Introduction After the housing crisis of 2008, Spain experienced an extended recession after 16 years of continuous economic growth. Spain’s economy started to grow once again in 2013, but only moderately compared to the early 2000’s. According to EUbusiness.com, “Exports, however, have been resilient throughout the economic downturn, partially offsetting declines in domestic consumption and helped to bring Spain's current account into surplus in 2013 for the first time since 1986” (EU Business, 2014). I chose to analyze Spain, as it is always a place I have wanted to travel to, experience, and learn more about the culture. This analysis is going to detail the CAGE and SWOT analysis’, including controllable and uncontrollable variables, and if I would choose to put a particular business in Spain.
CAGE Framework Analysis The CAGE Analysis identifies Cultural, Administrative, Geographic and Economic differences or distances between countries that companies should address when crafting international strategies. It offers a broader view on distance and provides another perspective on the geographic location with the associated risks and opportunities related to global arbitrage. Below is an analysis of each one of these differences to get a better understanding of the importance of Spain within the World’s economy. Cultural Distance Historically, Spain has been a society rich in culture dating back several centuries. Culture as a whole can include several different items- language, religion, taboos, and customs just to name a few. Our book describes culture as, “a system of values and norms that are shared among a group of people and that when taken together constitute a design for living” (Hill, p. 92). Spain shares many of the same cultural factors and beliefs as Mexico and almost all Central and South American countries. These similarities include language (Spanish), religion (Catholicism), food, architecture, and political beliefs. Spain’s influence can be seen throughout the world as whole and a lot of this is due to its impact on the country’s exports. “Spain's greatest trade is with France, Germany, Italy, and Great Britain. Among the leading exports are machinery; motor vehicles; fruit, wine, and other food products; and pharmaceuticals. Major imports include machinery and equipment, fuels, chemicals, manufactured goods, foodstuffs, and medical instruments” (Infoplease.com, n.d.). Administrative Distance Four of the five largest companies in Spain are either in the financial industry (Banco Santander, BBVA Compass) or energy distribution (Repsol, Iberdrola) (Economy Watch, 2013). The Spanish banking system is said to be one of the most solid to handle crisis, mostly thanks to the Spanish banking rules and practices, that oblique banks to have very high provisions. Spain’s government is considered to be a more ‘mixed capitalist’ compared to the greater portion of the European Union and like the other 19 EU members, use the Euro as currency. Farming accounts for about 3% of Spain’s GDP and has been on a slight downtrend since the 1960’s. Agriculture and livestock products are vastly important. About 95% of all agriculture-type products are exported; wine, pork, and olive oil being the most important. Agriculture and livestock make up about 5% of total Spanish imports (Mintec Global, 2013.) Geographic Distance Spain has easy travel access to Europe and Africa. The country is easily accessible as it lies on the Western portion of the Mediterranean Sea and has a coastline on the Bay of Biscay, which is considered part of the Atlantic Ocean. Spain has a vast climate spectrum and is typically divided up into 3 sections. “Green Spain”, or northern Spain, has an Oceanic climate producing hot summers with low humidity. Central Spain has what is considered to be a Continental Climate, typically produce four seasons with hot summers