Part 1: CAGE Analysis
Crocs started out with the design of a revolutionary boat shoe in Fort Lauderdale, Florida. Since 2002, The Crocs Company
has continuously expanded throughout the world with manufacturing plants in the US, Mexico, Italy, and China. With such a large
demand worldwide, the Crocs Company needs to reduce costs, and gain economies of scale. Thus, it has considered Uruguay as a
candidate for Greenfield Investment. The Crocs company see’s Uruguay as an opportunity to cater to South America, in order to
persistently strive towards its primary objective – “To become the global leader in sustainable lifestyle footwear, apparel and
accessories whilst ensuring that the four pillars of the Ocean Minded brand – Quality, Authenticity, Responsibility and Community –
resonate throughout our company, products, associates and actions.”1 Below is a CAGE Analysis to examine the opportunities and
challenges of Uruguay.
CAGE Analysis
Dimensions
Cultural
Administrative
Geographical
Economical
National Language:
Spanish.
-Portuñol (A mixture of
Spanish and Portuguese)
is spoken on the
Brazilian Frontier2
Ethnicity:
-European decent 93%,
African decent 6%,
Indigenous decent 0.4%,
Asian Decent 0.4%.3
Religion:
-Roman Catholic 66%,
Protestant and other
Christian 2%, Jewish
Currency: Uruguayan
Peso (UYU$) 12
Form of Government:
Constitutional Republic13
-Uruguay traditionally
leads indices of low
corruption, good
governance and
democratic
development.14
President: José Mujica
(elected) 15
Foreign Affairs:
-Joined the UN in 1945
and has been a member
Size of Country:
Population: 3, 316, 328
as of July 2012.
Area: 176, 215 sq. km.
Capital: Montevideo,
with a population of
approximately 1,633,000
people
Geographic Landscape:
-Southern South
America, bordering the
South Atlantic Ocean,
between Argentina and
Brazil 26
-Second Smallest
Consumer Income:
-The average monthly
household income in
Uruguay is $1,756 (US)
or 34,329.60 Uruguayan
Pesos. (Uruguay
Economic Summary)
Nominal GDP:
-$50.91 billion (US) in
the year 2011. (World
Factbook 2011)
Nominal GDP per
Capita:
-$15,100 (US) in the year
2011. (World Factbook)
Country
Description
1%, Non-professing or
other 31%. 4
Culture:
-Uruguayans have a
strong sense of national
identity and patriotism.
-Culture is significantly
influenced by the gaucho
(cowboy) tradition. 5
-Music in this country is
dominated by a love for
the tango, which is
known as the most
passionate Latin dance. 6
-Travelers to Uruguay
will find the locals
nursing an obsession
with football (soccer).
-Colourful ponchos,
straw hats, and brightly
patterned scarves can be
seen on Uruguayans
strolling about on the
street. 7
-People are frank and
direct and maintain close
distance when speaking 8
-Uruguay is a familyoriented country;
children usually live at
the parental home into
of most of its specialized
agencies16
-Member of World Trade
Organization since
1995.17
-Member of the Latin
American Integration
Association (ALADI), a
trade association that
includes 10 South
American countries plus
Mexico and Cuba. 18
-Strong political and
cultural ties with the
countries of Europe and
the Americas.
- Bilateral relations with
Argentina and Brazil
have always been of
particular importance.19
-Uruguay's international
relations also reflect its
drive to seek export
markets and foreign
investment. 20
Investing in Uruguay:
-A decree passed in 2007
provides significant
incentives to local and
foreign investors.
Domestic investment and
Country in South
America (after
Suriname)27
-Rio de la Plata (River of
Silver) flows into the
Atlantic Ocean on the
east coast of South
America between
Uruguay to the North and
Argentina to the South.
-Terrain consists mainly
of plains and low hills,
with 84%
-Uruguay has no
territories or
dependencies. 28
Climate:
-Located entirely within
the same temperate zone,
Uruguay has a fairly
uniform climate
throughout the nation.
