The CAGE Distance Framework And Its Importance For Foreign Direct Investment

Topics: UCI race classifications, Tour de Georgia, Foreign direct investment Pages: 3 (304 words) Published: April 13, 2015
The CAGE Distance Framework and Its Importance for Foreign Direct Investment Tereza Dvořáková, V00837032

Due date: November 20, 2014
For: Erik Schindler
Course: Business English and Communication (COM 206b)
Executive Summary
When expanding to a foreign country, the company needs to analyze the business environment in the foreign country. One of the best tools, how to recognize differences between domestic and foreign country is the CAGE distance framework. In the report, I firstly define foreign direct investment and briefly describe analyzing foreign country for FDI. I mention the CAGE framework as one of the important parts of this analysis. CAGE is an abbreviation for cultural, administrative, geographic and economic distances. These distances can often represent barriers for the company to successfully expand into the chosen foreign country; therefore it is important not to underestimate them. In the second, practical part of report, I analyze the expansion of American company Toys R Us to Japan. This case is very representative, because Japanese retail market is very different from the American. By recognizing all the distances and barriers, Toys R Us found a way to exploit them and successfully entered Japanese toy market. Table of Content

1.Analyzing Countries for Foreign Direct Investment6
1.1What is Foreign Direct Investment6
1.2Analyzing Foreign Countries for FDI6
2.The CAGE Distance Framework7
2.1Cultural Distance7
2.2Administrative Distance8
2.3Geographic distance8
2.4Economic distance9
3.The Toys “R“ Us in Japan Case10
3.1About Toys “R” Us10
3.2Global Expansion10
3.3The Japanese Market for Toys11
3.4The CAGE Framework for Japan12

List of tables
Table 1: Cultural distances11
Table 2: Administrative distances11
Table 3: Geographic distances11
Table 4: Economic distances12

References: 15
List of tables
Table 1: Cultural distances 11
Table 2: Administrative distances 11
Table 3: Geographic distances 11
Table 4: Economic distances 12
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