Management

Orientations
 EPRG Concept

• The orientation of a company’s personnel affects

ability of a company to adapt to any foreign marketing
environment
• The behavioural attributes of a firm’s management
in casual exports to global markets can be described
under the EPRG:
(a). Ethnocentric Orientation
(b). Polycentric Orientation, and
(c). Geocentric Orientation
• A key assumption underlying the EPRG
framework is that the degree of
internationalization to which the management is
committed or willing to move affects the specific
international strategies and decision rules of the firm.
 Polycentric
Each host country is unique; in
foreign countries
Ethnocentric
Home country is
superior; sees
similarities in
foreign countries

Regiocentric Geocentric
Worldview; sees
Sees similarities and
similarities and
differences in a world region; is
differences in home
ethnocentric or polycentric in its
and host countries
view of the rest of the world

Orientation of management & Companies

(a). Ethnocentric Orientation

• The belief witch considers one’s own culture as

superior to others is termed as ethnocentric
orientation
• It means that a firm or its managers are so obsessed
with the belief that the marketing strategy which has
worked in the domestic market would also work in the
international markets
• Thus, ethnocentric companies ignore the
environmental differences between markets
• These companies generally indulge in domestic
marketing
• A few companies which do carry out export
marketing consider it as an extension of domestic
marketing
• These companies believe that just like domestic
marketing, export marketing too requires the minimum
level of efforts to adapt the marketing mix to the need
of the overseas market
• Generally, such companies attempt to market their
products in countries where the demand is similar to
the domestic market or the indigenous products are
acceptable to the consumers in those markets
• Ethnocentric orientation may be of the following
types:
(a). The firm becomes so accustomed to certain
cause and effect relationships in import
 activities that certain cultural factors in
overseas markets are overlooked
Managers need to analyze the cultural
variables so as to consider all the major factors
before taking a decision
For instance, most Indian handicraft
exporters, which are primarily from the SME (small
and medium-sized enterprises) sector, hardly
appreciate the market difference and need for
adaptation of marketing strategy
(b). The environmental differences are
recognized by the management but marketing
strategy focuses on achieving home-country
objectives rather than international or worldwide
objectives
 It leads to a decline in the long-term
competitiveness of the firm as the firm fails to
compete effectively against its competitors and show
any resistance to their overseas marketing
practices
The large size of the Indian market provides
little motivation to firms to venture into the overseas
market, or, even if overseas marketing is
undertaken by them, the company tries to find the
market for similar products and consumers with
similar tastes and preferences.
• Ethnocentrism considers overseas operations as a
means of disposing the surplus production thereby
giving a secondary or subordinate treatment
• Usually, in ethnocentric approach, goods are
manufactured at the home base and decisions are
taken at the headquarters
• Generally, in the initial stages of
internationalization, most companies adopt ethnocentric
orientation, but this approach becomes difficult to
sustain once a sizeable market share is achieved
• A number of Indian products sold abroad, such as
dresses like salwar-kurta, sarees, and food items,
such as dosa mix, idli mix, vada mix, sambhar mix,
gulab jamun mix, papad, and Indian sweets are
primarily targeted at the Indian population
• The trade statistics reveal that these products also
find customers in major world markets, such as
 Dubai, Singapore, London, Canada, etc., which
have sizeable ethnic Indian or south Asian population
• Besides, such a strategy can be used in south
Asian markets, where the consumer tastes and
preferences are more or less the same.
• Nissan’s ethnocentric orientation was quite apparent
during its first few years of exporting cars and trucks to
the United States
• Designed for mild Japanese winters, the vehicles
were difficult to start in many parts of the United States
during the cold winter months
• In northern Japan, many car owners would put
blankets over the hoods of their cars
• Nissan’s assumption was that Americans would do
the same thing
• Until the 1980s, Eli Lilly and Company operated as
an ethnocentric company in which activity outside the
United States was tightly controlled by headquarters
and focused on selling products originally developed
for the U.S. market
• Fifty years ago, most business enterprises – and
especially those located in a large country, such as the
United States – could operate quite successfully with
an ethnocentric orientation
• Today, however, ethnocentrism is one of the biggest
internal threats a company faces.
(b). Polycentric Orientation

• Contrary to the ethnocentric approach, polycentric

approach is highly market-oriented
• It is based on the belief that substantial differences
exist among various markets
• Each market is considered unique in terms of its
market environment, such as political, cultural, legal,
economic, consumer behaviour, market structure, etc.
• The marketing mix decisions as well as product
development strategies, pricing strategies, etc. involve
local experts and are different for different countries
• The decentralization of marketing activities is highest
in polycentric orientation
• Although polycentric approach is highly market
oriented, it generally needs more corporate
resources, little co-ordination among various affiliates,
and duplication of certain activities
• Besides, economies of scale is hardly achieved in
any corporate house
• This assumption lays the groundwork for each
subsidiary to develop its own unique business and
marketing strategies in order to succeed
• Until recently, Citicorp’s financial services around
the world operated on a polycentric basis
• James Bailey, a Citicorp executive , offered this
 description of the company: “We were like a
medieval state
• There was the king and his court and they were in
charge, right? No
• It was the land barons who were in charge
• The king and his court might declare this or that, but
the land barons went and did their thing.”
(c). Regiocentric Orientation

• A firm treats a region as a uniform market segment

and adapts a similar marketing strategy within the
region but not across the region
• Depending upon the convergence of market
behaviour on the basis of geographical regions, a
similar marketing strategy is used
• For example, McDonald’s strategy to not to serve
pork and to slaughter animals through the halal
process is followed only in the Middle East or muslim-
dominated countries and can be termed as regiocentric.
• For example, a U.S. company that focuses on the
countries included in the North American Free Trade
Agreement (NAFTA) – the United States, Canada, and
Mexico – has a regiocentric orientation
• Similarly, a European company that focuses its
attention on the EU or Europe is regiocentric.
(d). Geocentric Orientation

• The geocentric approach considers the whole world

as a single market and attempts to formulate integrated
marketing strategies
• A geocentric orientation identifies similarities
between various markets and formulates a uniform
marketing strategy
• The companies that follow the geocentric approach
strive to analyze and manage the marketing strategy
with integrated marketing programmes.
• The geocentric orientation represents a synthesis
of ethnocentrism and polycentrism; it is a
 “worldview” that sees similarities and differences in
markets and countries and seeks to create a global
strategy that is fully responsive to local needs and
wants
• A regiocentric manager might be said to have a
worldview on a regional scale; the world outside the
region of interest will be viewed with an ethnocentric or
a polycentric orientation, or a combination of the two
• Jack Welch’s quote at the beginning of this chapter
that “globalization must be taken for granted” implies
that at least some company managers must have a
geocentric orientation
•
• However, some research suggests that many
companies are seeking to strengthen their regional
competitiveness rather than moving directly to
develop global responses to changes in the
competitive environment
• The ethnocentric company is centralized in its
marketing management, the polycentric company is
decentralized, and the regiocentric and geocentric
companies are integrated on a regional and global
scale, respectively
• A crucial difference between the orientations is the
underlying assumption for each
• The ethnocentric orientation is based on a belief in
home-country superiority
• The underlying assumption of the polycentric
approach is that there are so many differences in
cultural, economic, and marketing conditions in the
world that it is impossible and futile to attempt to
transfer experience across national boundaries.