) CAGE Distance Table

Doing Business in Europe - Example of a CAGE Framework

CAGE Distance Framework - Definition and useful examples. (2023) (4)

civilisation

  • Europeansdon't put too much faith in God(in general)men they keep many religious traditions.
  • They live relatively close to their families.(since there is not much internal mobility).
  • There ismany different languages. English is used as a common language.
  • Europeans preferAnalyze-After-Do instead of Do-After-Analyze.
  • Europeansdoesn't care about wealth(as long as they can live in good conditions).
  • Europeans appreciatework as a way to live better.

Management

  • There ismany regulations in Europe.
  • every country hasdifferent areasand each region hasdifferent provinces.
  • The rules may even differ between provincesin the same area.
  • Management tends to mistrust companiesmuch more than in the US.

Geography

  • Europe is not very big, although its interior terrain makes it difficult to travel between countries.
  • In some areas it is easier to get around by boat than by car..
  • The population is spread across Europe, but especially in Central Europe.
  • A 3 hour trip is considered long.

Economy

  • Its economy is huge.but not homogeneous(The US is a single country).
  • it ismore difficult access to credit than in the US.
  • Peoplespend less and save morethan in the US (when they can, of course).
  • Europeans do not "love" risk in businessas well as Americans.

Doing Business in China - Example of a CAGE Framework

CAGE Distance Framework - Definition and useful examples. (2023) (5)

civilisation

  • they are chinesenot very religious people(on average of course).
  • The ervery hardworking and disciplined people.
  • In business, theypay particular attention to personal relationships.
  • Originality is not appreciatedas well as in Europe.
  • Practically speakingnobody speaks english(ordering at a restaurant can be a challenge).
  • Othe interior and the coast are very different in terms of culture and values.

Management

  • If you want to do business in China,you need a Chinese partner.
  • The rules are neither transparent nor flexible.
  • Chinese authorities are not cooperatingmuch with non-Chinese devices.
  • There are someincentives for national companies(uninhabited areas in the interior of China).

Geography

  • China isVery bigand varied.
  • There isdeserts in the north and tropical coasts in the south.
  • They havemany contested areas(Taiwan, Kashmir, Senkaku Islands, etc.).
  • Hong Kong has a special status; it is almost another country.

Economy

  • ThoughTheir economy is huge, China hasmany poor and isolated areas.
  • The difference is big(although this is expected to decrease in the coming years).
  • Thoughofficially communistLand,allow a "supervised form of capitalism".
  • You are missinggovernment approval for almost everything.

shortly said

The CAGE Distance Framework is a tool that helps companies adapt their corporate strategy or business model to other regions.

This framework examines the factors that characterize countries to maximize the potential of firms to go global.

These factors, called distances, are:

  • civilisation: What characterizes the country's culture.
  • Management: Sådan fungerer land administration.
  • Geography: What characterizes the country's geography.
  • Economy: How is the country's economy?

Tips on how to use the CAGE Framework effectively:

  • Focus onbiggest differences.
  • do not useManyagain in the similarities.
  • don't be softwhen analyzing a country.
  • don't underestimatevalues ​​and beliefs.
  • Rent or partner with localsand listen to them.

general questions

What is the example of the CAGE frame? ›

An example of a cultural difference CAGE framework ishow people in the new market will use and interpret the company's offer. For example, Fanta soda is peach flavored in Botswana and the same product is adapted to be more floral in taste and cultural differences in the Japanese market.

Get more information >

What is the CAGE frame for? ›

CAGE distance diagramidentifies cultural, administrative, geographic and economic differences or distances between countries that companies must consider when developing international strategies. It can also be used to understand patterns of trade, capital, information and human flows.

Discover more >

Why is the CAGE framework important in business? ›

CAGE ramming (Mariadoss, 2017)helps a company measure the distance between the company's destination country and the company's home country in four dimensions. The greater the distance or difference, the greater the risk and the less chance of success.

See details >

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How do you implement a CAGE framework? ›

To implement the CAGE framework,identify locations that offer low raw material costs, access to markets or consumers, or other important decision criteria. For example, you can indicate that you are interested in markets with strong consumer purchasing power, so you will use income per inhabitant as the first ranking criterion.

Read the full story ›

What are the 4 components of the cage's analytical structure? ›

The CAGE Distance Framework breaks down the differences between how countries do business into four categories that help simplify the analysis. They areCultural, administrative, geographical and economicand gives a wider view of the "distance" between countries than it appears.

