Topic :

INTERNATIONAL
ORINATATION
 BENSHA C SHAJI
2nd Year B.B.A LLB
Roll. No : 10
 Introduction
The degree and nature of involvement in international
business or the international orientations vary widely.
The analysis provided by Douglas Wind and Perlmutter
within the framework of the modified EPRG scheme is
helpful in understanding the levels of involvement of firms
in international business .The EPRG framework identifies
four (4) types of attitudes or orientations towards
internationalisation that are associated with successive
stages in the evolution of international operations.
There are four (4) orientations are
:
Ethnocentric Approach( Home country Orientation )
Polycentric Approach ( Host country Orientation )
Regiocentric Approach( Regional Orientation )
Geocentric Approach( World Orientation )
These stages are assumed to reflect the goals and philosophies of
the company in so far as international operations are concerned and
lead to different management strategies and planning procedures
for International operations .
Ethnocentric Approach
In the ethnocentric approach, overseas operations are viewed as
secondary to domestic operations and primarily as a means of
disposing of ‘surplus’ domestic productions. The top management
views domestic techniques and personnel as superior to foreign
and also as the most effective in overseas markets. Plans for
overseas markets are developed in the home office , utilising
policies and procedures identical to those employed in the domestic
market. Overseas marketing is most commonly administrated by an
export department or international division, and the marketing
personnel is composed primarily of home country nationals.
Overseas operations are conducted from a home country base, and
there is likely to be a strong reliance on export agents.
 No international
Ethnocentrism investment
needed
is pre-
dominantly a The domestic
home country companies view
orientation. foreign markets
as an extension
to domestic
markets.
This approach No
entails a additional
minimal risk and selling cost
commitment to incurred.
overseas
markets.
Ethnocentric Orientation Managing
Director

Manager Manager Manager Manager Manager

R&D Marketing Production Finance H.R.

A.M A.M A.M A.M A.M

A.M A.M A.M A.M A.M

A.M A.M A.M A.M A.M

Polycentric Approach
As the company begins to recognise the importance of
inherent differences in overseas markets, a polycentric
attitude emerges. The prevalent philosophy at this
stage is that local personnel and techniques are best
suited to deal with local market conditions.
Subsidiaries are established in overseas markets, and
each subsidiary operates independently of the others
and establishes its own marketing objectives and
plans. The environment of each market is considered
while formulating the marketing strategy. The important
merit of polycentrism is the adaption of the business
strategies to the local conditions.
 Polycentrism is multi
Companies national orientation.
establish foreign
subsidiary and
empowers its
executives Marketing is
normally
characterised by
Polycentrism is the ADAPTATION
more or less the STRATEGY
opposite of
Ethnocentric
Approach
 Home
Country
Polycentric Orientation Managing
Director
C.E.O
Subsidiary

Manager Manager Manager Manager Manager

R&D Marketing Production Finance H.R.

A.M A.M A.M A.M A.M

A.M A.M A.M A.M A.M

A.M A.M A.M A.M A.M

Regiocentric Approach
A regiocentric company views different regions as
different markets. A particular region with certain
important common marketing characteristics is
regarded as a single market, ignoring national
boundaries. Strategy integration, organisational
approach and product policy tend to be implemented
at regional headquarters on the one hand and
between regional headquarters and individual
subsidiaries on the other.
 Subsidiaries Providing
consider regional improved
environment for
coordination and
policy/ strategy
formulation control

More
Economical Regiocentrism is
and regional
orientation
Manageable
 Home
Country
Regiocentric Orientation Managing
Director
C.E.O
Subsidiary

Marketing Marketing Marketing

Manager Manager Manager Manager Manager

R&D Finance Production H.R. Marketing
Geocentric Approach
A geocentric company views the entire world as a single
market and develops standardised marketing mix,
projecting a uniform image of the company and its
products, for the global market .The business of the
geocentric multinational is usually characterised by
sufficiently distinctive national markets that the
ethnocentric approach is unworkable and where the
importance of learning curve effects in marketing,
production technology and management makes the
polycentric philosophy substantially suboptimal.
 National
Companies environmental
constraints may
views the entire restricts multinational
world as a operations and make
single market. the approach
unfeasible

Geocentrism
is global
orientation.
 Home
Geocentric Orientation Country

Managing
Director

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

U.K GERMANY U.S.A ENGLAND CANADA
 Costs Benefits

High communication and travel costs Integrated global outlook

Educational costs at all levels More powerful total company throughout

Time spent in consensus decision-making Better quality of products and services

International headquarters bureaucracy Worldwide use of best resources

"Too wide" distribution of power Improved local country management

Greater commitment to global objectives

Higher global profits

 Ethnocentric Polycentric Regiocentric Geocentric
Management Home country Host country Regional Global
orientation
Perception of •Domestic *Each national is *Markets on the * Entire world as
market • focuses on Distinctive basis of common single
similarities b/w home *Focuses on regional Market
and foreign markets difference b/w home characteristics
• foreign markets are and foreign markets
extension of domestic
market
Market strategy Extension of domestic Localisation Trade off b/w Global
strategy to foreign localisation and standardisation
markets standardisation
Merits •No cost and effort of *Adaptation to the *Some of the *Economies of scale
localisation market characteristics advantages of both and lower costs
• An easy route to which help better the localisation and * Advantages of pace
internationalisation exploitation of the standardisation
market potentials strategies
Demerits Limits the scope of High cost of Neglect of intra- Standardisation will
exploitation of adaptation and delays regional diff. In not be successful in
international market business environment many cases
THE END