-The absence of
mountains, which act as
weather barriers, makes
all locations vulnerable
to high winds and rapid
changes in weather as
fronts or storms sweep
across the country.
-Uruguay’s average
GDP Real Growth
Rate: 5.7% in 2011
8.9% in 2010 32
Natural Resources:
-Arable land,
hydropower, minor,
minerals, fish
Human Resources:
-Labour force in 2011
was 1.677 million.
-Work force: agriculture
--13%, industry--14%,
services--73% 33
Infrastructure:
-The nation has 8,983
kilometers of roads,
almost all paved.
-There are plans to build
a combination passenger
railway and underground
subway system for
Montevideo and its
suburbs.
-Uruguay and Argentina
are constructing a 35kilometer bridge between
Buenos Aires, Argentina,
and Colonia, Uruguay.
-Uruguay has 2,073
kilometers of railways,
and 1,600 kilometers of
their late twenties.9
-Well-educated
population, strong
universities and a
significant tradition of
both French and English
language education.10
Social Class System:
-Uruguay is a relatively
egalitarian society with a
large middle class.
-Uruguay's upper class
consists of ranchers,
businessmen, and
politicians.
-The middle class
includes professionals,
white-collar workers,
small businessmen, and
medium-sized farmers.
-The lower class consists
of blue-collar workers,
and domestic workers. 11
FDI, which have been
traditionally low,
increased significantly in
recent years. 21
-FDI accounts for 5% of
Uruguay’s GDP as of
2011
-FDI totaled US$2,528,
000,000 in 2011, and
multiplied by eight in the
last decade. 22
-There are no restrictions
or limitations for foreign
investors seeking to set
up a local operation with
respect to the kind of
business form they are
allowed to use. 23
Legal System:
-Uruguay’s legal system
is based on Spanish Civil
Law.
-Accepts the jurisdiction
of the International Court
of Justice, which settles
legal disputes according
to international law. 24
Labour Laws:
-The limit of daily hours
of work is eight hours
-The working hours
yearly high temperature
is 28°C, with an average
yearly low temperature
of 6°. 29
Transportation:
-Uruguay is served by 10
international airlines
-Highways have
surpassed railways as the
principle means of
conveyance of
passengers and freight.
-Montevideo is the major
Uruguayan Port. 30
Time Difference:
-Uruguay is 5 hours
ahead of Colorado. (HQ)
Physical Distance from
Headquarters &
Factories
-US (HQ)à 9723 km
-Mexicoà 8040 km
-Italyà11,049 km
-Chinaà19,442 km31
navigable waterways,
which are used to
transport small quantities
of goods.
-Uruguay has 65 airports,
15 of which have paved
runways. 34
Industry:
-Electronics, chemicals,
food and beverages,
petroleum and machine
products.
Major Markets:
-Brazil 19.3%
-China 14.2%
-Argentina 6.8%
-Germany 6%
Major Suppliers:
-Brazil 16.3%
-China 15%
-Argentina 13.4%
-US 9.4%35
Exchange Rate:
$1US = $19.62UYU36
Unemployment Rate:
-6% in 2011. 37
applied is 48 weekly
hours in the industry
sector
-The weekly rest is 24
hours and taken on
Sunday.
-Minimum daily wage is
approximately $7 (US)25
Relative
Importance
LOW
HIGH
HIGH
MEDIUM
Business
Challenges
-The language barrier
that is Spanish being
Uruguay’s official
language. Contracts and
official documents will
be written in Spanish.
Spanish will be the first
language of prospective
employees.
-People of Uruguay
speak in a direct manner
and in close proximity.
An indirect US American
will communicate very
differently than a direct
Uruguayan, this can pose
challenges. 38
-American management
will have to familiarize
itself with 6-day
workweeks. It may be
challenging to keep
workers motivated after
constantly working long
and tedious weeks.
-The Spanish Civil law
will be foreign to
American management;
the legislation may
contradict that of the
Law of the United States.
-The susceptibility to
high winds can be
threatening to the
condition of the factory,
as well as transportation
in and out.