Continue reading >

Who invented the CAGE Distance Framework? ›

The CAGE Framework was developed byProfessor Pankaj Ghemawat, Distinguished Professor of Global Strategy at IESE Business School in Barcelona, ​​Spain. He was convinced that one should look beyond simple sales potential and analyze the impact of distance.

Discover more details ›

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FAQs

What is an example of a CAGE Distance Framework? ›

A CAGE framework example of cultural difference is how the people of the new market will use and interpret the company's offer. For example, Fanta soft drink is peach flavored in Botswana, and the same product is adapted to appeal to the taste and cultural differences of the Japanese market to be more floral.

What is the purpose of the CAGE Distance Framework? ›

The CAGE framework (Mariadoss, 2017) helps a firm gauge the distance that the target country is from the firm's home country on four dimensions. The greater the distance or difference, the more risk exists and the less opportunity there is for success.

What are the 4 components of CAGE analytical framework? ›

The CAGE Distance Framework divides the differences between how countries do business into four categories which help to simplify the analysis. They are Cultural, Administrative, Geographic and Economic and provides a broader view of “distance” among countries than just the obvious one.

How does the CAGE Distance Framework helps a business expand globally? ›

The CAGE Distance Framework helps companies because it can evaluate countries and determine the distance between them. This does not only involve physical geographical distance, but also figurative distances between various cultures, economies, and working methods.

What are examples of cage questions? ›

The CAGE questionnaire consists of four questions that relate to your use of alcohol:
  • Have you ever felt that you ought to C ut down on your drinking?
  • Do you get A nnoyed by criticism of your drinking?
  • Do you ever feel G uilty about your drinking?

How do you apply the CAGE framework? ›

To apply the CAGE framework, identify locations that offer low raw material costs, access to markets or consumers, or other key decision criteria. You might, for instance, determine that you're interested in markets with strong consumer buying power, so you would use per capita income as your first sorting criterion.

How effective is the CAGE assessment? ›

The CAGE questionnaire is reported to accurately identify people with alcohol dependence issues 93 percent of the time. This makes the CAGE questionnaire a relatively accurate, quick way to screen people for alcohol dependence without making someone defensive or upset.

What are the benefits of cage analysis? ›

Key Takeaways
  • CAGE analysis asks you to compare a possible target market to a company's home market on the dimensions of culture, administration, geography, and economy.
  • CAGE analysis yields insights in the key differences between home and target markets and allows companies to assess the desirability of that market.

What are the strengths of the CAGE assessment? ›

The questionnaire takes less than one minute to administer and complete and is frequently used in primary care settings as a quick screening tool, in lieu of having an in-depth interview for those who may be uncomfortable talking about their possible alcoholism.

What are the 4 dimensions of distance? ›

Distance is separated into four dimensions: Cultural, Administrative and Political, Geographic, and Economic.

What is CAGE framework criteria? ›

The CAGE Distance Framework involves the analysis of Cultural, Administrative, Geographic, and Economic differences between home and foreign markets. The CAGE Distance Framework is a bilateral analysis that applies to most industries, allowing a business to assess its competitive ability in a new market.

What are the characteristics of a CAGE? ›

A cage is an enclosure often made of mesh, bars, or wires, used to confine, contain or protect something or someone. A cage can serve many purposes, including keeping an animal or person in captivity, capturing an animal or person, and displaying an animal at a zoo.

What are the limitations of the CAGE framework? ›

The main limitations are: It focuses on your entry and isn't useful to deciding market size. It requires a lot of research on the market so is not a quick framework to use. Ideally you'd have a country expert in your session.

What is the CAGE framework comparison tool? ›

The CAGE Comparator (direct link: www.ghemawat.com/cage) is an online tool to facilitate cross-country comparisons using the CAGE Framework. It covers 16 types of Cultural, Administrative, Geographic, and Economic (CAGE) differences and distances across 163 countries, with customized coverage of 65 industry groups.

What is an example of economic distance? ›

People generally travel or transport goods considering the transport cost. For, examples, the 10 minutes or 2 km rickshaw ride may cost 30 rupees. One can change his/her dissension to travel that distance if 30 rupees is beyond their capacity. Here is the importance of 'Economic Distance'.

What are the results of the CAGE questionnaire? ›

Item responses on the CAGE are scored 0 or 1, with a higher score an indication of alcohol problems. A total score of 2 or greater is considered clinically significant.

