...conducted within the boundaries of the language. To people in advanced nations and societies change is standard. Children and grown-ups there are socialized to expect and welcome change. By contrast say a tribe off the coast of South Africa has no concept of change and may not even have any words in their language to express or explain change. Then, some societies differ greatly in their general attitude toward change. People who revere the past and preoccupied with traditions and rituals will change slowly and unwillingly. Business picks up the flexibility and willingness to change on cultures swiftly and act accordingly. What is the difference between, a polycentric, ethnocentric, and geocentric approach to international management? What key factors should a firm consider before adopting one of these approaches? Polycentric approach to international management is the policy involved hiring and promoting employees...
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...mind set in the executive’s mind while building the MNC, the first is ethnocentric (E ) (where they believe that the executives should be from home country), the another is polycentric (P) (where the company appoints local foreigners as the company believes that they can understand the market better as they are locals), and the third is geocentric (G) (world-oriented where the executive seek the best talent and treats everyone equally). Mostly, R&D turns out to be ethnocentric, Marketing is polycentric, and the company adopts the EPG mix as per the requirement. Now a days, most of the firms senior executive practice the geocentric as they want to promote the best deserving person irrespective of their nationality or any other factor. One of the obstacle in this is from political and economic issues from the local country. Ethnocentric payoff are for the short term as there is faster communication, transparency and local knowledge. But when Ethnocentric is practiced for the global market, there can be a gap to understand the foreign market. While the geocentric accounts most of its cost for communications and travel expenses. The IBM World Trade president Jacques who is a French-born explained that a company needs to select whether they want to grow, expand or decline when they are mobilizing their resources. He emphasized that the future belongs to the geocentric companies. To make a company geocentric, many US firms are promoting non-nationals at senior executive...
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...particular job Tool for developing and promoting the desired corporate culture of the firm, i.e. norms and value systems of the firm It is believed that if employees’ personality types are matched to corporate culture, the firm will be able to attain higher performance Global Human Resource Management Approaches to Staffing Policy Three main approaches to staffing policy: Ethnocentric staffing policy Polycentric staffing policy Geocentric staffing policy Global Human Resource Management Ethnocentric Staffing Policy All key management positions are filled with parent company nationals Rationales: Host countries (especially LDCs) may lack qualified individuals to fill senior management positions Best way to maintain a unified corporate culture across the world Applicable when a firm places a high value on its corporate culture Transferring core competencies to foreign operations Knowledge underlying a core competency cannot easily be articulated or written down, rather it is acquired by experience. Global Human Resource Management Ethnocentric Staffing Policy Drawbacks: Limits advancement nationals opportunities for host-country May lead to resentment, lower productivity, and increased turnover among that group Can lead to cultural myopia Firm’s failure...
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...ECOFORUM [Volume 3, Issue 2 (5), 2014] WHAT DO WE KNOW FROM EPRG MODEL? Krzysztof DRACHAL Warsaw University of Technology, Poland k.drachal@mini.pw.edu.pl Abstract The aim of this paper is to present the fundamental ideas behind EPRG model. They are discussed with some illustrating examples. Moreover, some attention is drawn on the evolution from one orientation to another. In particular, the geocentric orientation is widely discussed. General Electric is studied in more details as a particular case of the geocentric orientation. Finally, some non-market dissertations are presented, on how geocentrism can evolve and some threats to the public interest are sketched. Key words: corporations; EPRG model; General Electric; geocentrism; internationalization. JEL Classification: F23, F60, L20, M14, M30 I. INTRODUCTION EPRG model, sometimes called also EPG model, is used in the international marketing. It was introduced by Perlmutter (1969). The strategy of the organization is characterized by three factors: ethnocentrism, polycentrism and geocentrism. Hence, the original name - EPG. A little later, Wind, Douglas and Perlmutter (1973) extended this model by another factor - regiocentrism. The extended model is known as EPRG model, in short. This model aims to identify the orientation of the organization. The strategy can be differently oriented, indeed. As a result, costs and profits are generated in slightly different ways, depending on the mentioned kind...
