Because most enterprises should draw from all three as to some extent, the framework can be used to develop a summary scorecard indicating how well the company is globalizing. See table 1 for a summary and the readings assigned for module ii for additional discussion. Pankaj megawatt ghemawat is an international strategy guru who developed the cage. In order to prove this point, ghemawat provides interesting data to prove that crossborder flows of goods, services, capital, information and people are actually a lot more limited that most. Differences across countries the cage distance framework there are no foreign lands. We use pankaj ghemawats wellknown aaa triangle framework to describe three generic approaches to global value creation. He is the global professor of management and strategy and director of the center for the.
Pankaj ghemawats aaa framework to evaluate global strategy. Differences and distances1 pankaj ghemawat, new york university stern school of business, usa, and iese business school, spain. As summarized in table the cage framework, the cage cultural. Managing differences the central challenge of global strategy by pankaj ghemawat broader lessons pankaj ghemawat ph. Then, the cage framework is used to unpack potential. Apr 02, 2014 the fact that ghemawat was accused of thinking of the world as round in his talks over in india, make me wonder about corporate backed subsidiaries. Cage framework for international trade global matters duration. Pdf in this study, we have analyzed the influence of institutional. One of the framework was identified by ghemawat aaa framework in which the three as.
Pdf the impact of cage institutional distances and motivations. The framework was developed by pankaj ghemawat, a professor at the university of navarra iese. Ghemawats aaa global strategy framework open textbooks. It will become required reading for thoughtful practitioners as well as practitionerstobe in the 1990s. The acronym cage stands for culture, administrative, geographical, and economic. May 27, 2015 globalization, the international integration, is adapted by an organization by adapting various approaches. Ghemawat improves upon the traditional competitive strategy concepts in order to help determine how to achieve and sustain a competitive advantage. Its one that david livingstone first floated back in the 1850s, and one thats been popularized by writers such as thomas friedman. Youngresearcherssection cage analysis of china s trade.
Cage framework, emerging markets, internationalization, thailand. Thus, it is important to combine the influence of the institutional environment. The cage framework for countrylevel analysis cultural differences administrative. Culture happens to be the first facet of cage, in terms of the acronym, but it also cage framework, mba discussions, pankaj ghemawat. Pankaj ghemawat born september 30, 1959 is an indianamerican economist, professor, global strategist, speaker and author known for his work in the study of globalization. Ghemawat, strategy and the business landscape, 3rd edition.
Adaptation strategies seek to increase revenues and market share by tailoring one or more components of a companys business model to suit local requirements or preferences. Tool kit companies routinely exaggerate the attractiveness of foreign markets, and that can lead to expensive mistakes. Learn vocabulary, terms, and more with flashcards, games, and other study tools. The cage framework also recurs in the discussion of strategies for globalization and speci. The impact of cage institutional distances and motivations for. Compared to the original cage distance framework two new components are added. Global prosperity and how to achieve it, and he takes the stage to ask an important question. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. Thus, it is important to combine the in uence of the institutional. Cage distance framework, where cage is an acronym for cultural, administrative. The framework developed does provide an aid in the evaluation of strategic alternatives that is especially useful for major investment decisions. Why do so many global strategies faildespite companies powerful brands and other bordercrossing advantages.
How the worlds most powerful company really works, chapters 34. He created the dhl global connectedness index and the cage distance framework. The cage model, by ghemawat 2001, is a typology of four. If you want a longer treatment, contemporary strategy analysis by robert grant, or strategic management by garth saloner, andrea shepard, and joel podolny are. This note introduces the cage distance framework, which is used to identify and prioritize the differences between countries that companies must address when developing crossborder strategies.
It was written by pankaj ghemawat, a professor of global strategy at the iese business school in barcelona who served as open pdf files through vfp a faculty member. Cage distance framework, where cage is an acronym for cultural, administrative institutional and political, geographic and economic distances among countries. Modern competitive strategy by gordon walker provides a slightly longer and very solid introduction. Download free cage framework pankaj ghemawat pdf ticketletitbit. It may also be used to understand patterns of trade, capital, information, and people flows. Rearrange individual pages or entire files in the desired order.
