Viewing the business world from an international perspective opens up an envelope to never-ending opportunities for the growth of a company. Understanding the dynamics of the cultural, administrative, geographical, and economical (CAGE) differences of another country is essential to successfully expanding abroad.
Let’s take Mcdonald’s, for example. McDonald’s is one of the biggest and most successful fast-food companies. Originating from San Bernardino, California in the USA, it has expanded all over the world such as Canada, Japan, Australia, Germany, France, etc.
How was McDonald’s success so big in most of these countries? Let’s briefly compare the business of the company in the USA vs Japan.
C for Culture:
Culture from the CAGE analysis includes many aspects such as food, language, art, etc. For a business that runs as a fast-food restaurant, making revisions to the menu are essential in catering to the people in Japan. Japanese food consists of many types of fresh meat, vegetables, sauces, etc. A few popular menu items in Japan that you wouldn’t find in a menu in America are the Teriyaki McBurger, or the McPork. These items are most popular in Japan as they have hints of its cultural roots in its recipes.
A for Administrative:
The administrative differences in the CAGE analysis is a thorough subject, but the main aspects consist of political differences, currency, trade agreement and policies, and political situation. As a brief example, Japan promotes economic partnerships with other countries, and expands free trade. America’s agricultural trading market is never-ending and has been working well with Japan’s trade market for decades and still continues to do so. This made it an easier target-country for McDonald’s to expand abroad.
G for Geographical:
The geographic feature of the CAGE analysis includes but is not limited to, the weather, location, size of country, etc. America has a much larger size as a country compared to Japan, giving it a more varied weather throughout. Japan being a smaller country, has overall hot and humid summers and snowy, freezing winters. The location of the fast-food restaurant will have to be in a well-developed and lively city for more customers, hence the opening of the first Japanese McDonald’s in Tokyo, Japan.
E for Economical:
The economical aspect of the CAGE analysis is an in-depth topic that branches out to many different subtopics. But from a simpler point of view, features such as country resources, average income levels and the country’s wealth are all vital in adjusting your business to work within the country. For example, inflation is a more critical problem in America vs Japan, thus the pricing differences in its menu items. A single Big Mac in Japan costs about 390 yen, which is $2.72. In America, the same Big Mac will cost you $5.74. The economical market surely plays a significant role in the planning of expanding a business overseas.
It’s no lie that McDonald’s is a genius when it comes to the marketing, produce, and the selling of its popular business. Starting from the cultural roots to the economical state and policies of each country, the fast-food restaurant plans well for each new opening across the globe, and continues to thrive in the business world.
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