Appendix 7: CAGE Distance Framework Analysis Instrument
Analysis Instrument
| CAGE dimension | Describe distance | Quantify distance (high/medium/low) | Describe distance | Quantify distance (high/medium/low) | Describe distance | Quantify distance (high/medium/low) |
|---|---|---|---|---|---|---|
| Country 1: | Country 2: | Country 3: | ||||
| Cultural distance | ||||||
| Administrative distance | ||||||
| Geographic distance | ||||||
| Economic distance | ||||||
| Recommendations | ||||||
CAGE distance framework analysis instrument
Example
| CAGE dimension | Describe distance | Quantify distance (high/medium/low) | Describe distance | Quantify distance (high/medium/low) | Describe distance | Quantify distance (high/medium/low) |
|---|---|---|---|---|---|---|
| Country 1: Bangladesh | Country 2: Ghana | Country 3: Brazil | ||||
| Cultural distance | Language: The official language is Bengali. While English is used in business and education, language barriers can still exist due to accents and regional dialects.
Religion: Bangladesh is predominantly Muslim (about 90%), whereas the U.S. has a Christian majority. Religious differences can influence business practices and consumer behavior. Societal norms: Bangladesh has a collectivist culture, emphasizing group goals over individual desires. The U.S., conversely, values individualism. Power distance: Bangladesh has a higher acceptance of hierarchical structures, which can affect organizational dynamics and negotiations. |
High | Language: English is the official language, minimizing language barriers.
Religion: Ghana is predominantly Christian (over 70%), like the U.S., which can ease cultural integration. Societal norms: Ghanaian culture leans toward collectivism, valuing community and family ties. Communication styles: Indirect communication is common, which may differ from the direct approach typical in the U.S. |
Medium | Language: Portuguese is the official language. While English proficiency is increasing, language barriers can still exist.
Religion: Brazil is predominantly Christian (mostly Catholic), like the U.S., aiding cultural affinity. Societal norms: Brazilian culture balances individualism and collectivism, with strong emphasis on relationships and networks. Business etiquette: Personal relationships are crucial in business dealings, and negotiations may take longer. |
Medium |
| Administrative distance | Political system: Bangladesh is a parliamentary democracy but has faced political instability. The U.S. is a stable federal presidential republic.
Legal framework: The Bangladeshi legal system is less developed, with challenges in contract enforcement and intellectual property protection. Corruption and bureaucracy: Higher levels of corruption and bureaucratic red tape can hinder business operations. |
High | Political system: Ghana is a stable presidential democracy with a history of peaceful transitions of power.
Legal system: Ghana’s system is based on English common law, which aligns somewhat with the U.S. legal framework. Regulatory environment: Efforts have been made to reduce corruption, but bureaucratic hurdles still exist. Trade agreements: Ghana is part of the Economic Community of West African States (ECOWAS), which may affect trade dynamics. |
Medium | Political system: Brazil features a federal presidential republic, like the U.S., but has faced political scandals and instability.
Legal system: Its legal system is based on civil law, which differs from the U.S. common law system, potentially affecting legal proceedings. Regulatory environment: Brazil is notorious for complex tax systems and bureaucratic procedures. Trade policies: Its membership in MERCOSUR means it has its own trade regulations and tariffs. |
Medium |
| Geographic distance | Physical distance: Approximately 12,500 km (7,770 mi) separate the U.S. and Bangladesh, leading to longer shipping times and higher transportation costs.
Time zone difference: Bangladesh is 10-11 hours ahead of Eastern Standard Time, complicating real-time communication. Infrastructure: Underdeveloped transportation and communication infrastructure can pose logistical challenges. Climate and environmental factors: Bangladesh is prone to natural disasters like floods and cyclones, which can disrupt business activities. |
High | Physical distance: It is located approximately 8,500 km (5,280 mi) from the U.S., affecting logistics and transportation costs.
Time zone difference: Ghana is five hours ahead of Eastern Standard Time. Infrastructure: Developing infrastructure has shown improvements in ports and roads, but gaps remain. Climate: The tropical climate has potential for seasonal disruptions. |
High | Physical distance: Brazil is closer to the U.S. than the other two countries, approximately 7,000 km (4,350 mi).
Time zone overlap: Time zones partially overlap with the U.S., facilitating communication. Infrastructure: Brazil offers more developed infrastructure, including ports, roads, and telecommunications. Climate: The climate is diverse like the U.S., ranging from tropical to temperate zones. |
Low |
| Economic distance | Economic development: Bangladesh is a lower-middle-income country with a GDP per capita significantly lower than the U.S.
Market size and growth: With a large population exceeding 160 million, it offers a sizable market but with lower purchasing power. Industrial focus: The economy relies heavily on the textile and garment industry. Labor costs: Lower labor costs present opportunities for cost-effective manufacturing. |
High | Economic development: Ghana is a lower-middle-income country with growing GDP but lower per capita income than the U.S.
Market potential: The emerging market features a growing middle class and increasing consumer demand. Natural resources: It is rich in minerals, oil, and agricultural products. Labor market: Ghana offers a young workforce with relatively low labor costs. |
High | Economic development: Upper-middle-income country with a sizable economy but lower GDP per capita than the U.S.
Market size: Large population of over 210 million, with significant consumer market potential. Industry diversity: The diverse economy includes strong agriculture, manufacturing, and service sectors. Labor market: Brazil’s labor costs are higher compared to Bangladesh and Ghana but still competitive. |
Medium |
| Recommendations | Bangladesh presents the greatest distances in all categories. While the large population and low labor costs are attractive for manufacturing, the significant cultural, administrative, and geographic distances, along with infrastructural challenges, make it a more complex market for U.S. businesses to navigate. | Ghana poses moderate challenges. The shared language and political stability reduce some barriers, but economic and infrastructural limitations require careful consideration. | Brazil presents the least distance across all dimensions, making it the most accessible market among the three for U.S. businesses. The cultural similarities, closer geographic proximity, and larger, more developed economy offer favorable conditions for market entry. | |||
Example of CAGE distance framework analysis instrument
