International Orientations,MNC,TNC,EPRG Framework

1. INTERNATIONAL ORIENTATION
Dr M Valliammal
Professor
AMET Business School
AMET UNIVERSITY

2. ORIENTATION
 Degree and nature of involvement of firms
in international business
 Four types of attitudes /orientations that are
associated with successive stages in the
evolution of international operations
 These stages assumed to reflect the goals
and philosophies of the company
 Led to different management strategies
&planning procedure for international
operations.

3. Types of Orientations
The EPRG framework provided based on the
analysis of Wind , Douglas and Perl mutter
.
• Ethnocentrism(home country orientation)
 Polycentrism(host country orientation)
 Regiocentrism (regional orientation)
 Geocentrism (world orientation)

4. Ethnocentric approach
 Under this approach , target market is
own country , Excessive production will
be exported due to change in customer
taste, preferences

5. 1. Ethnocentric approach
Organization Structure
Managing Director
↓
↓
↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻↓
Manager
R & D FIN PROD HRD MKTG
↓
↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻↓
Asstt. Manager
North india South India Exports

6. Ethnocentric orientation
 Overseas operations are viewed as
 Secondary to domestic operations
 Primarily as a means of disposing
'surplus”
 Domestic technique and personnel are
viewed superior
 Plans for overseas market are developed in
home office
 Policies and procedures are identical to
those of domestic market

7. contd
 Seperate export department or international
division comprising the marketing personnel
from home country nationals.
 Overseas operations conducted from a
home country base
 Strong reliance on export agents
 Domestic product mix for overseas market
without major modifications
 Ethnocentric-extension strategy

8. Ethnocentric companies
 Ethnocentric Companies which conduct
business outside can be described as
international companies
 Ethnocentric companies which neglect the
oppurtunities outside home country may be
called as domestic companies.
 Ethnocentric orientation is appropriate for
small companies just entering overseas
markets.

9. suitability
 Suitable for small companies just entering
international market with
 Minimal international commitments
because of minimal risk
 With nil/minimal international investments
reqt
 No additional selling costs
 Suitable 50 years ago
 Today ethnocentrism is biggest internal
threats for a company

10. Polycentric orientation
Under this approach, the companies
customizes the marketing mix to meet
the taste, performance and needs of
the customers of each international
market.

11. POLYCENTRIC ORIENTATION
 Adaptation of business strategies to local conditions
 Company recognises the inherent differences in overseas
markets
 Subsidiaries are established in overseas markets
 Each subsidiary operates independently of others
&establishes its own marketing objectives and plans.
 Formulating marketing strategy after considering each
market environment
 Market segmentation at least on country basis

12. 2. Polycentric approach
Organization Structure
Managing Director
→→→ C E O
FOREIGN SUBSIDIARY
↓ SOUTH AFRICA
↓
↓
↓
↓
↓⁻⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻↓
Manager
R & D FIN PROD HRD MKTG

13. Contd.
 Understands local way of doing business-
local laws ,culture&custom
 Results in max degree of geographic
decentralisation
 Local managers recognised as
psychologically close to local markets
envts.and customers
 Marketing is adaptation strategy,opposite of
ethnocentrism
 MNCs are polycentric companies

14. Regiocentric orientation
• Under this approach, the company operating successfully in a
foreign country thinks of exporting to other neighboring
countries of the host country.
• At this stage, the concerned subsidiary considers the regional
environment ( such as laws, culture, policies etc) for
formulating the policies & strategies.

15. 3. Regiocentric approach
Organization Structure
Managing Director
↓
→→→ C E O
↓
↓ SOUTH AFRICA
↓ ↓⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻↓
↓ Mktg Mktg Mktg
↓ ( Lesotho) ( Kenya) ( Nambia)
↓
↓⁻⁻⁻⁻⁻⁻⁻ ⁻ ↓⁻⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻↓⁻⁻⁻⁻⁻⁻⁻⁻↓
MGR MGR MGR MGR MGR
R & D FIN PROD HRD MKTG

16. Regiocentric orientations
 Regional orientation
 Differentiated markets ,which are delineated
on the basis of common regional
characteristics.(ignoring national boundaries
 Trade-off between localisation
&standardisation strategies
 Neglect of intra regional differences in
business environment.

17. 4. Geocentric approach
• Under this approach, the company analyses the tastes, preference and
needs of the customers in all foreign markets and then adopts a
standardized marketing mix for all the foreign markets.
• Coca-cola adopted this strategy by selling its popular soft drink with
the same content, packaging, branding & advertisement themes
worldwide
• Whirlpool designs a world-washer – small, stripped-down automatic
washing machine for Mexico, Brazil & India. However, it modified its
product for Indian market to wash the delicate “sarees”.

18. 4. Geocentric approach
Organization Structure
Managing Director
Headquarters India
↓
↓
↓
↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻ ↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻ ↓⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻⁻ ↓
Subsidiary Subsidiary Subsidiary Subsidiary
India South Africa Kenya Nambia

19. Geocentric orientations
 Global orientation
 Entire world is a single market
Develops standardised marketing mix
Projects uniform image of the company and its
products
 Standardised marketing mix strategy
 Global standardisation
 Economies of scale and lower costs
 Advantage of pace (T/O,less cost
advantage etc.)

20. Contd.
 Objectives set by negotiation between
headquarters and regional HQ/and between
regional HQ& individual subsidiaries

21. Desirability condition for EPRG
Size of the firm
Experience gained in a given market
Size of the potential market
Type of product &its cultural dependency

22. The EPRG Framework
(Companies’ Philosophies on International Involvement)
Ethnocentric Orientation:
Firms are guided by a domestic market extension concept.
(Disney – in the past)
Polycentric Orientation:
Firms are guided by a multi-domestic market concept.
(Some of the car companies)
Regiocentric Orientation:
Firms view world regions as distinct markets.
(Pepsi Co., Otis)
Geocentric Orientation:
The world is perceived to be a potential market regardless
of geographic location or nationality.
(McDonalds, IBM)

23. Stages in evolution of
companies
 Purely domestic company
 Domestic company with some direct/indirect
foreign business
 International company
 MNC/global company
 Transnational company

24. International companies
International marketing is the export,
franchising, joint venture or full direct entry
of a marketing organization into another
country.
This can be achieved by exporting a
company's product into another location,
entry through a joint venture with another
firm in the target country, or foreign direct
invesetment into the target country

25. MNC
A multinational corporation (MNC) or
multinational enterprise (MNE) is a
corporation that is registered in more than
one country or that has operations in more
than one country. It is a large corporation
which both produces and sells goods or
services in various countries. It can also be
referred to as an international corporation.

26. MNC (contd.)
• They play an important role in globalization.
Arguably, the first multinational business
organization is conjectured to be the
Knights Templar, founded in 1120. After
that came the British East India Company in
1600[6] and then the Dutch East India
Company, founded March 20, 1602, which
would become the largest company in the
world for nearly 200 years.

27. Transnational corporation
A transnational corporation (TNC) differs from a
traditional MNC in that it does not identify
itself with one national home.
While traditional MNCs are national companies
with foreign subsidiaries, TNCs spread out
their operations in many countries sustaining
high levels of local responsiveness.
An example of a TNC is Nestlé who employ
senior executives from many countries and try
to make decisions from a global perspective
rather than from one centralized
headquarters.