Podcast
Questions and Answers
What is the primary goal of CAGE Analysis for businesses?
What is the primary goal of CAGE Analysis for businesses?
- To promote one-size-fits-all approaches in global markets
- To encourage mass-customization strategies
- To identify international strategy development opportunities (correct)
- To eliminate the need for market analysis
What does the CAGE framework emphasize for internationalization?
What does the CAGE framework emphasize for internationalization?
- Prioritizing countries with the greatest physical distances
- Entering markets with the least psychic distance first (correct)
- Choosing countries with the most psychic distance
- Focusing only on high economic size countries
According to the CAGE Distance Framework, how does trade between two countries relate to their economic sizes?
According to the CAGE Distance Framework, how does trade between two countries relate to their economic sizes?
- It is directly related to their economic sizes (correct)
- It depends solely on cultural differences
- It is unrelated to their economic sizes
- It is indirectly proportional to their economic sizes
What aspect does the CAGE framework consider when analyzing international markets?
What aspect does the CAGE framework consider when analyzing international markets?
Which of the following statements is NOT true regarding the CAGE Distance Framework?
Which of the following statements is NOT true regarding the CAGE Distance Framework?
What role does physical distance play in the CAGE framework concept?
What role does physical distance play in the CAGE framework concept?
Which component is fundamental to the concept of psychic distance in the CAGE framework?
Which component is fundamental to the concept of psychic distance in the CAGE framework?
Who is credited with developing the CAGE Distance Framework?
Who is credited with developing the CAGE Distance Framework?
How can colonial ties affect trade between countries?
How can colonial ties affect trade between countries?
Which of the following is NOT listed as a factor that can increase trade?
Which of the following is NOT listed as a factor that can increase trade?
What effect can bad relationships between nations have on trade?
What effect can bad relationships between nations have on trade?
Which of the following barriers is posed by government policies?
Which of the following barriers is posed by government policies?
What can substantially increase trade among member nations?
What can substantially increase trade among member nations?
What is a possible consequence of having lapsed colonial ties between countries?
What is a possible consequence of having lapsed colonial ties between countries?
Which type of trade barrier is characterized by restrictions other than tariffs?
Which type of trade barrier is characterized by restrictions other than tariffs?
What type of relationship can impede administrative processes in international trade?
What type of relationship can impede administrative processes in international trade?
What factors influence economic distance on the supply side?
What factors influence economic distance on the supply side?
What primarily drives companies to look beyond national borders for demand?
What primarily drives companies to look beyond national borders for demand?
Which of the following is NOT a benefit of the CAGE framework for international business strategists?
Which of the following is NOT a benefit of the CAGE framework for international business strategists?
How does the CAGE framework assist in understanding the liability of foreignness?
How does the CAGE framework assist in understanding the liability of foreignness?
Which aspect is likely to experience low levels of cross-border international exchange?
Which aspect is likely to experience low levels of cross-border international exchange?
What is one of the primary functions of the CAGE framework in comparing markets?
What is one of the primary functions of the CAGE framework in comparing markets?
Which of the following does the CAGE framework help strategists identify regarding products?
Which of the following does the CAGE framework help strategists identify regarding products?
What key insight does the CAGE framework provide about foreign competitors?
What key insight does the CAGE framework provide about foreign competitors?
What term describes differences affecting cross-border economic activity distinct from cultural, administrative, or geographic differences?
What term describes differences affecting cross-border economic activity distinct from cultural, administrative, or geographic differences?
Which factor is NOT included in the definition of economic distance?
Which factor is NOT included in the definition of economic distance?
What correlation is observed regarding rich countries in terms of cross-border economic activity?
What correlation is observed regarding rich countries in terms of cross-border economic activity?
How does high per capita income generally affect labor costs?
How does high per capita income generally affect labor costs?
Which of the following statements accurately describes the relationship between economic size and cross-border activities?
Which of the following statements accurately describes the relationship between economic size and cross-border activities?
What is one of the economic factors that influence economic distance?
What is one of the economic factors that influence economic distance?
What aspect of infrastructure is crucial when considering economic distance?
What aspect of infrastructure is crucial when considering economic distance?
Which of the following is least likely to significantly affect economic distance?
Which of the following is least likely to significantly affect economic distance?
What factor potentially affected the popularity of Starbucks in Australia?
What factor potentially affected the popularity of Starbucks in Australia?
What was a reason for the U.S. financing of Starbucks in Australia?
What was a reason for the U.S. financing of Starbucks in Australia?
How did the pricing of Starbucks coffee compare to local cafes in Australia?
How did the pricing of Starbucks coffee compare to local cafes in Australia?
What characteristic of the Australian administrative dimension impacted Starbucks?
What characteristic of the Australian administrative dimension impacted Starbucks?
Which demographic trend in Australia may have hindered Starbucks' growth?
Which demographic trend in Australia may have hindered Starbucks' growth?
What was the primary cause of Tim Hortons' struggles in the United States?
What was the primary cause of Tim Hortons' struggles in the United States?
What change in coffee culture was introduced to Australians in the 1990s?
What change in coffee culture was introduced to Australians in the 1990s?
What aspect of the economic dimension affected Starbucks' price strategy in Australia?
What aspect of the economic dimension affected Starbucks' price strategy in Australia?
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Study Notes
CAGE Distance Framework Overview
- CAGE Analysis aids businesses in developing international strategies by balancing global market approaches.
- Focuses on the concept of "psychic distance," which reflects the perceived cultural and business differences between home and foreign markets.
Key Points on Trade and Distance
- Trade relations between countries hinge on their economic sizes and are inversely affected by physical distance.
- Factors influencing trade include:
- Tariffs and non-tariff barriers.
- International organizations and quotas.
- Colonial ties and regional trading bloc memberships.
- Shared currency and treaties.
Administrative Correlations
- Historical colonizer-colony relationships can increase trade significantly, even after a long period.
- Preferential trading arrangements and common currencies, like those seen in the European Union, also promote trade.
- Poor diplomatic relations can enhance administrative distance, increasing trade barriers.
Economic Distance Insights
- Economic distance impacts cross-border activity through distinctions in economic size, consumer income, and resource costs/types.
- Wealthier nations tend to engage more in international trade relative to their economic size, while high per-capita income correlates with elevated labor costs.
Industry-Level CAGE Framework Insights
- Economic distance on the supply end is influenced by labor intensity and capital costs.
- Large discrepancies in consumer willingness to pay can drive international market exploration.
- Industries requiring significant variety and responsiveness face higher complexity and lower cross-border exchanges.
Strategic Applications of CAGE Framework
- Assists international business strategists in analyzing market size, risks, and barriers.
- Helps in determining the sequence for entering international markets and identifying transportable products.
- Supports product development specific to global needs and clarifies key market differences.
- Enhances understanding of foreignness liability and comparisons among competing markets.
Case Study: Starbucks in Australia
- Starbucks struggled in Australia due to differences in administrative practices regarding business financing.
- Geographic factors, such as Australia's sparse population and size, may have limited the chain’s growth.
- Economic reasons included higher coffee prices compared to local cafes, which deterred Australian consumers.
Case Study: Tim Hortons in the United States
- Contextual analysis of Tim Hortons' struggles in the U.S. market, with specifics to be explored through dedicated resources.
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