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...1. The ethnocentric approach to staffing policy fills key management positions with parent-country nationals It makes sense for firms with an international strategy Firms that pursue an ethnocentric policy believe that: there is a lack of qualified individuals in the host country to fill senior management positions it is the best way to maintain a unified corporate culture value can be created by transferring core competencies to a foreign operation via parent country nationals 2. The polycentric staffing policy recruits host country nationals to manage subsidiaries in their own country, and parent country nationals for positions at headquarters It makes sense for firms pursuing a localization strategy The polycentric approach: can minimize cultural myopia may be less expensive to implement than an ethnocentric policy There are two disadvantages to the polycentric approach: host country nationals have limited opportunities to gain experience outside their own country and thus cannot progress beyond senior positions in their own subsidiaries. a gap can form between host country managers and parent country managers 3. The geocentric staffing policy seeks the best people, regardless of nationality for key jobs This approach is consistent with building a strong unifying culture and informal management network It makes sense for firms pursuing either a global or transnational strategy Immigration policies of national governments may limit...
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...have three staffing options: ethnocentric, global and polycentric staffing model. Notably, MNC wants to open a branch in South America (like Brazil), and it is looking forward to choosing criteria of staffing their subsidiary (Stahl, Björkman, & Morris, 2012). From a distance, many countries in South America are developing countries and hence possess small economies. Therefore, the application of ethnocentric or polycentric staffing will not be appropriate. This paper chooses and supports a global model of staffing as the best staffing option that will see the subsidiary to higher levels. This essay seeks to show how the global model can be appropriate for the subsidiary that specializes in the production of automobile parts. Global model (Geocentric staffing model) Unlike ethnocentric and polycentric which focus on hiring employees from either host country or from the subsidiary location; global model focuses on hiring employees who have the required skills irrespective of their home country. Notably, this company deals with the manufacturing of Automobile parts (Ryan, & Tippins, 2009). Therefore, it becomes mandatory to focus on the quality of its products. Equally, it admires localization of their business such that local people will freely interact. As a result, MNC is forced to adapt geocentric staffing model. Indeed, this model is likely to bring positive results to the company. Strong informal management and cultural network Geocentric staffing applies...
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...ECOFORUM [Volume 3, Issue 2 (5), 2014] WHAT DO WE KNOW FROM EPRG MODEL? Krzysztof DRACHAL Warsaw University of Technology, Poland k.drachal@mini.pw.edu.pl Abstract The aim of this paper is to present the fundamental ideas behind EPRG model. They are discussed with some illustrating examples. Moreover, some attention is drawn on the evolution from one orientation to another. In particular, the geocentric orientation is widely discussed. General Electric is studied in more details as a particular case of the geocentric orientation. Finally, some non-market dissertations are presented, on how geocentrism can evolve and some threats to the public interest are sketched. Key words: corporations; EPRG model; General Electric; geocentrism; internationalization. JEL Classification: F23, F60, L20, M14, M30 I. INTRODUCTION EPRG model, sometimes called also EPG model, is used in the international marketing. It was introduced by Perlmutter (1969). The strategy of the organization is characterized by three factors: ethnocentrism, polycentrism and geocentrism. Hence, the original name - EPG. A little later, Wind, Douglas and Perlmutter (1973) extended this model by another factor - regiocentrism. The extended model is known as EPRG model, in short. This model aims to identify the orientation of the organization. The strategy can be differently oriented, indeed. As a result, costs and profits are generated in slightly different ways, depending on the mentioned kind...
