Ethnocentric approach perlmutter

Eprg model of mcdonalds

This is an important business model which can be used to help organizations who compete on an international level ensure that they are working toward the right goals and objectives. The right way to approach running a business on an international scale is going to depend on the business at hand, the people involved, and plans for the future. On the plus side, the local offices around the world tend to be more engaged and more satisfied with their work since they are valued and trusted. Regiocentric or regional orientation is defined as a functional rationalization on a more-than-one country basis. Key Points The EPG model is a framework for a firm to better pinpoint its strategic profile in terms of international business strategy. Polycentric orientation assumes that host country cultures are different making a centralised approach unfeasible. The EPG Model provides insight in how far an organisation has internationalised. On the downside, it can be hard to properly grow the business in other nations when making decisions based on how things are done at home. Putting more emphasis on the local offices will create a situation in which those offices are doing the same work that is being done in other parts of the world — causing costs to rise unnecessarily. Such companies are also sometimes referred to as domestic companies. Drawbacks are that national immigration policies may put limits to its implementation and it might be a bit expensive compared to polycentrism. For example, the standards in which the home country operates are going to be much different from how the host country operates. Overseas subsidiaries or offices in international markets are seen as less able and less important than the head office.

It is against that backdrop that the EPG model comes into focus. Geocentric Geocentric companies, as truly global players, view the world as a potential market, and seek to serve this effectively.

Drawbacks are that national immigration policies may put limits to its implementation and it might be a bit expensive compared to polycentrism. This view alleviates the chance of cultural myopia and is often less expensive to implement than ethnocentricity because it needs less expatriate managers to be send out and centralised policies to be maintained.

eprg framework with example

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. Sales are often boosted as a result, since the company remains in touch with local trends, cultures, and more.

Examples of companies following polycentric approach

A geocentric organization will not default to either the customs and traditions of their home country or the host country. On the plus side, running the business this way can keep things simple. Key Points The EPG model is a framework for a firm to better pinpoint its strategic profile in terms of international business strategy. In Perlmutter and his collague David A. Instead, management selects the person best suited to foster the companies goals and solve problems worldwide. Such companies are also sometimes referred to as domestic companies. The EPG Model provides insight in how far an organisation has internationalised. Subsidiaries get grouped into larger regional entities. Also, if local branches are not trusted to make decisions in a manner that they see fit, those employees may look for other opportunities where they will be more valued as an asset to the business. This view alleviates the chance of cultural myopia and is often less expensive to implement than ethnocentricity because it needs less expatriate managers to be send out and centralised policies to be maintained. Unification is the ultimate goal of a geocentric operation. Each of the three options included in this model can be successful in the right circumstance, and each can fail in the wrong situation.

Instead, they want to operate as a cohesive unit, just as a company would that is operating in just one country. Regiocentric or regional orientation is defined as a functional rationalization on a more-than-one country basis.

Instead, management selects the person best suited to foster the companies goals and solve problems worldwide.

ethnocentric geocentric polycentric tutor2u

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 the organization.

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EPRG Framework