2440030342/Axel Keane

LA24/IBM

Distance is made of various components which is categorized to 4 categories:

1.Cultural Distance : Difference between various culture attributes such as language, religion,
race, tribe,ethnicity, etc.

2.Administrative or institutional Distance : Difference in societal institusions. The preffered

distance is when two countries have and share the same history, engaged in political ties, trading
partners, and have common governmential policies.

3.Geographic or Spatial Distance: The literal travel distance needed to be taken between
countries. The presence of rivers and waterways could help making travel time faster, while
difference in topography and climate would make it slower.

4.Economic Distance : Difference in customer’s social and economic status,simply everything

concerning their income,wealth and welfare.

There are two main approaches when planning an expansion to another city or outerseas

1.Replicating existing Competitive Advantage by basing it on scale and scope economies

2. exploiting differences in input costs or prices between markets through economic arbitrage.

There are two disadvantages when having a greater or longer distance.

1.Weaker transferability and exploitation potential of NLB FSAs

2.Higher investments required in LB FSAs.