CAGE

CAGE is a framework that allows us to evaluate the "distance" between your country and a target market. The 4 letters stand for Culture, Administration, Geography, Economy.

It is designed to be used for Global Strategy and internationalization.

Cultural distance
Culture determines how people interact with each other. What are the expected behaviors? Furthermore, culture helps to understand how to interest with companies and institutions Some cultural elements are evident like languages but some, like common history or beliefs, are deeper like. Some products can trigger strong responses either positive or negative. These elements can influence how consumers choose between substitute products.

Administrative or political distance
The administrative and political distance is influenced by both, the relationships between the host and the home country, and how similar are the administration in both countries. The historical and political associations between countries can make trades blossomed or perish. Trade tends to be 900% higher between countries with a colony-colonized history. On the opposite, do not expect a lot of trade between countries at war with each other. Common currency and trade agreement also served to boost the trade between countries.

We also cannot ignore the local policies of the government. They will put trade quotas, tariffs, and restrictions to protect their economy, especially if there is a threat to :
 * A large employer (lots of potential votes)
 * A national champion (national pride)
 * Vital national security
 * Essential goods (food, fuel, electricity, etc)
 * Entitled good or services (health care and other product people feel entitled to)
 * Natural resources (Foreigners may be seen as robbers)
 * High sunk cost (the government will secure highly vulnerable companies)

Geographic distance
The further the harder. Distance will increase transportation costs for example. We also need to take into consideration the difference in country size, access to waterways, transportation and/or communication infrastructure, average within-country distance to borders, and topography.

These effects are not only related to the exchange of physical goods but also affect intangibles and services.

Economic distance
Wealth and income is the most important economic attribute. Money tends to flow from rich countries to rich countries or to poor countries, rarely from poor to poor. One of the reason is that companies business models usually relies on a certain minimum income level from the consumer and the cost and quality of the resources.