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Competitive Strategy: CAGE Framework

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Write about the Competitive Strategy for CAGE Framework.



For this activity, the selected weekly materials include CAGE framework and business model innovation.

Key Ideas from the Selected Weekly Material

The key idea of one of the weekly material includes detail explanation regarding the difference between countries and the way it matters a lot in the global trade. The importance of evaluating differences between countries for getting success in the international business is indicated through the CAGE framework. This model indicates that the analysis of cultural, administrative, geographic and economic distances is quite useful to support the international trade. This framework is effective to determine the key differences and similarities between the countries for evaluating the international trade opportunities in the systematic manner (Ghemawat, 2016). CAGE framework is based on the idea of evaluating trade opportunities in the foreign markets. The differences and similarities among the countries play critical role in influencing the level of trade. The different dimensions in one country from other are likely to affect the trade partnership of such countries. On the other hand, similarities in these dimensions help to operate business effectively. It helps to compare situation of a country from the industry of the other country (Frynas and Mellahi, 2015). The high level of similarities of in these dimensions means to get huge success in the foreign markets. By using this framework, a firm can evaluate the external conditions of a country to make informed decisions for establishing international trade in country.  The understanding regarding external conditions of an industry in a country through CAGE framework is likely to help a business to expand the business in the international market more effectively. The other key idea is learnt regarding the innovation in the business model. An innovative business model helps a firm to compete in the market and to bring sustainability in the operations. Innovation helps a firm to find a way to either reduce cost and to create value for the customers and it contributes in creating competitive advantage (Enz, 2010). A business model informs about the target customers, offerings, value creation and revenue sources more clearly. An innovative business model mainly focuses on value creation and revenue sources. For brining innovation in the business model, there are four key steps namely initiation, ideation, integration and implementation followed effectively by firms. These steps may help a firm to bring innovations in the business models and to create competitive advantage. The business model evaluates on the basis of qualitative and quantitative data. This helps to examine on which basis the business model is developed (Hill and Jones, 2011). Incorrect management behavior and organizational resistance to the change are two key factors responsible for causing failure in inventing and implementing new business model. It is because, it is critical for organization to follow change management strategies for implementing new business model. By developing feasible key performance indicators, communicating new business model clearly, implementing one business model at a time and ensuring top management commitment, a firm could manage change initiatives effectively and to bring innovations in the business model (Parnell,, 2013). Innovation is the key source to create competency by learning from others and making informed changes in the business model.


Application of Key Ideas in Tesco

Tesco is facing significant problems in managing international business successfully. By applying this framework, this firm could be able to face problems in intentional business, which it is facing due to the differences in cultural, geographical, political and economic dimensions. The failure of Tesco in the Chinese market is mainly attributed to the lack of understanding for cultural aspect. Due to this, the firm has failed to understand the needs and preferences of the customers effectively and to transform their offerings accordingly (Pendrous, 2013). Similarly, the cultural differences were one of the key reason due to which Tesco decided to close its “Fresh & Easy” stores. Due to this, firm has failed to gain adequate and required market knowledge and to tailor its offerings accordingly. With the application of this model, Tesco would be able to understand and evaluate the differences in these dimensions effectively and to establish business in the foreign markets successfully (Walker, 2014). The idea of evaluating trade opportunities should be applied by investigating and comparing government policies for retailers, laws and regulations, GDP, growth rate, income level, employment rate, inflation rate, social-cultural aspects, trade policies and among other in UK and in the other international market. This analysis could be helpful to determine the similarities and differences effectively and to make informed decision regarding international trade.  By conducting environmental analysis, CAGE framework should be applied by Tesco to access the international trade opportunities effectively and to successfully expand business globally (Frynas and Mellahi, 2015). Similarly, Tesco would gain benefits from the implementation of the idea of inventing business model. Tesco has lost its competitive position in many markets. Its current business model has failed to handle the business challenges (Warner, 2014). The application of idea of reinventing business model would be effective for this firm to bring required changes and to create value for the customers. By applying this model, Tesco would also be able to understand the needs of the market and to determine the challenges. Through this it could find a way to develop an innovative business model, which may help this to improve the competitive position (Ruddick, 2015). The idea of reinventing business model could be helpful to bring innovations and to create customer value. It should be implemented by conducting careful examination of internal and external business environment. By using strategic management tools and frameworks such as PESTEL, Porter’s five forces and SWOT analysis, a firm can effectively analyze the internal and external environment and to learn from the established business models. It may help to bring innovations in the business model. Apart from this, clear communication and top management commitment should also be used by this firm to reinvent the business model successfully and to create competitive advantage (Hill and Jones, 2011). Thus, competitive strategy requires an analysis of business environment. 



Enz, C. (2010) Hospitality Strategic Management: Concepts and Cases. Hoboken, NJ: Wiley.

Frynas, J.G. and Mellahi, K. (2015) Global strategic management. USA: Oxford University Press.

Ghemawat, P. (2016) The Laws of Globalization and Business Applications. UK: Cambridge University Press.

Hill, C.W. and Jones, G.R. (2011) Essentials of strategic management. USA: Cengage Learning.

Parnell, J.A. (2013) Strategic management: Theory and practice. USA: Sage Publications.

Pendrous, R. (2013) Tesco failed to understand the Chinese customers. [Online]. Available at: (Accessed: 1May 2017).

Ruddick, G. (2015) Strangely, Tesco is the only one not obsessed with its profit margin. [Online]. Available at: (Accessed: 1May 2017).

Walker, T. (2014) Why does Tesco work in the UK but not in the United States? [Online]. Available at: (Accessed: 1May 2017).

Warner, J. (2014) Problems by the bagful for beleaguered Tesco. [Online]. Available at: (Accessed: 1May 2017).

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