Professional Documents
Culture Documents
Companies routinely exaggerate the attractiveness of foreign markets, and that can
lead to expensive mistakes. Here’s a more rational approach to evaluating global
opportunities.
• Traditional • CAGE
1. Do you believe that the traditional country profile analysis is insufficient? Why or
why not?
3. Can you think on any other factors that might be influential in trade? Why would
they be relevant?
Some cultural attributes, like language, are easily perceived and understood. Others
are much more subtle. Social norms the deeply rooted system of unspoken principles
that guide individuals in their everyday choices and interactions, are often nearly
invisible, even to the people who abide by them.
• Books, film industry, music industry
Deeper:
• Consumer’s identity as a member of a particular community.
• The food industry is particularly sensitive to religious attributes.
• Hindus, do not eat beef
• In Japan, rice, carries cultural baggage.
Preferential trading arrangements, common currency, and political union can also
increase trade by more than 300% each.
The integration of the European Union is probably the leading example of deliberate
efforts to diminish administrative and political distance among trading partners.
It is the target country’s government that raises barriers to foreign competition: tariffs,
trade quotas, restrictions on foreign direct investment, and preferences for domestic
competitors in the form of subsidies and favoritism in regulation and procurement.
Such measures are expressly intended to protect domestic industries, and they are
most likely to be implemented if a domestic industry meets one or more of the
following criteria:
It exploits natural resources. A country’s physical assets are often seen as part of a
national heritage.
Geographic attributes influence the costs of transportation. Products with low value-
to-weight or bulk ratios, such as steel and cement, incur particularly high costs as
geographic distance increases.
All companies find that major disparities in supply chains and distribution channels are
a significant barrier to business.
• Can you name some examples of companies that took into account the four
dimensions (or a few) abroad?
• Which of the four dimensions is almost always taken into account the least? Why?
• TRI’s president, Pete Bassi, decided to rationalize its global operations by focusing its
equity investments in a limited number of markets
• Country Portfolio Analysis: A Flawed Approach
• Using the CPA method, Mexico, with a total fast-food consumption of $700 million, is a relatively
small market, ranking 16th of 20
• Country Portfolio Analysis: Adjusted for Distance
• Applying the effects of distance, Mexico leaps to sixth place in terms of market opportunity
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The paradimensions
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• TRI might have ended up abandoning a core market with the CPA method. Instead,
they concluded that “Mexico is one of TRI’s top two or three priorities.
• Also, TRI already owned more than 4/5 of its Mexican outlets and had a 38% share of
the local market (well ahead of McDonald’s)
Dr. Jorge Alcaraz
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The paradimensions
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Discussion #3:
1. What could Star TV had done to ensure they were more successful in Asian markets?
• Could you propose an alternative action plan?
2. Were you surprised by how much the CAGE framework impacted TRI’s analysis? Why
do you think it did have such a large influence?
3. To what extent should a business rely on the traditional CPA and CAGE framework
methods of analysis?
4. Having seen all the content, which method (CPA or CAGE) do you prefer and why?