Reference no: EM13479120

The research paper assigned is described in detail in the attachement. The 2 countries chosen are Australia and Russia and the product is:

Health foods ( such as vitamins, nutrients, energy foods, drinks, etc)

The procedure lists out the instructions to follow and there is a report outline. It must be 8 pages including the graphs required.

THE CAGE PROJECT:

BACKGROUND:

In a highly popular 2005 book, Thomas Friedman declared that the "world is flat." What he meant was that because of communication technology (i.e., the Internet), increased travel, labor migration (going to a different country to work), etc. the people of the world were converging on common tastes, preferences, etc. By "flat," Friedman argued that differences among people and markets no longer mattered and that competitively the world became a level playing field. This meant that a company in China could compete in the U.S. on an equal footing with an U.S. company because customer tastes and expectations were the same in both markets ("What works in Shanghai, China works in Savannah, Georgia"). For example, Friedman would argue that Lenovo (the Chinese company that bought IBM's PC business) can compete successfully in the U.S. market with Hewlett-Packard and Dell as would Dell in China because of similar market characteristics. In short, Friedman's idea supports globalization.

PankajGhemawat, a Harvard professor, opposes Friedman's idea - in fact, he derisively calls it "globaloney" (even professors, like NBA hoopsters, do trash talking!). His point is that there are significant differences in Cultural, Administrative (i.e., management styles), Geographic, and Economic (CAGE) areas that companies should pay attention to. He calls these differences "distance," such as cultural distance, administrative difference, etc. In other words, he would argue that Dell could face (and in fact, Dell did and continues to face) considerable problems succeeding in China because of vast CAGE differences. What works for Dell in the U.S. would not necessarily work for them in China. Ghemawat suggests looking at the attractiveness of foreign markets from a CAGE perspective - the more CAGE difference between (say) the U.S. and a particular country, the less attractive is that market because of the difficulty of doing business profitably in that market. So, while a market may be big in size (for example, India's 1.1 billion population or China's 1.3 billion), it may not be attractive to a U.S. company because of significant CAGEdifferences. You have to understand, though, that CAGE differences can be specific to a particular product - for example, the CAGE difference between the U.S. and the U.K. may be small when it comes to cell phones but big when it comes to (say) over-the-counter pharmaceuticals.

YOUR TASK:

You have been hired by a New Jersey-based company that has, until now, competed only in the U.S. market. Due to increased competition in the U.S. market, they now desire to go overseas. But they don't know which country (ies) to go first, which next, etc. This is where you come in. Your task is to do research on the selected countries (keeping in mind the product assigned to you) and prepare a report examining the CAGE difference between the U.S. and 2 other countries (assigned to you) and make recommendations about those 2 markets for your client.

SUGGESTED REPORT OUTLINE:

Your report should be organized in terms of the following sections:

• Brief description (including the graph - one graph showing both countries) of the Country Attractiveness Portfolio (CAP). Here, you should describe briefly the process that you used to collect the data, justification for the factor used for one of the axis in the graph - one axis (population) is common to all students while the second depends on the product, and conclusions about the attractiveness of the two countries. The narrative part of this section should not be more than 1 page.

• Adjusting the CAP for CAGE. This is the heart of the paper. Here, you should look at each CAGE element (culture, etc.) and factors within each element and make a conclusion on this element's distance between the U.S. and the selected country. For example, you should say something like ... "based on the factors involved in examining the cultures of India and the U.S., our conclusion is that the distance is large." Do the same for all the CAGE elements and make sure that you back up your arguments by data (with citation of sources). At the end of this section, you are going to create an adjusted CAP graph - that is, the previous CAP graph now adjusted for CAGE difference. Your narrative is going to conclude by addressing the difference in the countries' positions in the two graphs - the original CAP graph and the revised CAP/CAGE graph. This section is likely to be about 3 pages plus the graph.

• The final section is the recommendation section. What can you tell your client about the attractiveness or otherwise of the two countries? Can they do business profitably in that country? This section should not be more than 2 pages. Make sure all 3 sections cite sources used.

PROCEDURE:

Your first task is to think about your assigned product and do some preliminary research on what factors determine market attractiveness for that product. Here is an example: Let's say that your product is automobiles. One important factor is purchasing power because people need to have money to be able to buy cars. A good proxy for purchasing power is per capita income. This means that for automobiles, you are going to use population as one factor (this is common to all students) and per capita income as the second. If you look at Figure 1 attached to this note, you will notice that in the example number of cell phones currently owned is used along with per capita income. Based on the two factors, plot your two assigned countries on a graph and show the relative size of the market by the size of the circle.

Next, you study each of the CAGE factors (the Ghemawat article cited at the end and available electronically in our library gives all the relevant questions that you have to ask for each CAGE factor)for both your selected countries and collect data supporting the factors (you may not get "hard" or numbers type data for all of them, but look for evidence of some kind). Once you have collected data on all the CAGE factors, study them and make an assessment of the distance between the U.S. (your base country) and each of the selected countries. Your summary should be something as follows:

Cultural Distance: large (key evidence); implications to CAP?

Administrative Distance: moderate (key evidence); implications to CAP?

Geographic Distance: large (key evidence such as miles); implications to CAP?

Economic Difference: Small (evidence); implications to CAP?

The final step is to make recommendations based on your analysis.

Possible Data Sources:

Here is a link to good data sources:

https://globaledge.msu.edu/resourcedesk/statistical-data-sources/

Figure 1: Country Attractiveness Portfolio (CAP) Graph
Figure 2: CAGE-Adjusted CAP Graph

Additional reading for students:

1. https://www.excellence-leadership.com/mediapack-articles/CIM009_the_globalisation_challenge.pdf

2. "Distance Still Matters: The Hard Reality of Global Expansion," by PankajGhemawat, Harvard Business Review, September 2001, pages 137-147. (Available in electronic form in MSU's Sprague Library Website)

COUNTRY PAIRS:

1. Canada and Brazil
2. U.K. and Mexico
3. Germany and China
4. France and India
5. Japan and Malaysia
6. Australia and Russia
7. Spain and South Korea

Products:

1. Washing Machines and Dryers
2. Health foods ( such as vitamins, nutrients, energy foods, drinks, etc)
3. Wine
4. Hybrid cars
5. Fashion Merchandizing