What is the CAGE assessment tool? ›

A five-question tool used to screen for drug and alcohol use; answering yes to two or more questions indicates a complete assessment is advised.

What is the validity of the CAGE questionnaire? ›

It is reported to have a sensitivity of 93% and a specificity of 76% for the identification of excessive, i.e. problem, drinking and a sensitivity of 91% and specificity of 77% for the identification of alcoholism [4].

How do you use strategic framework? ›

Here are six items to consider for your strategic framework:
  1. Vision statement. A vision statement is a short statement that includes one to two sentences. ...
  2. Mission statement. ...
  3. Time frame for completion. ...
  4. Business objectives. ...
  5. Strategies to achieve objectives. ...
  6. Action plan to provide detail into strategies.
Jun 24, 2022

Which framework can be used to ensure organizations achieve the most possible value from IT investments while meeting business goals? ›

IT governance is a formal framework that provides a structure for organizations to ensure that IT investments support business objectives.

What is the sensitivity of the CAGE questionnaire? ›

The CAGE questionnaire is simple, nonthreatening, brief, and easy to remember. A yes answer to two or more items has a sensitivity of 75% to 95% and a specificity of 84% to 97% for alcohol dependence. However, CAGE is less sensitive for identifying nonalcohol-dependent at-risk drinkers.

What is the strongest predictor of success in an impairment treatment program? ›

The willingness of the nurse to stick with the program and admit there is a problem are the strongest predictors of success . Often, nurses resist substance abuse treatment; and only enter a program with the encouragement of family, friends, peers, management, or court order.

What is the success rate of intervention? ›

According to data from the Association of Intervention Specialists, the success rate for interventions is in the range of 80–90%. More than eight in ten individuals choose treatment following an intervention.

What is the difference between Pestel and CAGE analysis? ›

The goal of the PESTLE framework is to give a big picture for decision makers of individual countries. The CAGE framework is focusing on distances between the home and host country. The primary objective of the cross cultural analysis is the difference in culture, social, governmental and economic aspects.

What is pestle vs CAGE analysis? ›

The PESTLE Analysis, the CAGE framework and the SMART Model, are acronyms, referring each to a set of specific perspectives from which to assess any Enterprise, as follows:- The PESTLE focuses on: the Political, Economic, Social, Technological, Legal and Environmental aspects,- The CAGE focuses on the perspectives of: ...

What are the disadvantages of the CAGE questionnaire? ›

The CAGE does have limitations as a sole screening assessment of alcohol abuse and dependence. Without a lead in question, the CAGE does not distinguish between current and past drinking problems. The CAGE may have gender and ethnic biases (Steinbauer et al., 1998).

What are the 4 questions of the CAGE questionnaire? ›

Have you ever felt you needed to Cut down on your drinking? Have people Annoyed you by criticizing your drinking? Have you ever felt Guilty about drinking? Have you ever felt you needed a drink first thing in the morning (Eye-opener) to steady your nerves or to get rid of a hangover?

What is the difference between a screening tool and an assessment? ›

Screening is a process for evaluating the possible presence of a particular problem. The outcome is normally a simple yes or no. Assessment is a process for defining the nature of that problem, determining a diagnosis, and developing specific treatment recommendations for addressing the problem or diagnosis.

What are the names of the four types of distance? ›

Hall (1969) delineated four zones of interpersonal distance that characterize Western culture: intimate (up to 18 inches), personal (18–48 inches), social (48 inches to 12 feet), and public (greater than 12 feet).

What is an example of 4D? ›

The 4D equivalent of a cube is known as a tesseract, seen rotating here in four-dimensional space, yet projected into two dimensions for display.

What is the distance formula for 3 points? ›

To calculate the distance between 3 points, calculate the distance between all 3 combination of points, sum these values together, then divide by 3.

What is the full form of CAGE framework? ›

Developed by professor Professor Pankaj Ghemawat , the CAGE Distance framework identifies the Cultural, Administrative, Geographic, and Economic differences between the various countries that companies should address and take care of whilst working on and crafting international strategies.

Who created CAGE framework? ›

Professor Pankaj Ghemawat developed the CAGE Distance Framework to help organizations explore how distance could affect plans for international expansion. He split distance into four key categories: Cultural distance.

What are the different types of cage? ›

Four types of cage are used in cage aquaculture: fixed, floating, submersible and submerged.

