Understanding Economic Distance in Global Market Strategies PPT

This PPT slide, part of the 32-slide CAGE Distance Framework PowerPoint presentation, presents an overview of the "Economic Distance" component within the CAGE Distance Framework. It outlines how economic disparities between countries influence market entry strategies and operational considerations for businesses. Key elements discussed include differences in per capita income and purchasing power, which are critical for assessing market potential. Markets with higher disposable incomes are identified as more favorable for premium products, while those with lower incomes necessitate a focus on cost-effective solutions.

The slide emphasizes the impact of economic development levels on infrastructure availability and access to financial resources. Developed markets typically offer better infrastructure and skilled labor, whereas developing markets may present challenges due to resource limitations. The text highlights that large, growing economies can provide significant opportunities due to their expanding consumer bases,, but smaller economies may require careful evaluation of investment returns.

Labor and production costs are also addressed, noting that firms often seek to locate operations in countries with lower costs to enhance profitability. However, the slide warns that these cost advantages must be weighed against potential risks related to quality and supply chain reliability. Currency stability is mentioned as another important factor, particularly in markets with volatile currencies, which can affect profit margins.

Overall, this slide serves as a crucial resource for executives considering international expansion. It underscores the need for a nuanced understanding of economic factors when developing market entry and product adaptation strategies.

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Globalization Market Entry Supply Chain Production