Question

Respond to the following in a minimum of 175 words:

• Discuss the CAGE Distance Framework that firms should consider when choosing which foreign markets to enter.
• What conditions help managers determine which type of distance is most likely to affect the success of an international expansion? Provide an example.

PLEASE DO NOT GIVE AN ANSWER THAT IS ALREADY ON CHEGG..

Answer 1

• Discuss the CAGE Distance Framework that firms should consider when choosing which foreign markets to enter.

Whenever firms want to enter into foreign markets, it needs some data about that target country so that it can decide if that particular company is good enough to trade with or not.

A firm can identify the economic, geographic, administrative, and cultural differences that exist between the operation country and target country with the help of CAGE framework. This framework can be used to filter out the list of alternative foreign markets to be entered into.

CAGE framework can help firms to understand the patterns of information, type of people, trade, capital, etc. that are the essential factors for the organization.

Explanation:

Explanation:

Whenever firms want to enter into foreign markets, it needs some data about that target country so that it can decide if that particular company is good enough to trade with or not.

A firm can identify the economic, geographic, administrative, and cultural differences that exist between the operation country and target country with the help of CAGE framework. This framework can be used to filter out the list of alternative foreign markets to be entered into.

CAGE framework can help firms to understand the patterns of information, type of people, trade, capital, etc. that are the essential factors for the organization.

• What conditions help managers determine which type of distance is most likely to affect the success of an international expansion? Provide an example.

The conditions that are considered include;

1. The costs of the expansion related to distance
2. Time zone differences
3. Transport systems

Explanation:

The first condition that helps managers determine the type of distance that is most likely going to affect the success of an international expansion, is the cost of the expansion(Smolarski, Kut & Wilner, 2011). The more the distance between the headquarters of the firm and the branch of the firm, the higher the costs of expansion. For example, a firm that is in America is likely to expand at a cheap cost in Canada than in South Africa. The costs involved with the transportation of officials and materials increases as the distance increases, and that is likely to affect the success of an international expansion.

The other condition is the time difference. An organization is more likely to expand to a nation that they share the same time zone with, than to a nation that they are in a different time zone with. For example, a firm in the UK is more willing to open a branch in a country along the same time zone as them, such as Ghana than a country like Japan which is in a completely different time zone. This is because when the team in the UK wants to communicate with the firm in Japan, they might have to wait for a long period of time. This is because when they (UK team) are awake the Japanese team might be asleep.

There is also the transport system condition. It is easy for a firm to expand to a nation close to them because they know that they can reach the branch through the railway and road transport system, than to a nation that is a continent away. A company in France might find it easy to expand to Spain, than a country like South Africa because the only means of transport that will connect the two countries(France and South Africa) is air and water transport.