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...(Luthans & Doh, 2009, International Management: Culture, Strategy, and Behavior, 7th Ed.) Review and Discussion Questions (p151) 1. Define the four basic predispositions MNCs have toward their international operations. The four basic predispositions MNCs have toward their international operations are: * Ethnocentric predispositions: a nationalistic philosophy of management whereby the values and interests of the parent company guide strategic decisions. * Polycentric predispositions: a philosophy of management whereby strategic decisions are tailored to suit the cultures of the countries where the MNC operates. * Regiocentric predispositions: a philosophy of management whereby the firm tries to blend its own interests with those of its subsidiaries on a regional basis. * Geocentric predispositions: a philosophy of management whereby the company tries to integrate a global systems approach to decision making. 2. If a locally based manufacturing firm with sales of $350 million decided to enter the EU market by setting up operations in France, which orientation would be the most effective: ethnocentric, polycentric, regiocentric, or geocentric? Why? Explain your choice. Responding to the cultural needs of local operations and customers, MNCs find that regional strategies can be used effectively in capturing and maintaining worldwide market niches. In this case, as the operations are set up in France, to enter the EU market the firm should manage a strategy...
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...in the small town of Camden, South Carolina and it had a series of challenges due to the not fully understanding American and Southern pride and sensitivity to culture. They put Chinese managers in charge of the plant and that was a mistake that was quickly fixed. It didn’t work because it is a slap in the face when someone living in America all their life and being in that plant working hard see’s someone who didn’t grow up here or have any history in America, takes management over the plant the locals won’t be very pleased. Most Multinational corporations have a strategic predisposition when it comes to doing things in other cultures, ethnocentric, polycentric, Regiocentric, and geocentric. A company with an ethnocentric predisposition allows the values and the interests of the original company to guide the strategic decisions. Polycentric predisposition makes decisions that are tailored to suit the culture of the countries where the MNC is located. Regiocentric leads a firm to try to...
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...countries in the world. There are few government regulations on the conduct of business which creates a favorable climate for doing business there. Also, electricity is not widely available. The religious terrain includes Christians, Muslims and various animistic religions. 2. With regard to a company, ethnocentrism describes the belief that the methods which work for a company at home will be equally effective abroad any cultural influences. With regard to a company, polycentrism describes the belief that an organization should behave like a local company. A geocentric attitude is one taken by a business wherein it bases its operations on informed knowledge of the needs of both home and host country. M and G: Martin’s attitude is polycentric because he believes in accommodating Ugandan ways of doing business regardless of the conflict with his company’s method of doing business. Green’s attitude is ethnocentric because he believes that the company’s methods should work equally well in Uganda as they do at home. The factors that influenced their respective attitudes are as follows: Green was influenced by the values of L. He knew he would be held accountable for the results of Martin’s decisions and the impact of the company. Green was influenced by Martin’s success in dealing with local issues as well as performing in the culture and making new engineers comfortable in the company and culture. M was influenced by his education in African studies as well as his experience...
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...practices for international firms? Answer: Monochronic cultures like to do just one thing at a time. They value a certain orderliness and sense of there being an appropriate time and place for everything. They do not value interruptions. They like to concentrate on the job at hand and take time commitments very seriously. Polychronic cultures like to do multiple things at the same time. A manager's office in a polychronic culture typically has an open door, a ringing phone and a meeting all going on at the same time. 2) What is the difference between a polycentric, ethnocentric, and geocentric approach to international management? What key factors should a firm consider before adopting one of these approaches? Answer: Polycentric approach to international management is the policy involved hiring and promoting employees who are citizens of the country that host and operates the company. Ethnocentric approach is best used when teams from a certain home country...
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...5 Stages in the Evolution of Global Marketing: 1. Domestic Marketing: Ethnocentric orientation. 2 Export Marketing: Ethnocentric orientation. 3. International Marketing: Polycentric orientation 4. Multinational Marketing: Regiocentric orientation 5. Global Marketing: Geocentric orientation Domestic marketing: A company marketing only within its national boundaries only has to consider domestic competition. Even if that competition includes companies from foreign markets, it still only has to focus on the competition that exists in its home market. Export marketing: Generally, companies began exporting Indirect Entry means turning over international sales to a third party. Generally speaking, this third party does the exporting for you. Indirect entry can also include licensing deals as well. By utilizing indirect exporting, a company could use the services of an Export Management Company, distributors, or commissioned agents or brokers. Direct Entry you are dealing with a company in the foreign market, so it can be the end-user, retailer, distributor, or export management company in that market. Because the manufacturer is more involved, the manufacturer makes decisions about the entire export process - from market and distribution, sales fulfillment, and payment. International marketing: If the exporting departments are becoming successful but the costs of doing business from headquarters plus time differences, language barriers, and...
