Business Strategy : CAGE Framework

Introduction

The report is covering the weekly session of the classes on e learning and has discussed the lessons taught in e learning (Clark and Mayer 2016). The week 3 and week 5 has been analysed here to understand the topics properly and then the application of the learning has been done in the study. This has two parts that has developed the learning of these two weeks.  In the first part of the report, it has covered the lesson about the definition of Strategy and its application in the present life and organisations. On the other hand, it has developed the CAGE framework to evaluate the international trade opportunities. The study has also analysed the learning and then applied in the organisations.

Week 3 E-Learning materials 

WEEK 3: What is Strategy? 

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The strategy is the broad plan of developing an organisation to meet their organisational objectives. Therefore, strategy is the main policy of applying a well-designed way to reach the position to gain the maximum level of effectiveness. According to this lesson, the strategy is the process not only to reach the organisational objectives but also to analyse the internal processes and the adapting procedures of an organisation (https://www.youtube.com/watch?v=TD7WSLeQtVw 2016). In this video, the lesson has stated the various strategy statements to understand the meaning of the Strategy. Here, the strategy statements are as follows,

• Be the low cost provider
• Pursue a global strategy
• Integrate asset of regional acquisitions
• To always be the first mover
• Move from defence to industrial application
• Unrivalled customer service

However, the strategy statements have been stated here, the video or the e learning lesson has stated that all these strategies have the same aim for the organisations. In other words, it can be said that the strategy statements hold a few common idea that can evaluate the strategy in a better way. The common idea of these strategy statements is that they all indicating towards the (a) tactics, (b) goals, (c) objectives and (d) descriptions. However, it does not define the actual meaning of strategy (https://www.youtube.com/watch?v=TD7WSLeQtVw 2016).

Therefore, the source of the word “strategy” has to be analysed to understand the actual meaning of the process. The source of the word is Greek language, from the Greek word “Strategos” this word has came in the use. The word strategos means the art of the general. It refers to the idea that would be followed by every general person to attain his or her desired destination. On the other hand, a legendary Chinese general, Suntzu, argues it in the 2^nd century BC and according to his doctrine, strategy is the art of war. This theory tells that there is only two way. One has to win, which would be good for him or her, otherwise have to lose, which would be very bad. One should not say that to beat someone or any organisation, rather is has to be said that the goal of the organisation or the person should be to win over them. In this way, Suntzu has established his point of view that strategy is the art of war (https://www.youtube.com/watch?v=TD7WSLeQtVw 2016). Additionally, it is related to the win and loss. In business, strategy is the process of gaining the organisational opportunities by utilising the profitable path.

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According to Jayawardhana and Weerawardena (2014), strategy is the pattern of systematic actions that are taken in a stream decision. While Salunke et al. (2013), opposed this words and stated that strategy is the process of shaping the future to meet the desirable ends. Therefore, it can be stated that strategy sets the path for an organization to reach its goal with the chance of getting maximum profit.

Strategy formulation is a very tactful task to be performed by an organization. Therefore, to implement the strategies properly an organization have to detect first the failures that they have faced before not to repeat again. The main issues that the companies are facing at the time of execution are – (1) not having a proper aligned company initiative, (2) appropriate company processes and (3) less engagement of employees and stakeholders (Bharadwaj et al. 2013). If the strategies would be aligned with the internal rules and regulations of a company, then should not be possible to get a positive result from the organization. Therefore, the strategy should be implemented in a manner that these problems cannot raise within the organization. The strategy can be applicable to the organization by following the five simple steps, such as,

• Aligning company initiatives
• Engaging staff
• Align budget and performance
• Monitor and Adapt
• Structure follows strategy

Other processes are used to set business strategies. Environmental scanning is simply the process of paying attention to the external environment for factors that may affect your organization's performance, which will need to be addressed in the strategy formulation process. For example, you will pay attention to what your competition is doing and adjust your strategic plan as necessary throughout the process. Continuous implementation is simply implementing parts of the strategy that must take place in order for the next step of the strategy formulation process to be undertaken. The rest of the strategy formulation must be taken in order.

Figure1: Supply Chain Management

(Source: Campbell et al. 2012)

Week 5 E-Learning materials 

WEEK 5: Pankaj Ghemawat: CAGE framework to evaluate international trade opportunities 

Paragraph 1:  

The CAGE framework is based on the international economics that indicates in which trade connects extent two countries with each other. According to this lesson, it identifies the cultural, geographic, economic and administrative differences between the countries. It helps the organisers to detect the problems with any country before starting the business with them. On the other hand, it can be beneficial for the companies to understand the trade patterns, peoples’ interest, and capital to frame their strategy for the place while expanding the business in the new countries.