-The physical distance
between Uruguay and the
company’s headquarters
in Colorado is not
exactly proximate. This
distance will be costly
and pose challenges of
it’s own.
-The labour force is not
very large, as Uruguay
itself has a smaller
population than the state
of Colorado.
-The Industry sector of
Uruguay’s economy only
makes up 14% of the
work force. Crocs will
have to attract a work
force of which 73% are
members of the service
sector.
-The future subway
system connecting
Montevideo and
surrounding suburbs may
encourage prospective
employees to find work
in the city.
Business
Opportunities
-Crocs would only have
to concern themselves
with holidays celebrated
by Christians.
-The nation’s liking for
bright, colourful,
clothing will attract
people (potential
employees) to the
company.
-Uruguay’s significant
tradition of English
language education
would benefit
communication for
Crocs’ American
management.
-Extreme emphasis on
unity, loyalty, and
respect for elderly
(working together).
-Follows the same form
of government as the
United States.
-Uruguay presents an
inviting business
environment with low
corruption, good
governance, and
democratic development.
-Being a member of the
WTO ensures that trade
will flow as smoothly,
predictably, and freely as
possible. 39
-Being a member of
ALADI enhances trade
among South American
countries, in pursuit of
establishing a common
market. The Uruguayan
plant can distribute to
numerous South
American countries.
-Uruguay evidently seeks
Foreign Investment,
through incentives like
tax benefits, free zones
and an attractive
statutory framework.
-Located in an ideal
location between Brazil
and Argentina, two of
Crocs’ major markets.
- Uruguay’s mass
amounts of untouched
land will offer many
options pertaining to the
location of the
manufacturing plant.
-Rio de la Plata is a
valuable waterway with
Buenos Aires just across
the estuary from the
Montevideo Port.
-The presence of
international airlines is
crucial for enabling
international business.
Having ten international
airlines is opportune.
-A time difference of
only five hours is
certainly not overly
problematic.
-Crocs can take
advantage of Uruguay’s
dependable
Hydroelectricity. The
company can enjoy the
fact that it’s
environmentally sound as
well as an efficient
power source for the
factory.
-The well-established
highway system is ideal
for commute.
-The future bridge
linking Argentina and
Uruguay will greatly
expand trade between the
two nations.
-Brazil and Argentina are
both enormous markets
for Crocs, and are two of
Uruguay’s top three
trading partners.
-The construction of the
subway system could be
advantageous for
commuters depending on
the location of the
factory.
-Uruguay and America
have both accepted the
jurisdiction of the ICJ,
which can facilitate any
potential legal dispute.
-Legal weekly working
hours are greater than in
North America by 8
hours.
-Having strong political
and cultural ties with the
Americas is promising
for the American
company.
-The cost of labour is
significantly less than the
current minimum wage
implemented the United
States.
Management
Implications
-The Crocs Company
will be required to send
management to Uruguay
that is proficient in both
the English and Spanish
languages.
-Management will
undeniably be forced to
adapt to South American
communication
protocols. South
-With longer workweeks
than those of North
America, management
must prioritize
motivating employees in
order to assure quality
performance. Motivation
may come in the form of
intrinsic or extrinsic
rewards.
-With regards to legal
-The investment will not
be financially burdening,
as the American dollar is
nearly twenty times
stronger than the
Uruguayan peso.
-The unemployed can
apply for manufacturing
positions at the factory,
as these positions require
little experience and
training will be applied.
-The vast geographic
distance between
Uruguay and Crocs’
headquarters in Colorado
will require frequent
virtual communication
from both locations.
Crocs will assume the
costs of transporting
management, and
commodities between the
-The small labour force
implies that Crocs must
advertise employment
opportunities to fill
necessary positions in the
factory.
-To make the investment
worthwhile, Crocs
should investigate
potential franchisees, or
carriers in the continent.
America’s direct style of
communication will
initially bewilder Crocs’
North American
Management.
-The company should
market itself to
prospective employees
with an emphasis on the
brand’s use of bright
colours.
procedures, having an
understanding of Spanish
Civil Law regulations
would be beneficial,
however sharing an
acceptance of the ICJ
will certainly make legal
transactions easier.