Ghemawat draws on several examples that illustrate how organizations use and balance these strategies and describes the tradeoffs they make as they do so. Ghemawat rivkin creating competitive advantage 798062 pdf eng. Ghemawat 2001 this new framework integrates parts of the transaction cost approach, the. The cage distance framework identifies cultural, administrative, geographic and economic differences or distances between countries that companies should address when crafting international strategies. Jun 27, 2012 pankaj ghemawat is the author of global 3. Ghemawat 2001 has focused extensively on country distance and has defined what is commonly known as the cage distance framework, which covers four countryspecific variables, i. Sep 17, 2015 ghemawat socalled aaa framework offers three generic approaches to global value creation. Whether, it is in the best interest of foreign corporations to back a view of a flattening world now rather than later in order to challenge controversial views of a western dominated media and. Jun 23, 2015 pankaj ghemawats aaa framework to evaluate global strategy june 23, 2015 dennisbarber in recent due to the volatile nature of various factors like economic conditions, dynamic nature of market factors, etc.
Ghemawat argues that instead of seeing the world through our lenses of the pastwith a protectionist viewpoint or a world is flat viewpointwe must start looking at our world through a new 3. This perspective, says ghemawat, blinds firms to a contrasting strategy. Cage distance framework, a powerful strategic tool toolshero. Fundamentals of global strategy a business model approach. Ghemawat has presented the cage framework, which takes into account cultural c, administrative a, geographic g, and economic e distance. Heres a more rational approach to evaluating global opportunities. Pankaj ghemawat is the anselmo rubiralta professor of global strategy at iese business school in barcelona and the jaime and josefina chua tiampo professor on leave at harvard business school.
Robert louis stevenson, the silverado squatters, 1883 chapter 1 emphasizedthe semiglobalized state of the real world, in which borders continue to matter. Instead of 1,000 robots, 2,000 workers were employed for manual assembly at a full. He created the dhl global connectedness index and the cage distance framework he is the global professor of management and strategy and director of the center for the globalization of education and management at the. By contrast, similarities along these dimensions suggest great potential. Begin by considering the example summarized in exhibit 21, which plots walmarta s operating margin by country in 2004 against the distance between each countrya s capital and walmarta s headquarters. Ghemawat socalled aaa framework offers three generic approaches to global value creation. Creating competitive advantage case study solution, creating competitive advantage case study analysis, subjects covered economic analysis strategic planning by pankaj ghemawat, jan w. This view more realistically incorporates the facts and acknowledges the opportunities and increased consumer choices opened up by. Ghemawat s discussion of these important ideas is concise, studded with detailed examples, based on rigorous research and, above all, practical. Seduced by market size, the illusion of a borderless, flat world, and the allure of similarities, firms launch onesizefitsall strategies. Pankaj ghemawat disagrees with both and his case, backed by data, can be convincing. The cage comparator covers 163 home countries and 65 industries, and allows users to customize the impacts of 16 types of cage distance. The cage model, by ghemawat 2001, is a typology of four institutional dimensions.
Strategy and the business landscape is based on contemporary research in the field of strategy and adopts a valuefocused, firmcentered perspective that promotes an analytical approach to strategy. Santos silva and tenreyro 2011 were in line with pankaj ghemawats cage framework when they argued that the gravity model can be extended by including variables to account for language relationships, tariffs, contiguity, access to the sea, colonial history, exchange rate regimes, and other variables of interest. Adaptation strategies strategies that seek to increase revenues and market share by tailoring one or more components of a firms business model to suit local requirements or preferences. Ghemawat rivkin creating competitive advantage 798062 pdf. Managing differences the central challenge of global strategy author. The cage distance framework is a tool that can be used to uncover important differences between various countries that companies should take into account when deciding on their strategy. The more two countries differ across these dimensions, the riskier the target foreign market. The previous chapter ghemawat, llano and requena highlighted the. The evolution of the circus industry a even a clown can do it b bos007pdfeng bos008pdfeng massive layoffs and mediocrity. Pankaj ghemawat is the global professor of management and strategy and director of the center for the globalization of education and management at the stern school of business at new york university, and the anselmo rubiralta professor of global strategy at iese business school.
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