What is cage and types? ›

There are 4 types of fish-rearing cages namely: i) Fixed cages, ii) Floating cages, iii) Submerged cages and iv) Submersible cages. Economically speaking, cage culture is a low impact farming practice with high returns and least carbon emission activity.

What are the components of a cage? ›

Cage components consist of a frame, mesh or netting, feeding ring, lid, and flotation. Cage shape may be round, square, or rectangular.

What does CAGE stand for in mental health? ›

A number of other screening tools are available. CAGE is derived from the four questions of the tool: Cut down, Annoyed, Guilty, and Eye-opener. CAGE Source: Ewing 1984.

What is an example of CAGE framework in real life? ›

A CAGE framework example of cultural difference is how the people of the new market will use and interpret the company's offer. For example, Fanta soft drink is peach flavored in Botswana, and the same product is adapted to appeal to the taste and cultural differences of the Japanese market to be more floral.

What are the advantages of CAGE Distance Framework? ›

CAGE stands for Cultural, Administrative, Geographic, and Economic. By examining all four categories you'll get a much better understanding of the “distance” between two countries than just the miles between them. Ultimately, the CAGE Distance Framework can help you understand the risks of international expansion.

What is Google CAGE Distance Framework? ›

What is the CAGE Distance Framework? The CAGE Distance Framework is a tool that helps companies to evaluate the big differences between countries when developing international strategies in order to adapt their corporate strategy or business model to other regions.

What are the 5 examples of distance? ›

Let us study these examples of distance in detail.
  • Examples of Distance.
  • Trekking to a hill.
  • Traveling to office.
  • Jogging on a path.
  • Hare and tortoise.
  • Playing hide and seek.
  • Moving of Camera roll.
  • Monkey roaming around.

What is a good example of distance? ›

The distance of an object can be defined as the complete path travelled by an object. For example. if a car travels east for 5 km and takes a turn to travel north for another 8 km, the total distance travelled by car shall be 13 km.

What are 5 examples of economy? ›

One can broadly classify five distinct examples of economic activities. These activities are producing, supplying, buying, selling, and the consumption of goods and services.

What is the CAGE framework? ›

The CAGE Distance Framework 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.

What is the cage method of globalization? ›

The cultural, administrative, geographic, and economic (CAGE) distance framework helps managers identify and assess the impact of distance on various industries. The more two countries differ across these dimensions, the riskier the target foreign market.

What are cage questions usually used for? ›

CAGE questionnaire (CAGE-AID): primarily used for brief screening for alcohol abuse but has been adapted to include drugs. Short Michigan Alcoholism Screening Test (SMAST-AID): also adapted to include drugs.

What is the disadvantage of CAGE framework? ›

Disadvantages. The major limitations are: It is only beneficial for determining the market size and focuses on your entry. It is not a quick structure to employ because it needs extensive market research.

What does CAGE stand for in business? ›

Yes, obtaining a CAGE Code is mandatory in order to do business with the federal government or receive federal grant funding. What is a CAGE Code? ( also known as SAMs) The CAGE Code is a five-character ID number used by the Federal Government to identify vendors. CAGE stands for “Commercial And Government Entity.”

What are the benefits of CAGE analysis? ›

Key Takeaways
  • CAGE analysis asks you to compare a possible target market to a company's home market on the dimensions of culture, administration, geography, and economy.
  • CAGE analysis yields insights in the key differences between home and target markets and allows companies to assess the desirability of that market.

What is the three 3 types of globalization? ›

Types of globalization: Economic, political, cultural

There are three types of globalization.

What are the three 3 approaches to globalization? ›

There are 3 approaches to globalization, internationalist, transformationalist and globalist.

Who is the creator of the CAGE Distance Framework? ›

Professor Pankaj Ghemawat developed the CAGE Distance Framework to help organizations explore how distance could affect plans for international expansion.

What is a positive CAGE questionnaire? ›

Item responses on the CAGE are scored 0 or 1, with a higher score an indication of alcohol problems. A total score of 2 or greater is considered clinically significant.

How reliable is the CAGE questionnaire? ›

It is reported to have a sensitivity of 93% and a specificity of 76% for the identification of excessive, i.e. problem, drinking and a sensitivity of 91% and specificity of 77% for the identification of alcoholism [4].

What age is the cage screening tool for? ›

When To Use The CAGE Questionnaire. Even though the test was originally designed for individuals over the age of 16 years old, all patients of any age who drink alcohol should be screened with CAGE questions according to the National Institute of Alcohol Abuse and Alcoholism.

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