BUS 495 Module 1 Globalization and Distance Example

Sold in Forty Countries, Mostly Next Door: Why International Business Is Not Domestic Business on a Larger Scale

Student Name

Business Administration Program, Aspen University

BUS 495: International Business

Instructor Name

Month Day, Year

Sold in Forty Countries, Mostly Next Door: Why International Business Is Not Domestic Business on a Larger Scale

Driftless Valve Works, a composite manufacturer in western Wisconsin, makes stainless steel valves used in dairy, beverage and food processing plants. Its website lists customers in forty countries, and visitors could easily conclude that the company sells everywhere. Its sales records tell a different story. Of the 38% of revenue earned outside the United States, more than two thirds comes from Canada and Mexico. Customers in Europe, Asia and Oceania exist, but each took years to win and buys in small amounts. The company's experience raises the question at the center of this course: if markets are global, why does selling across borders remain so different from selling at home?

The Case for Global Markets

Levitt (1983) argued that communication and transportation technology were driving the world toward a converging commonality. In his view, consumers everywhere increasingly wanted the same reliable, modern products at low prices, and companies that standardized their offerings and sold them worldwide would defeat those that tailored products to each country. Levitt's essay shaped a generation of managers and contains real insight. Industrial buyers such as dairy processors do share technical standards, and a valve that meets sanitary requirements in Wisconsin is close to what a plant in Ontario needs. Some products are indeed converging.

Distance Still Matters

Ghemawat (2001) replied that managers routinely overestimate the attractiveness of foreign markets because they look at size and income while ignoring the costs of distance. He described four kinds of distance, known by the initials CAGE. Cultural distance includes differences in language, religion and social norms. Administrative or political distance includes differences in laws, currencies, political ties and trade agreements. Geographic distance includes physical remoteness, time zones and transport links. Economic distance includes differences in income and in the cost and quality of resources. Countries that are closer on these dimensions trade much more with each other, and the costs of distance vary by industry.

Regional, Not Global

Rugman and Verbeke (2004) tested whether the world's largest firms were truly global. Examining the geographic distribution of sales of the largest multinationals for which data were available, they found that the great majority earned most of their sales in their home region of North America, Europe or Asia. Only nine met their definition of global, with at least 20% of sales in each of the three regions and less than half in any one. Their conclusion was that most large firms pursue regional strategies, whatever their annual reports say about global reach.

How U.S. Companies Export

Federal data show the same concentration among American exporters. The table summarizes the Census Bureau's profile of companies that exported goods in 2023 (U.S. Census Bureau, 2025).

Most exporters are small, and most sell to a single foreign market. A small number of large firms reaching many countries account for most of the value. The report also found that 92,263 companies that exported in 2023 had not reported exports in 2022, a sign that many firms move in and out of foreign markets (U.S. Census Bureau, 2025).

Distance at Driftless Valve Works

The CAGE framework explains the company's sales map. Canada and Mexico are close in every sense that matters to a valve maker. Trucks reach Ontario dairies in a day, the United States-Mexico-Canada Agreement keeps most tariffs at zero, technical standards for sanitary equipment are similar, and the company's sales engineers can visit customers and return within a week. The Netherlands is a strong dairy market but more distant administratively, because European buyers require certifications under different standards, and culturally, because procurement relies on long-standing relationships with European suppliers. New Zealand, home to large dairy cooperatives, is geographically remote; winning its first order took three years, a local service partner and a willingness to hold spare parts in Auckland.

The company's export pattern resembles the national one. Like most American exporters, it began with one foreign market, Canada, and added others slowly. Like Rugman and Verbeke's multinationals, it is regional in practice even though it is global in reach.

Choosing the Next Market

The company's managers now use distance deliberately when choosing where to grow. Before a sales trip, the export manager scores each candidate country on the four CAGE dimensions using simple evidence: whether the country's sanitary standards match those Driftless already meets, whether a trade agreement removes tariffs on valves, how many days a replacement part takes to arrive and whether local processors pay prices close to American ones. Chile scored well on administrative distance because of its trade agreement with the United States, but poorly on geography. Ireland scored well on culture and standards but sits inside the European Union's certification rules. The scoring does not make the decision, yet it forces the managers to price distance before they commit staff and inventory to a market that looks attractive only on a population chart.

What Levitt Still Explains

The evidence against a flat world does not erase Levitt's insight. Within the company's industry, sanitary design rules, stainless steel grades and automated cleaning systems are increasingly shared across countries, and a dairy engineer in Mexico reads the same technical journals as one in Wisconsin. Product convergence of this kind lowers one kind of distance even as administrative and geographic costs remain. The practical lesson is that globalization proceeds unevenly, faster for technical standards than for law, logistics or trust, and a firm must judge each of those separately.

What Makes International Business Different

Three lessons follow. First, foreign markets differ in ways that size and income figures hide, so each market requires its own assessment. Second, distance has costs that fall unevenly: geography raises the cost of service, while administrative distance raises the cost of compliance and cultural distance raises the cost of building trust. Third, the firm's own position matters; a company that has learned to serve Canada has not thereby learned to serve New Zealand.

Conclusion

Levitt was right that technology connects markets and that some products converge, but the evidence shows that distance still shapes where firms sell and how much it costs them to do so. Most of the largest multinationals are regional, most American exporters sell to one country, and a Wisconsin valve maker with customers in forty countries earns most of its foreign revenue across its own borders. International business is different because every border adds a layer of cultural, administrative, geographic and economic distance that domestic business never has to cross.

References

Ghemawat, P. (2001). Distance still matters: The hard reality of global expansion. Harvard Business Review, 79(8), 137-147.

Levitt, T. (1983). The globalization of markets. Harvard Business Review, 61(3), 92-102.

Rugman, A. M., & Verbeke, A. (2004). A perspective on regional and global strategies of multinational enterprises. Journal of International Business Studies, 35(1), 3-18. https://doi.org/10.1057/palgrave.jibs.8400073

U.S. Census Bureau. (2025). A profile of U.S. importing and exporting companies, 2022-2023 (Release No. CB25-52). https://www.census.gov/foreign-trade/Press-Release/edb/edbrel2023.pdf