Entering new markets

Johanson and Vahlne observed that firms tend to internationalise in steps: they begin with markets that feel close and with modes that commit little, and increase commitment as they learn. Ghemawat’s CAGE framework makes “close” precise by separating cultural, administrative, geographic and economic distance, each of which affects products differently. Read together, they suggest treating market and mode as one decision, since a distant market entered with a heavy commitment combines two kinds of uncertainty at once.

The module begins once an opportunity has been pursued. Whether the market is attractive and fits is judged under Opportunity assessment, and the decision to pursue it is recorded on the shortlist; when to enter is a question for Market timing in the Time Core. Where the chosen mode is a partnership, choosing and contracting the partner happens in Partners; where it is the purchase of a local business, the acquisition itself is handled under Build, buy or ally. Obligations in the new market are mapped under Regulatory mapping, and the tax consequences of the entry vehicle are considered under Tax.