-Uruguay’s membership
in various trade
organizations such as the
WTO and ALADI will
benefit commerce for the
Crocs Company.
two countries.
-Looking to be the
primary supplier to the
Argentinian and
Brazilian markets,
management will need to
arrange logistics among
the countries.
-Management must
decide on a location for
the factory that is
favourable with regards
to land and proximity.
1 Crocs (The United States of America: 2012) Crocs Company 2 Uruguay, (The United States of America: 2009) Every Culture. 3 Uruguay. (Washington, D.C, The United States of America: November 13, 2012) CIA World Factbook. 4 Uruguay. (Washington, D.C, The United States of America: November 13, 2012) CIA World Factbook. 5 Uruguayan Culture. (The United States of America: 2010) Adventure Life.
6 Uruguayan Culture. (The United States of America: 2010) Adventure Life.
7 Uruguay, (The United States of America: 2009) Every Culture. 8 Uruguay, (The United States of America: 2009) Every Culture. 9 Uruguay, (United States of America: 2009) Encyclopedia of the Nations 10 Canada and Uruguay Relations (Canada: October 2, 2012) The Government of Canada. 11 Hudson, Rex A. Uruguay: A Country Study (The United States of America: 1990)
12 The Uruguayan Peso. (The United States of America: November 25, 2012) Universal Currency Converter 13 Uruguay. (Washington, D.C, The United States of America: November 13, 2012) CIA World Factbook. -The construction of the
subway system could
factor into management’s
decision pertaining to the
factory’s location.
14 Canada and Uruguay Relations (Canada: October 2, 2012) The Government of Canada. 15 Uruguay. (Washington, D.C, The United States of America: November 13, 2012) CIA World Factbook. 16 Uruguay: Government (The United States of America: 2012) globalEDGE.
17 World Trade Organization (The United States of America: 2012) World Trade Organization. 18 Uruguay: Government (The United States of America: 2012) globalEDGE.
19 Hudson, Rex A. Uruguay: A Country Study (The United States of America: 1990) 20 Uruguay: Government (The United States of America: 2012) globalEDGE.
21 Foreign Direct Investment in Uruguay (Montevideo, Uruguay: April 2012) Uruguay XXI.
22 Foreign Direct Investment in Uruguay (Montevideo, Uruguay: April 2012) Uruguay XXI. 23 Duran Hareau, Andres Strategy. Uruguay: Foreign Investment Protection in Uruguay. 24 Uruguay: Government (The United States of America: 2012) globalEDGE 25 Uruguay Business Guide. (The United States of America: 2012) World Services Group 26 Uruguay. (Washington, D.C, The United States of America: November 13, 2012) CIA World Factbook. 27 Uruguay. (United States of America: November 1, 2005) About.com 28 Uruguay, (United States of America: 2009) Encyclopedia of the Nations. 29 Hudson, Rex A. Uruguay: A Country Study (The United States of America: 1990) 30 Uruguay, (United States of America: 2009) Encyclopedia of the Nations. 31 Google Maps 32 Uruguay. (Washington, D.C, The United States of America: November 13, 2012) CIA World Factbook. 33 Uruguay. (Washington, D.C, The United States of America: November 13, 2012) CIA World Factbook.
34 Uruguay, (United States of America: 2009) Encyclopedia of the Nations. 35 Uruguay. (Washington, D.C, The United States of America: November 13, 2012) CIA World Factbook.
