“Distance Still Matters” is an influential Harvard Business Review article. In this work, Ghemawat proposes the CAGE distance framework that. Harv Bus Rev. Sep;79(8), , Distance still matters. The hard reality of global expansion. Ghemawat P(1). Author information: (1)Harvard . STIll MATTERS The hard reality of global expansion. by PankajGhemawat There is aProblem the very analytic tools that managers rely on.

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The Hard Reality of Global Expansion advertisement. In class we focused a lot ghhemawat culture as an important factor when considering international expansion for company or employee career. This article by Pankaj Ghemawat identifies a key point or a main reality that company needs to keep in mind is the distance component that can impact the effectiveness stlil the deal.

By distance he basically means performing a gap analysis on four dimensions: Much of this is a common knowledge the article tries to quantifies the impact of each factors with examples and detail research. It provides a case study of launching a restaurant internationally by comparing the four dimensions of distance with traditional analysis done by company using country portfolio analysis CPA.

Author mentions theory of gravity that quantifies various attribute of distance and its impact on change in international trade. But other factors related to distance, matter even more e.

Summary: Ghemawat (2001). Distance still matters, the hard reality of global expansion

Differences in religious beliefs, race, social norms, and language are all capable of creating distance between two countries. In the opening example when owner of New Corporation, Rupert Murdoch decided to buy license to broadcast Star TV in Asia it was a high profile disaster because it ignored cultured distance.


They should have localized the TV for the contents for English, and edited to suit the audience. Similarly Red color means beautiful in Russia where as in rest of world it has different connotation. For Coco Cola, Neville had stressed on the importance culture plays in success of company.

He hired a local leader who could relate to the consumer. Administrative or Political Distance: In olden days historical and political associations shared by countries greatly affect trade between them. Colony-colonizer had different bonding amoung countries which has given a soft corner for companies expanding in these countries. Mqtters recent years the integration of European Union is a classic example of the effort to diminish administration and political distance.

Distance Still Matters: The Hard Reality of Global Expansion

Barriers to foreign competition by: The rule of thumb is farther you are from a country, the harder it will be to conduct business in that country. Disance attributes that must be considered include the physical size of the country, average distance and mode of transportation withincountry, borders, access to waterways and the ocean, and topography.

This influences the cost of transportation. Watch out are companies that find geography a barrier to trade are often expected to switch to direct investment in local plant and equipment as an alternative way to access target markets.

Distance still matters. The hard reality of global expansion.

Current research suggests that this approach may be flawed because of the advancement in global communication and shrinking world: The economic condition of consumers have impact on level of trade it does business with other countries.


Typically ghhemawat depends on size of per capita GDP.

Companies that rely on economies of experience, scale, and standardization should focus more on countries that have similar economic profiles. That’s because they have to replicate their existing business model to exploit their competitive advantage as it depends on cost and quality of recourses. For example set up of Wal-Mart in India is different business than setting up in Canada. Factors that contribute to major disparities are supply chains and distribution channels; these are significant barrier to business.

This article provides interesting research data on how different distance attribute affects international trade, most of which gets factored in while setting up a distribution network for business. It gives a CAGE tools to measure industry sensitivity and impact of distance on business. This tool would have been of great help for Beckman Coulter for analyzing the effectiveness to expand in Japan.

Distance still matters. The hard reality of global expansion.

Summer Assignment World Geography Test on the first day of class. A local area network, wide area network, and worldwide. National Geographic Video Assignments. Mapping Skills and Activities with Children’s Literature.

The Human Family Tree Assignment. Appendix S1 — Examples of alpha hulls calculated for the observed. Addendum – Dixie State University. Geographic Names is to standardize the names of geographic features The rise and fall of species: