The article uses the failure example of Star TV to reflect that even though there is a trend of globalization all over the world, companies should still be careful on expanding into other markets. Companies must measure the impact of distance to avoid the blindness expansion, which there are four dimensions of distance: Culture, Administrative, Geographic and Economic.
Each dimension encompasses many factors, some of which are apparent, but some are subtle. Different industries are affected by different dimensions, thus industry sensitivity to distance is various. So people need to do the CAGE distance framework analysis aiming the specific industry before the expansion, in order to find a proper way and a correct market for a particular industry.
Also, while doing the host-country portfolio analysis, company has to consider the CAGE distance dimensions, which can turn a flaw approach into an adjustment version of the analysis. Only in this way, can a company reduce the risk of its expansion.
Reasons why I have chosen:
1.I’m a Chinese student, and nowadays a lot of companies are willing to expanding into the Chinese markets. This makes me pay more attention on FDI and emerging markets, which are both related to the distance factor. The article shows the importance of CAGE analysis, which must be considered during the process of expanding companies.
2.I have learned the CAGE analysis and also I’m personally into culture differences between different nations. Meanwhile, this article is written in a simple way and there is less big words in the article. Thus, it is much easier for me to understand the language.
Things I have learned:
1.I have to admit that I have learned the CAGE analysis before, but this time is definitely a helpful review for me to consolidate my learning. Also, the CAGE analysis taught in the article is much more vivid because it is with a lot of examples. This helps me to comprehend the analysis deeply. In addition, the country portfolio analysis approach is a new method for me and the way how it works with the grid is visually helpful for companies while they are trying to make decisions on expansions. Also, it is very impressive to see that the analysis can be adjusted by considering the distance dimension.
2.The article mentions China several times and it takes Chinese markets as examples. As a Chinese student, I found something interesting that I never noticed before. It is the truth that the copyright infringement is a big problem in China. I considered it as simple as buyers wanting to save money while the press wanting to make money. However, the article seems reveals the truth deep down for me: the percept of Confucius that encourages replication of the result of past intellectual endeavors. This is very novel for me to find out how the world treats the Chinese culture.