Question 1

Explain how the distance theory can be applied to the cause of Deglobalisation, by drawing
examples from today’s world economy?

International business consists of transactions that are devised and carried out across national
borders to satisfy the objectives of individuals, companies and organizations.’
(Czinkota et al , 2004)

Theories under International Business mainly we have 3,

• Theory of semi globalisation
• CAGE distance Framework
• AAA strategy

According to the question we will be discussing about the distance theory which is known as
CAGE DISTANCE FRAMEWORK.
Cultural+Administrative+Geographical+Economical=CAGE Frame work

CULTURAL ADMINISTRATIVE GEOGRAPHICAL ECONOMOCIAL

• Religion • Historical • Physical • GDP per

• Ethnicity • Political • Topography capita
• Language • Policy • Access to • Purchasing
• Social Norm • Regulations Ocean power
• Time zone • Labour cost
• Resource

The CAGE Distance Framework identifies Cultural, Administrative, Geographic and Economic

differences or distances between countries that companies should address when crafting
international strategies.
We should consider about above given CAGE frame work when understanding deglobalization .
Deglobulisation is the process of diminishing interdependence and integration between certain
units around the world, typically nation-states. It is widely used to describe the periods of history
when economic trade and investment between countries decline. It stands in contrast
to globalization, in which units become increasingly integrated over time, and generally spans
the time between periods of globalization. While globalization and deglobalisation are
antitheses, they are no mirror images. While as with globalization, deglobalization can refer to
economic, trade, social, technological, cultural and political dimensions, much of the work that
has been conducted in the study of deglobalization refers to the field of international economics.
The occurrence of deglobalization has strong proponents who have claimed the death of
globalisation, 

According to the researches in the past we can see that the from globalization the economic
gain is not equally shared, most of the time the richest percentage of the world receive most of
the income while the poor people get a very little.

• CULTURA • ADMINISTRATIV • GEOGRAPHIC • ECONOMOCIA

L E A L

China has a very Us faced trade around These are very far The Chinese DGP is
Asian culture, USD 273 billion with away. The around 7 which makes
language is mostly china . usa politically geographical distance them the highest
Chinese. They stable country . currently is a huge disadvantage. economic power
don’t use engl8ish both the countries has country.
much. China and increased their tariffs
USA doesn’t highly
match with each
other USA is a
very open minded
western cultured
country.

Bretrix , Chaina USA trade war , NAFTA 2.0 will be a great example for above question such
as , USA understood that they are highly depending on china to cut the interdependency
between these two country USA increased the tariff between china . due to this they china had
to pay a huge amount of money . to reduce the dependency between these 2 country USA took
this destination at the same time china also did the same with USA .
USA came up with the NAFTA 2.0 as solution. This time they contact with similar countries
which is Canada and Mexico. They NAFTA agreement has almost eliminate all the tariff
between these countries. these includes benefits such as zero tariff for automobile
manufactured in Mexico, good pay for ppl who work in automobile industry , access to dairy
farms between UAS and canada .
In this strategic move according to CAGE they difference between their cultures are very less.

In above example shows how cage theory has led deglobalization between countries