In the video, the speaker is telling about the meaning of the CAGE framework for the business. According to him, CAGE stands for the four elements that determine the trade condition of various countries. The CAGE stands for Cultural, Administrative/Political, Geographical and Economy (https://www.youtube.com/watch?v=7FpUJaG7uMk 2016). These four elements are the basic of any trade that can be helpful to know before sharing the business with another country. As per the lesson, it can be said that the speaker is supporting the framework to get a profitable business. Therefore, the speaker here is suggesting that the CAGE framework helps the countries to know relations not only related to trade but the others too, which will be beneficial for them to determine whether the trade will be successful or not. He stated an example of two equally developed countries, which have almost the same per capita income of its people, cannot want to trade with each other for many times. Therefore, it is indicating that the trade relation is cannot be fixed at a point; rather it depends on the economical factor of both of the countries. It can be justified with the fact that USA is developing a good trade relation with Canada, which has ranked tenth largest economy in the world (https://www.youtube.com/watch?v=7FpUJaG7uMk 2016).

Figure 2: CAGR Framework

(Source: Ghemawat 2015)

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As the CAGE framework is based on the international economics and the organisations of various countries are benefitted by using this policy therefore, Ghemawat offers some advice on how the CAGE Framework can help managers considering international strategies (Moalla and Mayrhofer 2014):

It helps to pinpoint the differences across countries that might handicap multinational companies relative to local competitors.

It can shed light on the relative position of multinationals from different countries. For example, it can help explain the strength of Spanish firms in many industries across Latin America.

It makes distance visible for managers.

One method to conduct quantitative analysis of this type is to discount (specifically, divide) raw measures of market size or potential with measures of distance, broadly defined. It can be used to compare markets from the perspective of a particular company.

Ghemawat emphasizes those different types of distance matter to different extents depending on the industry. Because geographic distance, for instance, affects the costs of transportation, it is of particular importance to companies dealing in heavy or bulky products. Cultural distance, on the other hand, affects consumers’ product preferences. It should be a crucial consideration for a consumer goods or media company, but it is much less important for a cement or steel business.

Conclusion

The study has analysed the effectiveness of the e learning procedure and has analysed two lessons. In the first part, the study has discussed the lesson on the topic of business strategy. The exact definition of strategy has been stated there and then has applied in the organisations that require it very much. In the second part, it has analysed the evaluation of Pankaj Ghemawat, who has explained the meaning and application of CAGE framework. According to the study, this framework is required very much to study before trying to expand any business to other country. Then the application has made to understand the situation through this framework. Therefore, it can be concluded that the e learning process has effectively discussed the two-business topics strategy and CAGE framework to apply in the organisations to increase the profitability.

References

Bharadwaj, A., El Sawy, O.A., Pavlou, P.A. and Venkatraman, N.V., 2013. Digital business strategy: toward a next generation of insights. Mis Quarterly, 37(2), pp.471-482.

Campbell, J.T., Eden, L. and Miller, S.R., 2012. Multinationals and corporate social responsibility in host countries: Does distance matter?. Journal of International Business Studies, 43(1), pp.84-106.

Clark, R.C. and Mayer, R.E., 2016. E-learning and the science of instruction: Proven guidelines for consumers and designers of multimedia learning. John Wiley & Sons.

Ghemawat, P., 2015. From International Business to Intranational Business. In Emerging Economies and Multinational Enterprises (pp. 5-28). Emerald Group Publishing Limited.

https://www.youtube.com/watch?v=7FpUJaG7uMk, 2016. Pankaj Ghemawat: CAGE framework to evaluate international trade opportunities. YouTube. Available from: https://www.youtube.com/watch?v=7FpUJaG7uMk [Accessed on 20 Aug. 2016].

https://www.youtube.com/watch?v=TD7WSLeQtVw, 2016. What is Strategy?. YouTube. Available from: https://www.youtube.com/watch?v=TD7WSLeQtVw [Accessed on 20 Aug. 2016].

Jayawardhana, K. and Weerawardena, J., 2014. Conceptualizing the Role of Market Learning in Social Innovation-Based Competitive Strategy.

Moalla, E. and Mayrhofer, U., 2014. How do different dimensions of distance affect market entry mode choice? An application of the CAGE-distance framework (No. hal-01134087).

Salunke, S., Weerawardena, J. and McColl-Kennedy, J.R., 2013. Conceptualizing the interplay of knowledge accumulation and integration capabilities in service innovation-based competitive strategy: a project-oriented firm context. In Proceedings of the 16th Biennial World Marketing Congress-Looking Forward, Looking Back: Drawing on the Past to Shape the Future of Marketing (p. 279). Academy of Marketing Science.