Discussion – International Expansion

 

To succeed in international markets, organizations must have a solid global strategy to gain a competitive advantage and then sustain economic growth in these markets. Organizations utilizing the CAGE Distance Framework can key in and focus on which countries it makes business sense to expand into. The CAGE Distance Framework is a predictor of how an organization’s products or services will sell based on factors such as cultural, administrative and political, geographic, and economic. Conditions in foreign nations that are fairly equal to an organization’s “home field” are likely going to have a high level of trade intensity in that such foreign markets are going to be attractive for international expansion.

To provide an example, let’s look at the Tesla automobile company. The first predictor is the economic factors of a technologically advanced, high-end vehicle. A poor nation such as Afghanistan, with very little economic growth or stability, certainly would not be on Tesla’s radar for expansion. Tesla is a California based company and likely would use the CAGE Distance Framework to predict countries with economic stability to support high-end end automobiles as an option.

Another aspect is the “A” in CAGE- administration and political- being an electric automobile Tesla is going to search out nations that have the legislation in place or in the process to change the laws to support a green landscape that is focused on emission controls. Nation’s that are not focused on controlling emissions aren’t likely to land on Tesla’s list of nations to seek expansion into.