This framework addresses the way strategic decisions are made and how the relationship between headquarters and its subsidiaries is shaped. These stages are discussed below. 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 exercises, activities and policies of the functioning company in the native country becomes the default standard to which all subsidiaries need to abide by.
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These four international business modules are ethnocentric, polycentric, regiocentric and geocentric orientations. In the year , Howard Perlmutter proposed the EPG model where he suggested three different frameworks i.
This model was later upgraded by Perlmutter, Wind, and Douglas in the year to include regiocentric orientation. Thus, it became the EPRG framework. Let us now go through each of these strategies in detail below: Ethnocentric Orientation Ethnocentric oriented companies though operate internationally, but they consider their home country superior to their overseas subsidiaries.
Also, such organizations depend upon their basic skills while internationalization and look for markets similar to their home country. This is a suitable strategy when the business has negligible overseas sales revenue in comparison to the revenue generated from domestic sales. The companies adopting polycentric orientation believes that a business can be run successfully in the international market only if the headquarters keep a limited control over business operations and the subsidiaries are allowed to take business decisions independently.
Each local market located in different countries is given significance and freedom of operations under this management orientation. It is a cost-efficient model. Polycentric orientation limits the career mobility of domestic as well as international staff. Also, it restricts the cross-cultural interactions and teamwork at a global level.
Regiocentric Orientation Under the regiocentric approach, the international markets are segmented on the grounds of regional affinities and dissimilarities, in terms of cultural, social, political and economic factors. For instance, many multinational companies like Coca Cola consider India, Bangladesh, and Pakistan as a single regional market and adopts similar marketing strategies for these countries.
This orientation can also be seen as a blend of polycentric and geocentric approaches. The company figures out the similar characteristics among the different geographical regions and therefore applies the same strategy in all these countries. Geocentric Orientation Geocentric orientation is that internationalization strategy where companies consider the whole world as a target market.
It determines the similarities and dissimilarities between the domestic and international markets, to frame suitable global strategy by inculcating a perfect mix of ethnocentric and polycentric approaches.
The strategy of these companies is in sync with the consumer requirements in the global market and thus, deems to be a successful marketing strategy that is also applied in the domestic market. It is a broader perspective since it functions with a global mindset. Characteristics of International Orientation of EPRG Model The below give table lists and compares the features of all the four strategic orientations in international business: Criteria.
International Marketing - EPRG Framework
International Marketing Orientation: EPRG Approach
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