Global Expansion Strategy Report – CAGE, PND & AAA Analysis

The module assessment comprises of an INDIVIDUAL research-based assignment that requires you to write an essay that represents 100% of the module mark. You are required to produce a report covering all four tasks of the assessment.

Focussing on a company of your choice that has some international presence, and assuming that the company is considering further international expansion into new countries, conduct a research-based strategic analysis addressing the following tasks.

1. Applying the CAGE framework, identify similarities/differences between the home country of the company and two potential host countries (each in two continents that are different from the home country of the company). Discuss the strategic implications of those CAGE similarities/differences, and recommend one of the two countries for the company to invest in. (30 marks, 900 words maximum)

• Using Porter’s National Diamond (PND) framework, evaluate the competitiveness of the recommended country focusing on the relevant industry the company is interested in, and summarise the strategic implications of the findings from the PND analysis for the company (25 marks, 750 words maximum)

• Based on the findings of the above analyses, identify what should be the relatively most important strategy out of the AAA (Adaptation, Aggregation or Arbitrage) strategies to focus on for the company to create value in the recommended host country to start with, and justify your recommendation. Reflect on how this strategy may shift over time as the firm continues to operate in the recommended country. (25 marks, 750 words maximum)

• Drawing on the above analyses and supported with other relevant sources, briefly discuss THREE cross-border challenges in operating in the recommended country that should be considered by the company. Make your strategic recommendations for the company that could be useful in coping with those challenges. (20 marks, 600 words maximum)

Strategic Management Answer: Expert Answer on Above Questions on Strategic Management

The company selected for international expansion is Starbucks and the specific target location is South Africa. The analysis using the Cage Framework is performed as follows:
1) CAGE framework analysis: The CAGE framework stands for cultural, administrative geographic and economic factors, and this framework is quite useful in understanding the distance between countries and its strategic implications. When it comes to cultural distance in South Africa, it is considered to have a modest culture, highly individualistic and relatively diverse because of its multiethnic population. In terms of administrative distance, South Africa has strong legal institutions and stable FDI laws. With respect to geographic distance, the infrastructure in outside cities in South Africa can be considered as weak. Finally about the economic distance, the South African economy is small but it has high unemployment and lower disposable income.
2) Porter National Diamond framework: This framework is highly effective in accessing how favourable a country is for competitive advantage in a specific industry. The Starbucks industry competitiveness is analysed as follows:

The factor conditions in South Africa indicate that it has strong human capital, technological expertise and agricultural resources. The demand is also good within the middle class group of people, and the related and supporting industry indicates that there are well developed retail spaces in metros. Competition is there from other service providers, and can continue to expand its business in metro areas.

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