36 The Uruguayan Peso. (The United States of America: November 25, 2012) Universal Currency Converter 37 Uruguay. (Washington, D.C, The United States of America: November 13, 2012) CIA World Factbook. 38 Anamaria. Indirect-Direct Communication Styles. (The United States of America: 2010) Culturally Teaching. 39 World Trade Organization (The United States of America: 2012) World Trade Organization. Final Discussion
The Crocs Company has proved successful in globalizing their footwear products over the last decade. Crocs have
continuously attracted an array of cultures worldwide based their comfort, style and reasonable price. With such a remarkable
expansion into the South American market, Uruguay has proven to be a worthwhile candidate for a Greenfield investment in the
continent. Ideally located in the center of Argentina and Brazil, constructing a factory in Uruguay would undoubtedly benefit two of
Crocs’ major markets. Currently, South American countries have imported Crocs footwear from the company’s manufacturing plant in
Mexico. Uruguay’s prime geographic location, and the nations appealing parameters regarding Foreign Direct Investment suggest that
constructing a manufacturing plant within the country is advisable
Naturally, Uruguayan culture differs greatly from that of North America. South America possesses a unique culture that has
been influenced by a concoction of European, African, North American and Native cultures. Having originally been a colony of Spain,
Spanish is the official language of Uruguay. Investing in Uruguay, Crocs would be required to employ management that is fluent in
both Spanish and English in order to successfully conduct business in the country. Legal documents in Uruguay will be written in the
Spanish language, and it will likely be the first language of prospective employees. Assuring that management is capable of
communicating in the Spanish language is essential to effectively investing in Uruguay. American management will also need to
adjust to the direct manner in which Uruguayans communicate. The people of South America have typically been known to speak in a
direct fashion, as opposed to North Americans who generally communicate indirectly. At first, South Americans may come across as
rude or insensitive, however it is important to recognize that this is merely a characteristic of their culture. Another characteristic of
South American culture is a collective appreciation for bright colour. The Crocs Company has evidently marketed their products
through the use of bright colours, which coincides with South American taste. Having an instinctive liking for bright colours may
draw prospective employees to the Crocs Company. Based solely on cultural characteristics, I wouldn’t recommend that Crocs invest
in Uruguay as the obstacles are overpowering.
Uruguay’s civilization and societal structure stands out among South American countries. As a developing country, Uruguay is
achieving remarkable economic growth, which can be attributed to the nation’s foreign relations. An initial appeal of the country is its
use of a constitutional government; the same form of government observed in the United States. Having an understanding of a nation’s
political system is important when looking to invest in that country, and using a parallel system will attract Crocs’ American
management. Legal jurisdictions will also be facilitated favourably through the International Court of Justice. Having accepted this
court, both nations will allow for legal disputes to be settled according to international law. Certainly, being a member of several trade
organizations makes Uruguay an attractive candidate for Foreign Direct Investment. With organizations like the WTO, and ALADI
reducing the cost of trade and regulating the exchange of goods, Uruguay’s membership is advantageous. The Uruguayan government
evidently seeks Foreign Investment, and has been successful through the use of incentives like tax benefits. The relatively inexpensive
labour in Uruguay is also an attractive feature worth considering. Judging by administrative characteristics alone, I would definitely
recommend that Crocs invest. Uruguay’s significant increase of FDI over the past decade can be attributed to the nation’s
administration!
Situated nearly 10,000 kilometers south of Crocs’ headquarters, Uruguay is conveniently central to two of the company’s
major markets. Over the years Argentina and Brazil have embraced Crocs footwear, and have imported the shoes from the company’s
Mexican factory. Constructing a manufacturing plant in Uruguay would be ideal as it will significantly reduce freight costs, and save
Crocs money in the long run. The nation’s abundant supply of unoccupied land represents the options pertaining to the factory’s
location. Rio de la Plata, the estuary located south of Uruguay, will serve as a valuable means of transportation to Argentina. Though
the five-hour time difference may hinder communication between Uruguay’s factory and Crocs’ corporate office, the nation’s
geographical location is prime. With remarkable technology accessible at minimal costs, communication should never prevent an
international business pursuit. Based solely on geographical characteristics, the Crocs Company should invest in Uruguay.
Uruguay has experienced steady economic growth over the last decade. This is fascinating seeing as the World Financial Crisis
has taken a negative toll on most economies. Uruguay managed to avoid a recession altogether and maintain a positive growth rate.
