CAGE (cultural, administrative, geographic and economic) analysis

Cultural Distance: Cultural Distance refers to different languages, ethnicities, religions, and
social norms (Ghemawat P, 2001). Germany, the United Kingdom and the United States have
high cultural sensitive, because citizens of these countries have different ethnicities, religions,
languages and social norm. By contrast, the majority of citizens in India, China and Brazil
have similar ethnical background and languages. Based on the exhibit 4, Germany had the
most similar cultural dimensions with Italy, which were individualism (67 to 76), masculinity
(66 versus 70), and long-term orientation (31 compared to 34).

Administrative Distance

The trade among countries could also be affected by administrative distance, which includes
historical and political associations shared by countries, preferential trading arrangements,
currency, and political union (Ghemawat P, 2001). As to the political union, The United
Kingdom and Germany were both in the European Union and therefore facilitate trade within
this economic union. As for the rank of ease of doing business, based on exhibits 3 in the year
2012, the United States owned the highest position (4th), followed by the United Kingdom
(7th), Germany (19th) and Japan (20th). China had the middle position (91th), while Brazil
and India had the similar rank (126th and 132th respectively).

Geographic Distance
Geographic distance is not simply about the location of targeted market, but other attributes
have to be considered, such as the size of the country, the transportation and communications
infrastructure of the country (Ghemawat P, 2001). As for the physical distance, Germany and
the United Kingdom were the parts of European Union and both located in Europe, which
could facilitate products transport across the border. Based on the case, flight time from
Tokyo, Brazil and Beijing to Rome was similar, 13, 12 and 11 hours respectively. At the
median distance, the United States and India are both 9 and 8 hours, respectively, from Rome.

Economic Distance
Consumers income or wealth is the most important economic factor. Rich countries with
higher per capital GDP and urbanization typically engage in more cross-border economic
activity (Ghemawat P, 2001). Furthermore, high quality coffee is an not a necessary
expenditure and a higher income is necessary to possess the discretionary income necessary
for the purchase. Based on Exhibits 3, the United States had the highest GDP per capital with
$48,100 in 2012, followed by the Germany ($37,900), the United Kingdom ($35,900) and
Japan ($34,300). The numbers for Brazil was $11,600, more than three times the figure for
India ($3,700). The figure for China was $8,400. In terms of urbanization, Brazil occupied
the highest position percent with 87%, almost twice the percentage of China (47%).
However, India had the lowest urbanization, which was 30%. The United Kingdom and
America had the similar numbers (80% and 82%, respectively). The proportions for Japan
and Germany were 67% and 74%, respectively.