Ethnocentric, Geocentric, and Polycentric

In: Business and Management

Submitted By sean007
Words 637
Pages 3
The ethnocentric model is one which a business feels and acts as though it is superior to other countries, both in its culture and products or services (Business, 2012). With this approach the domestic market sets the standard for pricing and marketing. With this concept a firm will not change how it prices or markets its products. A company does save resources by not studying the foreign market; however they may lose any competitive advantage that could have been gained through the knowledge of the foreign market (Keegan & Green, 2011). Often times a firm may seek identical verticals in foreign markets to help minimize this competitive disadvantage. The ethnocentric model captures the domestic market more so than foreign markets for firms.
The geocentric model is what I would consider, the most open minded approach. The world is viewed as one large market place with many firms having a world headquarters that does not represent one culture or country (Keegan & Green, 2011). This model promotes diversity through global integration of capital resources (Perlmutter, 2009). Each foreign market it studied and the product or service prices are changed based on the local climate of the foreign market.
Polycentrism is the belief that each country a firm has presence in operates independently from one another. This allows a company to have subsidiaries in foreign markets that can independently meet the needs of foreign consumers in each market. This method uses more capital resources then ethnocentrism but also could create more revenue for a firm since foreign consumers may consider the subsidiary part of their country and its culture (Keegan & Green, 2011). The polycentric model’s revenue stream in looked at as being independent throughout the various foreign markets.
The method a company markets a product or service will influence which model best suits...