The nation’s recent economic success can greatly be attributed to Foreign Investment, however an astonishing 96% of the population
is employed. The Labour Force of Uruguay is quite small, at approximately half of the nation’s population. The level of infrastructure
in Uruguay is impressive and improving. With thousands of kilometers between highways, waterways, and railways, there is no
shortage of transport in Uruguay. Constructing a bridge connecting Uruguay and Argentina will surely increase direct trade between
the countries, and lessen freight costs. The bridge will prove itself valuable, as Argentina is one of Uruguay’s top three trading
partners. The American dollar being much stronger than the Uruguayan peso will make operations relatively inexpensive in
comparison to those in North America. To make the investment worthwhile, I would encourage the Crocs Company to investigate
expansion into alternate retail stores. The economic conditions of Uruguay suggest that Crocs should invest in the country.
Having thoroughly weighed the opportunities and challenges posed by the Foreign Direct Investment, I am confident with my
recommendation that the Crocs Company invest in Uruguay. Though cultural characteristics make investing seem unfavourable,
Greenfield Investments are easier to implement standard culture and procedure. When considering the execution of a Greenfield
Investment, I believe that a nation’s administrative and geographical characteristics should be carefully analyzed. Uruguay’s ideal
central location, and attractive political environment make the expansion indeed worthwhile.
References
1) Uruguay. (Washington, D.C, The United States of America: November 13, 2012) CIA World Factbook.
https://www.cia.gov/library/publications/the-world-factbook/geos/uy.html (November 21, 2012)
2) Uruguayan Culture. (The United States of America: 2010) Adventure Life.
http://www.adventure-life.com/articles/Uruguary-culture-565/ (November 20, 2012)
3) Uruguay, (The United States of America: 2009) Every Culture. http://www.everyculture.com/To-Z/Uruguay.html#b (November 20,
2012)
4) Canada and Uruguay Relations (Canada: October 2, 2012) The Government of Canada.
http://www.canadainternational.gc.ca/uruguay/bilateral_relations_bilaterales/canada-uruguay.aspx?menu_id=7&view=d (November
21, 2012)
5) Uruguay: Government (The United States of America: 2012) globalEDGE.
https://globaledge.msu.edu/Countries/Uruguay/government (November, 19 2012)
6) Hudson, Rex A. Uruguay: A Country Study (The United States of America: 1990) http://countrystudies.us/uruguay/ (November 24,
2012).
7) Foreign Direct Investment in Uruguay (Montevideo, Uruguay: April 2012) Uruguay XXI. http://www.uruguayxxi.gub.uy/wpcontent/uploads/2012/04/FDI-in-Uruguay-April-2012-URUGUAY-XXI-.pdf (November 22, 2012)
8) Duran Hareau, Andres Strategy. Uruguay: Foreign Investment Protection in Uruguay. (October 4, 2007) Mondaq.
http://www.mondaq.com/article.asp?articleid=52896 (November 24, 2012)
9) The Uruguayan Peso. (The United States of America: November 25, 2012) Universal Currency Converter.
http://www.xe.com/currency/uyu-uruguayan-peso (November 26, 2012)
10) Uruguay Business Guide. (The United States of America: 2012) World Services Group
http://www.worldservicesgroup.com/countries.asp?c=uy&country=Uruguay (November 24, 2012)
11) Uruguay. (United States of America: November 1, 2005) About.com. http://www.advertiseonabout.com/about-us/ (November 21,
2012)
12) Uruguay, (United States of America: 2009) Encyclopedia of the Nations.
http://www.nationsencyclopedia.com/Americas/Uruguay.html (November 23, 2012)
13) Uruguay Economic Summary. (Montevideo, Uruguay: May 2012) http://photos.state.gov/libraries/uruguay/19452/pdfs/UYEconSummaryMay2012.pdf (November 23, 2012)
14) Anamaria. Indirect-Direct Communication Styles. (The United States of America: 2010) Culturally Teaching.
http://culturallyteaching.com/2010/02/17/indirect-direct-communication-styles/ (November 23, 2012)
15) Crocs (The United States of America: 2012) Crocs Company http://company.crocs.com (November 23, 2012) 16) World Trade Organization (The United States of America: 2012) World Trade Organization http://www.wto.org (November 24, 2012)