How Stable is the Political Environment in the Prospective Country?


SKU: Repo084756 Category:
  • Political
  • Environmental
  • Technological
  • Sociocultural



1)CAGE Analysis


To apply the CAGE framework, would analyse the countries based on such things as low raw material costs, access to markets or consumers, or other key decision criteria. You might, for instance, determine that you’re interested in markets with strong consumer buying power, so you would use per capita income as your first sorting criterion. As a result, you would likely end up with some type of ranking. Recall though, that any international expansion strategy still needs to be supported by the specific resources and capabilities possessed by the firm, regardless of the picture presented by the CAGE analysis.

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2)PESTL Analysis (Political, Economic, Social, Technological, and Legal, including taxation)

  1. Political
  • How stable is the political environment in the prospective country?
  • What are the local taxation policies? How do these affect your business?
  • Is the government involved in trading agreements, such as the Association of Southeast Asian Nations(ASEAN)?
  • What are the country’s foreign trade regulations?
  • What are the country’s social-welfare policies?
  1. Economic
  • What are the current and forecast interest rates?
  • What is the current level of inflation in the prospective country? What is it forecast to be? How does this affect the possible growth of your market?
  • What are local employment levels per capita, and how are they changing?
  • What are the long-term prospects for the country’s economy, gross domestic product (GDP) per capita, HDI and other economic factors?
  • What are the current exchange rates between critical markets, and how will they affect production and distribution of your goods?
  1. Sociocultural
  • What are the local lifestyle trends?
  • What are the country’s current demographics, and how are they changing?
  • What is the level and distribution of education and income?
  • What are the dominant local religions, and what influence do they have on consumer attitudes and opinions?
  • What is the level of consumerism, and what are the popular attitudes toward it?
  • What pending legislation could affect corporate social policies (e.g., domestic-partner benefits or maternity and paternity leave)?
  • What are the attitudes toward work and leisure?
  1. Technological
  • To what level do the local government and industry fund research, and are those levels changing?
  • What is the local government and industry’s level of interest and focus on technology?
  • How mature is the technology?
  • What is the status of intellectual property issues in the local environment?
  • Are potentially disruptive technologies in adjacent industries creeping in at the edges of the focal industry?
  1. Environmental
  • What are the local environmental issues?
  • Are there any pending ecological or environmental issues relevant to your industry?
  • How do the activities of international activist groups (e.g., Greenpeace, Earth First!, and People for the Ethical Treatment of Animals [PETA]) affect your business?
  • Are there environmental-protection laws?
  • What are the regulations regarding waste disposal and energy consumption?
  1. Legal
  • What are the local government’s regulations regarding monopolies and private property?
  • Does intellectual property have legal protections?
  • Are there relevant consumer laws?
  • What is the status of employment, health and safety, and product safety laws?

B) Recommendations

Based on your overall analysis you should recommend:

  1. Whether or not to enter the particular market.
  2. Which is the best market entry strategy to do so?
  • Exporting – Direct sales to end-user
  • Licensing/Franchising
  • Partnering/Strategic Alliance/Joint venture
  • Acquisition
  • Green-field operations
  1. General marketing recommendations based on your CAGE and PESTEL analysis.


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