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CAGE Framework for Industry Analysis

The CAGE framework, which analyzes cultural, administrative, geographic, and economic distances between countries, can also be applied at the industry level within countries. This allows for industry-level analysis and explains competitive advantages between nations in the context of distances. While some argue globalization results in convergence and a "one-size fits all" approach, Pankaj Ghemawat contends borders still matter and the world remains only semi-globalized for the foreseeable future.

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Srinivas Nandikanti
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505 views5 pages

CAGE Framework for Industry Analysis

The CAGE framework, which analyzes cultural, administrative, geographic, and economic distances between countries, can also be applied at the industry level within countries. This allows for industry-level analysis and explains competitive advantages between nations in the context of distances. While some argue globalization results in convergence and a "one-size fits all" approach, Pankaj Ghemawat contends borders still matter and the world remains only semi-globalized for the foreseeable future.

Uploaded by

Srinivas Nandikanti
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
  • The CAGE Framework at the Industry Level: Introduces the CAGE framework's relevance and application at the industry level with a focus on cultural and economic influences.
  • Pankaj Ghemawat's CAGE Framework Details: Details the components of the CAGE framework, emphasizing cultural, administrative, geographic, and economic distances.
  • Wal-Mart International's Operating Margin Analysis: Presents a visual analysis of Wal-Mart's operating margins by country, illustrating geographic impacts on business.
  • Extending the CAGE Framework: Discusses the application of the CAGE framework from country to industry level, highlighting its analytical utility.
  • Perspectives on Globalization: Explores differing perspectives on globalization, referencing thought leaders like Theodore Levitt and Pankaj Ghemawat.

The CAGE framework at

the Industry Level


Pankaj Ghemawat’s CAGE-framework
Cultural Administrativ Geographi Economic
Distance e Distance c Distance Distance
Cultural differences Government Geography Economic
matter the most when: involvement is high plays a more differences
in industries that important role matter the biggest
•Products have high are: when: impact when:
linguistic content (TV •Producers of • Products have •Nature of demand
programs) staple goods a low varies with income
•Products matter to (electricity) value-to-weight (cars)
cultural or national •Producers of other or •Economics of
identity (foods) ‘entitlements’ bulk ratio standardization or
•Product features vary (drugs) (cement) scale are limited
in terms of size (cars) •Large employers • Products are (cement)
or standards (electrical (farming) fragile or •Labour and other
equipment) •Large suppliers to perishable factor cost
•Products carry government (mass (glass, fruit) differences
country-specifi transportation) • Local are salient
c quality •National supervision and (garments)
associations(wines) champions operation •Distribution or
(aerospace) al business systems
•Vital to national requirements are
security are high different (insurance)
(telecommunication (services) •Companies need to
s) be
•Exploiters of responsive and agile
natural (home appliances)
resources (oil,
mining)
The CAGE framework can be extended
from the country level and can be
applied to the industry level in each
country. Thus the CAGE framework is a
new tool for industry analysis and can
also be used to explain the competitive
advantage of nations in the context of
distances.
Theodore Levitt, said “globalization” was the result of a
demand side force and it was a result of the convergence
of tastes which he called “globalization of markets”. It was
basically about ‘one-size fits all’ strategies, thereby
advocating the world is flat.

Similar inferences were made by Thomas Friedman in


“The World is flat”.

However Pankaj Ghemawat , one of the most prominent


authorities on globalization says borders still matter for
evaluating cross- border moves, and the world is in a state
of semi- globalization and will remain this way for
decades to come.

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