External Scanning

External Scanning

1. CAGE ANALYSIS

   • Identifies Cultural, Administrative, Geographic and Economic (CAGE) differences or distances between countries that companies should address when crafting international strategies.
     • Applications
       • Can be used to address the question of where and how to expand internationally.
       • Helpful in order to create insights into the key differences between a company’s home market and the international market it intends to target.
       • Areas Assessed
         • Cultural distance: the cultural norms, values and social beliefs
         • Administrative distance: differences in history and politics among countries.
         • Geographic distance: refers not only to the physical distance between two countries, but also a country’s physical size.
         • Two of the biggest determinants of economic distance are the Cost of Labor and level of Consumer wealth between countries.

2. PEST ANALYSIS

   • Is a management method whereby an organization can assess major external factors that influence its operation to become more competitive in the market.
   • Applications
     • Used for identifying current or possible future challenges.
     • Applied in assessing the in-house structure of an organization in order to identify strengths and weaknesses.
     • Areas Assessed
       • Political: focuses on the areas in which government policy or changes in legislation affect the economy.
       • Economic: targets the key factors of interest and exchange rates, economic growth, supply and demand, inflation and recession.
       • Social: are demographics, age distribution, cultural attitudes, workplace and lifestyle trends.
       • Technological: considers the specific role and development of technologies within the sector and organization.
     • It helps you avoid starting projects that are likely to fail, for reasons beyond your control.
     • It can help you break free of unconscious assumptions when you enter a new country, region, or market; because it helps you develop an objective view of this new environment.