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...selection of selecting either a Malaysian expatriate or a Chinese local to be operations manager for Proton’s new factory in China. We anticipate that it is by having the significant understanding on the overall issue regarding international staffing approach, knowing how regarding international assignment selecting process, knowing why on the cause of expatriate failure, then only Proton’s IHRM would be able to come out with a strategic International HR Management approach that could minimize the cost and failures of international assignment. Table of Content Page 1.0 Introduction 4 2.0 International Staffing Policies 5 3.1 Ethnocentric Approach 5 3.2 Polycentric Approach 6 3.3 Region centric Approach 7 3.4 Geocentric Approach 7 3.0 International Assignment Selection 8 3.1 Technical Competency 8 3.2 Personal Traits 8 3.3 Ability to cope with Environment variables 9 3.4 Family Situation 9 4.0 Reasons of Expatriate Failure 10 5.0 Recommendation 11 6.0 Conclusion 13 7.0 Reference 14 1.0 Introduction The rapid pace of globalization and technology evolved over the last decade had caused business operation to expand beyond national boundaries. This has caused a...
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...problem faced by the small transitional countries/companies, globalization by foreign transnational companies (TNCs) is considered to be the generic expansion strategy. The question is, however, which foreign investor to select. The paper evaluates the potentials of the EPRG scheme (Ethnocentrism, Polycentrism, Regiocentrism, and Geocentrism) in choosing foreign investor. It enables company to analyze and predict its competitors' behavior. (Biljana Crnjak-Karanovič). The Ethnocentric, Polycentric, Regiocentric, and Geocentric Framework (EPRG) dates back to Perlmuter (1969) and his associates Wind and Douglas (1973). The EPRG framework identifies four management approaches or orientations of the company while internationalization process is taking place. The framework is based on the assumption that the level of a company’s involvement in the international business gradually evolves. EPRG orientations describe an exporter's process of evolution and internalization. Companies begin by being Ethnocentric, i.e., they emphasize...
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...Global Marketing, 6e (Keegan/Green) Chapter 1 Introduction to Global Marketing 1) A management team that fails to understand the importance of global marketing risks losing its domestic business to competitors with lower costs, more experience, and better products. Answer: TRUE Diff: 1 Page Ref: 4 AACSB: Reflective Thinking 2) As Wal-Mart expands into Guatemala and Central American countries, it is implementing a market development strategy. Answer: TRUE Diff: 1 Page Ref: 4 AACSB: Reflective Thinking 3) Global marketing may take the form of diversification strategy in which a company creates new products or services for the domestic market. Answer: FALSE Diff: 2 Page Ref: 4 AACSB: Reflective Thinking 4) The perceived value equation can be represented as Value = Price/Benefits. Answer: FALSE Diff: 2 Page Ref: 5 AACSB: Analytic Skills 5) Recently the auto industry is shifting its attention to emerging markets such as India and Africa. Answer: TRUE Diff: 1 Page Ref: 5 AACSB: Reflective Thinking 6) Globalization is presenting significant marketing opportunities for professional sports organizations such as the National Football League and Major League Soccer. Answer: TRUE Diff: 1 Page Ref: 6 AACSB: Reflective Thinking 7) If Nestlé decides not to market biscuits (cookies) in the United States due to competitive reasons, it is considered as a lack of strategic focus and missed opportunity. Answer: FALSE Diff: 2 Page Ref: 7 AACSB:...
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