Many companies have been forced to bring down their shutters of overseas ventures because of certain infrastructural issues. Businesses are started with lots of hopes. However, when they stop operating, entrepreneurs realize that the venture was a mistake. The reason for failure might be difficult roads, harsh terrains or even cultural difference. In this article, we will look at the Cage Distance Framework, which is one of the strategy tools used to identify the strategic opportunities and issues that are related to foreign expansions.
Cage Distance Framework - Origin
The Cage Distance Framework was developed by Pankaj Ghemawat, professor at IESE Business School in Barcelona, Spain. It was first published in Harvard Business Review in 2001.
Cage Distance Framework – An Idea
When a company has to withdraw from the market, it earns a bad name among investors. If the management looks at prospective oversea ventures only from a particular angle, they will miss out more important perspectives. For example, if management sees only the large amount of disposable income in the hands of the population of a certain country and the huge untapped market, they will miss out other factors that might increase the cost incurred by the company.