Howard Perlmutter identified a way of classifying alternative management orientations, which is commonly referred as Perlmutter’s EPRG model. He states that. The aim of this paper is to present the fundamental ideas behind EPRG model . () the essence of geocentric strategy is an uniform approach to all national. To overcome from this problem one should adopt EPRG Framework, ETHNOCENTRIC ORIENTATION: Ethnocentric approach will better suit.
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EPG Model is an international business model including three dimensions — ethnocentric, polycentric and geocentric. It has been introduced by Howard V. The EPG model is a framework for a firm to better pinpoint its strategic profile in terms of international business strategy. The importance of the Epdg model is mainly in the firm’s awareness and understanding of its specific focus.
International Marketing – EPRG Framework
Because a strategy based mainly on one of the three elements can mean significantly different costs e;rg benefits to the firm, it is necessary for a firm to carefully analyze how their firm is oriented and make appropriate decisions moving forward.
In performing an EPG apprpach, a firm may discover that they are oriented in a direction that is not beneficial to the firm or misaligned with the firm’s corporate culture and generic strategy. In this case, it would be important for a firm to re-align its focus in order to ensure that it is correctly representing the firm’s focus.
Each of the three elements of the EPG profile is briefly highlighted in the table below, showing the main focus for each element, as well as its correlating function, products, and geography. There is no international firm today whose executives will say that ethnocentrism is absent in their organization.
In this context, ethnocentrism is the view that a particular ethnic group’s system of beliefs and values is morally superior to all others. It is a natural tendency for people to act ethnocentrically because it is what they feel comfortable with.
The ethnocentric attitude is seen often when home nationals of various countries believe they are superior to, more trustworthy and more reliable than their foreign counterparts.
Organizations that are designed with an ethnocentric focus will portray certain tendencies. These include an organizations headquarters that’s decision-making authority is relatively high. Home standards are applied to the evaluation and control of the organization. Ethnocentric attitudes can be seen in the organizations communication process.
The crucial critical concept of ethnocentrism in international organizations is the current policy that recruits from the home country are hired, and trained for key executive position appgoach the organization.
With the centralized approach, the training originates at the headquarters and than corporate trainers travel to the subsidiaries, and often adapt to local situations. There are many costs that ethnocentrism can incur on an international organization.
International Marketing EPRG Framework
Using the centralized approach can cause inefficient staffing problems in the organization, this is because the employed staff will incur high financial costs to aoproach global business as they have to pay for the transfer costs of the staff coming from the home country to overseas. There is often ineffective planning due to poor feedback from the international subsidiaries. This in turn could cause a lack of flexibility and local responsiveness.
Polycentrism [ disambiguation needed ] is one of the three legs in the EPG framework that “identifies one of the attitudes or orientations toward internationalization that is associated with successive stages in the evolution of international operations” . Polycentrism can be defined as apprpach host country orientation; which reflects host countries eptg and objectives with respect approacj different management strategies and planning procedures with regard to international operations.
In the most extreme views of polycentrism, it is the “attitude that culture of various countries are different, that foreigners are difficult to understand and should be left alone as long as their work is profitable.
Although there is great benefit to taking into consideration local preferences in the host country when it comes to international business practices, a polycentric approach has its obstacles once implemented. A polycentric approach “gives rise to the problems of coordination and control. Management is unable to have total control over the company in the host country because it is found that “local nationals have a better understanding and awareness of national market conditions, more so than home office personnel.
Approac, the majority of approacb in the host countries practices is lost, and the company is forced to manage its operations from the outside. Paproach are a few other drawbacks to the polycentric approach which may restrict a multinational company from completely realizing its full potential in the host country.
The first drawback of a polycentric approach is that the “benefits of global coordination between subsidiaries such as the development of economies of scale cannot be realized.
Therefore, knowledge approahc could be beneficial across all regions is lost, and subsidiaries could be worse off than if they had obtained the knowledge. A polycentric approach should only approwch used within a company in which there is a certain amount of comfort in allowing the host country to make all major decisions, following their own procedures and objectives. It must be understood that there is limited control or communication between the home and host-country, and products and distribution may vary across countries.
Companies should evaluate all legs of the EPG model before implementing a strategy, as all companies differ in international strategy among industry and region. The third and last aspect of the EPG model is the geocentric portion, this notion focuses on a more world-orientated approach to multinational management.
The main difference of geocentrism compared to ethno- and polycentrism [ disambiguation needed ] is that it does not show a bias to either home or host country preferences but rather spotlights the significance of doing whatever it takes to better serve appfoach organization.
Instead, management selects the person best suited to foster the companies goals and solve problems worldwide. The sole goal of geocentrism is to globally unite both headquarters and subsidiaries. For example, sprg standards in eptg the home country operates are going to be much different from how the host country operates.
EPRG – INTERNATIONAL MARKETING ORIENTATION – Priyanka Blog Thoughts
What is accepted as a permissible way of treating employees in the United States, the home country, may not be acceptable to Chinese employees, in the host country. It is the overall goal of geocentrism to form aoproach collaborative network between headquarters and apporach this arrangement should entail a set of universal standards that can thus be used as a guideline when attacking key business decisions. The most effective way to enforce geocentrism is with a formal reward system that encourages both subsidiary and headquarters managers to work for global goals rather than just defending home country values.
This ideology approacu a great example of how today’s business must manage both global and local issues in order to succeed in the end. While there are many obstacles that will hinder a company’s ability to become geocentric, epr are also a handful of forces which will drive them towards this. For instance, there is the loss of national sovereignty when one nation is dominated by another — this can lead to a loss in economic and political nationalism.
A third force causing this movement is the abundance of growing world markets, occurring in areas such as income earning age population, rising GDP’s, and escalating disposable income in areas such as China and Korea. With that said, geocentrism is an ideology that must be accepted by any corporation operating globally in order for any sort of success and long term stability to be attained.
However, there are certain aspects of the business life in which ethnocentrism and polycentrism are more adequate models to follow, but functional smoothness and success in both home and host countries is dependent upon upper managements ability to select individuals who are world orientated as opposed to home or epgr country centered.
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