IB EPRG.pptx ggggggggggggggghggghhhhhhhhhhhhhh

International Business

1. International orientations

2. I nternational orientations Different attitudes towards company’s involvement in international marketing/business process are called international orientations . EPRG framework was introduced by Wind, Douglas and Perl mutter. This framework addresses the way strategic decisions are made and how the relationship between headquarters and its subsidiaries is shaped. Perl mutter's EPRG framework consists of four stages in the international operations evolution. E thnocentric Orientation P olycentric Orientation R egiocentric Orientation G eocentric Orientation

3. Ethnocentric Orientation The practices and policies of headquarters and of the operating company in the home country become the default standard to which all subsidiaries need to comply. Such companies do not adapt their products to the needs and wants of other countries where they have operations. There are no changes in product specification, price and promotion measures between native market and overseas markets. The general attitude of a company's senior management team is that nationals from the company's native country are more capable to drive international activities forward as compared to non-native employees working at its subsidiaries. The exercises, activities and policies of the functioning company in the native country becomes the default standard to which all subsidiaries need to abide by. The benefit of this mind set is that it overcomes the shortage of qualified managers in the anchoring nations by migrating them from home countries. This develops an affiliated corporate culture and aids transfer core competences more easily. The major drawback of this mind set is that it results in cultural short-sightedness and does not promote the best and brightest in a firm.

4. Advantages of Ethnocentrism An ethnocentric perspective eliminates social order criticisms. It can increase the levels of devotion to a community, country, or society. Ethnocentrism can enhance solidarity in society. It can produce higher levels of self-esteem. This view can help an evolving society remember who it has always been. It creates an attitude of independence.

5. Disadvantages of Ethnocentrism Decisions are made based on unrealistic comparisons. Ethnocentrism encourages false conclusions . Ethnocentrism can cause societal polarization. Ethnocentrism can have deadly results. Ethnocentrism limits perspectives, It can impact every aspect of life if we allow it to do so . Ethnocentrism drives people away from what they love.

6. Polycentric Orientation In this approach, a company gives equal importance to every country’s domestic market. Every participating country is treated solely and individual strategies are carried out. This approach is especially suitable for countries with certain financial, political and cultural constraints. This perception mitigates the chance of cultural myopia and is often less expensive to execute when compared to ethnocentricity. This is because it does not need to send skilled managers out to maintain centralized policies. The major disadvantage of this nature is it can restrict career mobility for both local as well as foreign nationals, neglect headquarters of foreign subsidiaries and it can also bring down the chances of achieving synergy. For example, McDonald’s tailoring its offerings to the country of operation such as Maharaja Mac in India, McItaly in Italy, McLobster in Canada.

7. Advantages of Polycentric Approach The difficulty in the adjustment of expatriates from the parent country gets eliminated. The hiring of locals or the nationals of the host country is comparatively less expensive. The morale of the local staff increases. Better productivity due to better knowledge about the host market. The career opportunities for the nationals of the host country increases. Better government support. Chances of success are high.

8. Disadvantages of Polycentric Approach Lack of coordination between the host and the parent company, due to the absence of a link that gets created when expatriates from the parent country hold the managerial positions at the subsidiary. The lack of effective communication between the staff members of both the host and the parent company, due to the language barrier. Difficult to exercise control over the subsidiary. Lack of knowledge about the market conditions of the host country. The conflict may arise between the managers of both the host and the parent company due to the different thinking processes.

9. Regiocentric Orientation In this approach a company finds economic, cultural or political similarities among regions in order to satisfy the similar needs of potential consumers. For example, countries like Pakistan, India and Bangladesh are very similar. They possess a strong regional identity.

10. Advantages of Regiocentric Approach Culture fit, i.e. the managers from the same region as that of the host country may not encounter any problem with respect to the culture and the language followed there. Less cost is incurred in hiring the natives of the host country. The managers work well in all the neighboring countries within the geographic region of the business. The nationals of host country can better influence the decision of managers at headquarters with respect to the entire region.

11. Disadvantages of Regiocentric Approach The managers in different regions may not understand the viewpoint of the managers employed at the headquarters. There could be a communication barrier because of different languages. The manager selected from a particular region may lack the international experience. It may lead to the confusion between the regional objectives and the global objectives. The regional managers may only focus on accomplishing the regional targets and may oversee the impact on the firm as a whole.

12. Geocentric Orientation Geocentric approach encourages global marketing. This does not equate superiority with nationality. Irrespective of the nationality, the company tries to seek the best men and the problems are solved globally within the legal and political limits. Thus, ensuring efficient use of human resources by building strong culture and informal management channels. The main disadvantages are that national immigration policies may put limits to its implementation and it ends up expensive compared to polycentrism. Finally, it tries to balance both global integration and local responsiveness.

13. Advantages of Geocentric Approach MNC’s can develop a pool of senior executives with international experiences and contacts across the borders. The expertise of each manager can be used for the accomplishment of MNC’s objective as a whole. Reduction in resentment, i.e. the sense of unfair treatment reduces. Shared learning, the employees, will learn from each other’s experiences.

14. Disadvantages of Geocentric Approach The cost of training, compensation, and relocation of an employee is too high. Highly centralized control of staffing is required. Proper scrutiny is required by the HR to select the most suitable person for the job, which could be time-consuming. This approach is very costly since the recruitment agencies or the consultants are to be hired for the global search for eligible candidates.