The objective is to exploit similarities among geographies rather than adapting to differences but stopping short of complete standardization, which would destroy concurrent adaptation approaches.
Less visible but equally important absolute economies are created by greater differentiation with customers and partners, improved corporate bargaining power with suppliers or local authorities, reduced supply chain and other market and nonmarket risks, and through the local creation and sharing of knowledge.
Introducing standard production platforms and modularity in components also helps to reduce cost. And the increased use of global corporate branding over product branding is a powerful example of creating economies of scale and scope.
Salad sandwiches were another flop: At the time, Brazil had a fledgling audit services market.
The product dimension will be obvious: A good example of a company focused on design is Tata Motors, which has successfully introduced a car in India that is affordable to a significant number of citizens. Firms including Ranbaxy Laboratories, Mcdonalds cage framework.
Capital cost differentials can be an equally rich source of opportunity. Geographic aggregation is not the only avenue for generating economies of scale or scope. Today, after many missteps, one can truly imagine the ghost of Ray Kroc asking Indians one of the greatest questions of all time—the one that translates into so many cultures: Favorable effects related to country or place of origin have long supplied a basis for cultural arbitrage Strategies that are based on exploiting the favorable effects related to country or place of origin on consumer preferences.
And software companies heavily depend on both user adaptation and networking for the development of applications for their basic software platforms. Every day, for instance, at the international flower market in Aalsmeer, the Netherlands, more than 20 million flowers and 2 million plants are auctioned off and flown to customers in the United States.
By placing its U. As discussed in the previous chapter, regionalization or semiglobalization applies to many aspects of globalization, from investment and communication patterns to trade.
Aggregation Aggregation Strategies that focus on achieving globalized economies of scale or scope by creating efficiencies based on exploiting similarities among geographies or markets.
Indian pharmaceutical companies, too, are finding Latin America to be attractive for expansion. And in India, it does double duty: It is a separation that extends throughout the restaurant and its supply chain. In Latin America, the brands include Brastemp and Consul.
Rather than adapting a product or service, a company using this strategy chooses to accept the reality that without modification, their products will appeal to a smaller market segment or different distributor network from those in the domestic market.
The results have proven beneficial to all parties: Restriction of geographic scope can permit a focus on countries where relatively little adaptation of the domestic value proposition is required. Nespresso has gone even further by advising farmers on farming practices that improve the yield of beans farmers get per hectare.
What are the key elements in CAGE analysis? Nespresso set up local facilities in these regions that measure the quality of the coffee.
Whirlpool, for example, offers smaller washers and dryers in Europe than in the United States, reflecting the space constraints prevalent in many European homes.
After awhile, they hit on a veggie burger with a name Indians could understand:One of the framework was identified by Ghemawat- AAA Framework in which the three As stand for Adaptation, Aggregation and Arbitrage.
Adaptation Strategies: These strategies increase market share and revenue by adapting some components in a business model of a company such that it is suitable to suffice local preferences and requirements.
This is “Ghemawat’s “AAA” Global Strategy Framework”, section from the book Global Strategy (v. ). For details on it (including licensing), click here. This book is licensed under a Creative Commons by-nc-sa license.
The framework was developed by Pankaj Ghemawat, a professor at the University of Navarra - IESE Business School in Barcelona, Spain.  The impacts of CAGE distances and differences have been demonstrated quantitatively via gravity models. As summarized in Table "The CAGE Framework", the CAGE (cultural, administrative, geographic, and economic) framework offers a broader view of distance and provides another way of thinking about location and the opportunities and concomitant risks associated with global arbitrage.
To apply the CAGE framework, identify locations that offer low raw material costs, access to markets or consumers, or other key decision criteria. You might, for instance, determine that you're interested in markets with strong consumer buying power, so you would use .Download