Utilizing the CAGE Framework for Successful Business Expansion

CAGE is a business acronym which provides organizations with a chance to analyze Cultural, Administrative, Geographic and Economic factors that would influence a business as it expands its market to foreign countries. With the application of CAGE, managers get to analyze the possibility of either entering a new receptive market or entering markets that would incur high costs. CAGE analysis is also vital as it helps managers to have prior understanding of foreign markets in the aspects of differences in business laws, regulations and economic incentives. This understanding helps managers to confidently expand markets with less risks involved. If I were the global manager of a Boston based company that is opening a subsidiary in Thailand, I would apply the CAGE analysis from a diverse perspective.

Thailand is one of the countries where markets are flexible. However, moving a business to the country is a daunting task that must involve extensive research and planning. I would, therefore, analyze the cultural framework of Thailand in relation to the business. Central Thai is the official language in Thailand unlike Boston where a majority of the people speaks English. This, therefore, creates a language barrier. This means that to access the Thailand market, I must incorporate the locals of Thailand both in the administrative and subordinate positions. The Thai people also have different social norms which might lead to lack of a social network. Therefore, the products offered by the subsidiary company should conform to the cultural and national identity of the Thailand people. The products should also conform to the Thailand people’s consumer preferences.

I would also apply CAGE in the analysis of the administrative business strategies of Thailand. A foreign country’s diverse administrative policies might affect the establishment of businesses in the foreign market. Government policies for business establishment in Boston and Thailand differ. It is, therefore, important that I consider the legal framework requirements in Thailand in relation to the subsidiary company. I would also enquire about the tax rates for foreign companies established in Thailand. I would consider the foreign earned income tax in relation to the company’s costs and benefits of production. This is because foreign countries have different legal requirements in relation to company taxes. Assessing Thailand’s political environment in relation to foreign businesses and business environment stability is also vital. Boston and Thailand neither share similar colonial ties nor a common trading bloc and thus, understanding Thailand’s business environment is vital. A country that exhibits political hostility might be unfavorable as a foreign market. This is because such countries impose heavy tasks and a hostile environment which becomes hard for business operations. I would do a thorough analysis to ascertain that Thailand has a cool political environment that would support the growth of the subsidiary company. It would be important to find a specialized intermediary in legal and judiciary matters who has experience in Thailand’s legal matters. This would be crucial in upholding the property rights protection and enforcement of the subsidiary company in Thailand. Additionally, finding specialized intermediaries in other fields like financial markets and markets for both product managerial talent would be vital. This is because the specialized intermediaries in Thailand would be of importance in handling the company’s issues in relation to aspects like auditing, transparency, certifications and consumer patterns.

When applying the CAGE analysis as a manager, I would ensure to incorporate the geographic aspect of the CAGE analysis. Boston and Thailand are in two different continents which creates a vast geographical dispersion between the two countries. Additionally, there is no existence of a land border that connects the two countries which further escalates the physical distance between them. However, by the fact that the central headquarters of the company are situated in Boston, it is important to establish a clear communication and transportation link between the two companies. This is paramount to ensure effective management and administration of the subsidiary company. Thailand and Boston also experience different climatic conditions due to different geographic locations. I would, therefore, ensure to establish strategies to ensure that the production and supply of products in the company would not be affected by climatic conditions in Thailand.

Focusing on the economic part of the CAGE analysis, I would identify locations in Thailand where the costs of raw materials for the company are offered at lower costs. The economic disparities between Boston and Thailand would definitely result in differences in the cost of raw materials of the company’s products. Therefore, analyzing how such factors of quality and cost of raw materials would affect the final product is paramount. The Thailand subsidiary company should also be located in a place where there will be easy accessibility of the products’ market and consumers. I would ensure that I locate markets where the consumers have a strong consuming and purchasing power. This means that before sorting out the economic market location, I will have to do a thorough analysis of Thailand’s per capital income as a core sorting criterion. I would also consider the economic size of Thailand to determine if the country’s economic status would affect the market of the company’s products. I will also have to consider the fact that Thailand and Boston use different currencies. This means that the cost of production, processing and market price for the final product should be adjusted accordingly to fit into the Thai baht currency. However, this should be done with a lot of considerations to reduce chances of affecting the company’s profits in relation to the costs.

Application of CAGE analysis is a vital tool for companies with the intentions of expanding businesses to foreign markets. Application of CAGE gives companies an opportunity to compare markets from various perspectives before venturing into them. It is important that managers assess the desirability of a foreign market prior to establishment of a foreign subsidiary company. With the use of CAGE analysis, companies can easily expand their markets since they are in a position to identify institutional voids before making internationalization efforts.