What is CAGE Distance Framework, and what are best practices, tools and online templates for teams and organizations?
Definition of CAGE Distance Framework
The CAGE Distance Framework identifies Cultural, Administrative, Geographic and Economic (CAGE) differences or distances between countries that companies should address when crafting international strategies. It was developed by Pankaj Ghemawat, an international strategy expert, to offer businesses a way to evaluate countries in terms of the “distances” between them.
Description of CAGE Distance 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. Each is described in detail below:
Cultural distance: This refers to the cultural norms, values and social beliefs, also known as the unwritten rules, that shape the behavior of individuals and organizations. Various societies also differ in their attitudes toward globalization and market power that have important consequences in terms of both formalized trade regulations and general attitudes toward how businesses are run.
Administrative distance: This refers to differences in history and politics among countries, especially those which do not share colonial ties. Also, a lack of shared currency, political hostilities, and government corruption contribute to Administrative distance.
Geographic distance: Geographic distance refers not only to the physical distance between two countries, but also a country’s physical size, whether it shares borders with hostile or non-hostile neighbors, and access to trade routes such as the ocean and other topographical features. Any of these attributes can cause Geographic distance and make doing business a challenge.
Economic distance: Two of the biggest determinants of economic distance are the Cost of Labor and level of Consumer wealth between countries. It is more difficult for a company from a wealthy country to enter a poorer country and be successful there, but not impossible.
Using the CAGE Analysis is helpful in order to create insights into the key differences between a company’s home market and the international market it intends to target. It is also helpful because it allows companies to assess the desirability of that market in an organized manner.
Tools & Templates
Various types of Market Surveys and International business and trade reports can be used to provide insights, data and additional support when using the CAGE Distance Framework.
upBOARD's Online CAGE Distance Framework Tools & Templates
Unlike most traditional strategy techniques, upBOARD’s online CAGE Distance Framework tools allow any team or organization to instantly begin working with our web templates and input forms. Our digital platform goes far beyond other software tools by including progress dashboards, data integration from existing documents or other SaaS software, elegant intuitive designs, and full access on any desktop or mobile device.
Learn more about upBOARD’s portfolio of other business strategy best practice tools and templates, including:
2 X 2 Matrix, ADL Matrix, Affinity Diagrams, Baker’s 4 Strategies of Influence, Balanced Scorecard, Benchmarking, Blue Ocean Strategy, Bowman Strategy Clock, Build-Measure-Learn Feedback Loop, Business Model Canvas, CAGE Distance Framework, Competitive Analysis, Competitive Landscape Analysis, Contingency Planning, Core Competence Analysis, Critical Success Factors, Discovery Driven Planning, Economic Value Added, First Mover Advantage, Five Forces Model, Force Field Analysis, Gap Analysis, GE McKinsey 9-Box Matrix, Go To Market Strategy, Hambrick & Frederickson’s Strategy Diamond, Hedgehog Model, Hook Model of Behavioral Design, Hoshin Planning System, Kay’s Distinctive Capabilities Framework, Key Outcome Indicators, Kotler’s Five Product Levels Model, Kotler’s Pricing Strategies, Lafley & Martin’s Five Step Strategy Model, McKinsey 7S Model, McKinsey’s Seven Degrees of Freedom for Growth, Mergers & Acquisitions, Mission Statements, Mullin’s Seven Domains Model, OGSM Framework, Ohmae’s 3-C’s Model, Partner Relationship Management, PEST Analysis, PESTLE Analysis, Porter’s Diamond, Portfolio Management, Purpose Statements, Pyramid of Purpose, Scenario Planning, Simonson & Rosen’s Influence Mix, SMART Performance Metrics, SMARTER Goals, SOAR, Strategic Goals, Strategy Map, Strategy Roadmap, Strategy Uncertainty Map, SWOT Analysis, TOWS Matrix, Triple Bottom Line, USP Analysis, Value Chain Analysis, Value Disciplines Model, Value Net Model, Values Statement, Vision Statements, VRIO Analysis, and Weisbord’s Six-Box Model.