The CAGE framework of distance and analyzing foreign markets helps to study the feasibility of operating globally. Distance is the issue in producing globally but since supply chain management and information systems have been born in the advent of globalization this is not impossible but for the sake of the business it is important to analyze the strategy. In this framework the C stands for cultural distance which includes race, religions, beliefs, traditions, social norms and language.
Dell’s market in Asia Pacific and particularly Japan has a different language and norms or beliefs. But online purchasing is a comparatively new norm in Japan. Since people in this region have lower incomes they would prefer to buy things like PC’s from a retail outlet so selling to the masses through the direct sell model is not a good idea. But since Dell has been providing only to enterprises and the public sector they have managed to maintain their core competency and swell their profits. Dell’s business strategy has worked in Japan to a certain extend since selling to the masses through direct sell will not work and now Dell has broken its 23yr old norm of direct sell in order to sell to the masses through a retail outlet. The A stands for administrative or political distance which includes currency, trade agreements or political situation. Japan has a stable political system that does not affect the lives of the citizens that much but Dell had to convert the products price in terms of Japanese yen and since their currency is devalued the costs are a key consideration. But this is still something Dell has handled well and it is providing low priced computers in the region. The G stands for geographic distance which includes physical distance, transportation and distribution. Dell has had its operations in this region as well since manufacturing and delivering on time requires manufacturing process to be operatable in the region. Dell has been in to cost leadership and also vertical integration by being close to its market.
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