What is the purpose of the CAGE distance framework?

The purpose of the CAGE distance framework is to provide a comprehensive method for measuring how various dimensions of distance impact international business operations. It specifically focuses on four critical factors: Cultural, Administrative, Geographic, and Economic distances.

Each of these dimensions helps organizations understand the challenges and opportunities presented by entering foreign markets. Cultural factors consider differences in language, values, and social norms, which can affect consumer preferences and business practices. Administrative distance addresses variations in institutional frameworks, such as differences in laws and regulations or political stability, which can influence the ease of doing business. Geographic distance takes into account the physical distance between countries, as well as related factors like transportation and communication infrastructure. Economic distance examines the differences in economic conditions, such as income levels and economic development, that can impact market potential and competitiveness.

This framework assists companies in evaluating potential markets by highlighting these critical distances and aiding in strategic decision-making related to international expansion, market entry, and investment risks. Other options do not encapsulate the CAGE framework's primary intent, which focuses on understanding the multifaceted nature of international distance, making the correct response clear.