Contents

• Classification of Multinationals Depending upon their origin
• Stages of Internationalization
• Summary of Stages of Internationalization
• EPRG Framework
• Ethnocentric Orientation
• Polycentric Orientation
• Regiocentric Orientation
• Geocentric Orientation

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Classification of Multinationals Depending upon their origin

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Stages of Internationalization

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• Limits its operations vision, mission to the national boundaries
• Focus its view on the domestic market opportunities, domestic suppliers, domestic financial companies, domestic customers etc.
• Formulate the strategies to exploit the opportunities offered by environment
• Never things of growing globally
• In case of growth approach – selects the diversification strategy of entering into new markets, new products, technology etc.

Domestic Company

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• Some domestic companies think of internationalizing its operations
• Remain ethnocentric or domestic country oriented
• Focus is on domestic but extends the wings to the foreign companies
• Locating the branch in the foreign markets and extend the same domestic operations into foreign markets
• International Company holds the marketing mix constant and extends the operations to new countries

International Company

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• International companies turn into multinational companies when they start responding to the specific needs of the different country markets regarding product, price, promotion etc.
• Multinational company is also called as ‘Multi-domestic company’. Formulates different strategies for different markets, thus the orientation shifts from ethnocentric to polycentric

Multinational Company

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• ‘Global Marketing Strategy’ or ‘Global Strategy’
• Physical presence in other parts of world and cater to customers in different countries with standard products by consolidating resources from any part of the world
• Shifts manufacturing base to more profitable locations, open a warehouses in SEZ
• Train people to be multi-functional, multi-strategic

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Global Company

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• Multinationals have set up sub-headquarters close to the subsidiaries for easy accessibility
• Transnational company produces, markets, invests and operates across the world
• An integrated global enterprise which links global resources with global markets at profit
• Solve the business problems arising from nearby countries through the sub-headquarters
• Serving the purpose of administrative convenience

Transnational Company

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Summary of Stages of Internationalization

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What is the EPRG framework in international business, and why is it important to understand the various orientations it represents?

How does the study of the EPRG framework assist businesses in developing effective international marketing and management strategies?

How does understanding the EPRG framework assist MNCs in navigating cultural differences, local regulations & consumer preferences in international markets?

What role does the EPRG framework play in helping businesses strike the right balance between global standardization and local customization in their products and services?

How can the EPRG framework aid in risk management for international businesses, especially in turbulent global economic and political environments?

What are the implications of ignoring or misinterpreting the EPRG framework for international businesses, and how can it impact their competitiveness and sustainability in global markets?

In the age of globalization and digital connectivity, is the EPRG framework still relevant for international business, or are there new frameworks or factors to consider?

How does the EPRG framework contribute to building stronger relationships with international partners, suppliers, and consumers, ultimately fostering global business success?

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• EPRG stand for Ethnocentric, Polycentric, Regiocentric, and Geocentric.
• Created by Howard V Perlmuter and Wind and Douglas in 1969.
• Suggests that companies must decide which approach is most suitable for achieving successful results in countries abroad.
• Describes the different attitudes that the management of a company has about International Markets.
• Addresses the ways strategic decisions are made in the company and what is the nature of relationship between the companies headquarters and its subsidiaries outside.

EPRG Framework

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• Concentrate more on their location of origin; Focus on domestic objectives
• Proper understanding of own socio-cultural background
• Product development determined mainly by the needs of home country customers
• Do not adapt their products to the needs and wants of other countries
• Main decisions made in the main headquarters only
• Home standards applied on all markets
• Identification with the owner’s nationality
• Avoid taking high risks in other countries in the initial phase
• Slowly move abroad with few changes

Ethnocentric Orientation

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Organization structure of Ethnocentric Company

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• Domestic companies which are exporting to foreign countries using the ethnocentric approach
• Equal importance to every country’s domestic market
• Believe in uniqueness of every markets – Focus on local objectives
• Majority of multinationals have to enter different countries simultaneously
• Not possible to adopt ‘Wait and Watch’ policy to enter different countries and commence its operations
• Due to innovation and new product development; it has to spread everywhere
• Company establishes a foreign subsidiary company and decentralizes all the operations and delegates decision making and policy making authority to its executives
• Polycentric approach mostly focuses on the conditions of the host country in policy formulation, strategy implementation and operations

Polycentric Orientation

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Organization Structure of Polycentric Orientation

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• Company after operating successfully in a foreign country, thinks of exporting to the neighbouring countries of the host country
• Foreign subsidiary company considers the regional environment (Laws, Culture, Policy etc.) for formulating policies and strategies
• Market with economic, cultural or political similarities among regions
• Focus their activities in particular regions
• Certain practices are uniform in nature in specific region
• Region covers many nations; earn title of multinationals
• Main decisions made in regional headquarters
• Identification with regions – Regional standards in region – Focus on regional objectives
• High positions taken by regional managers

Regiocentric Orientation

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Organization structure of Regiocentric Company

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• Transnational company is Geocentric in orientation
• Entire world is like a single country for the company
• Company thinks Globally and acts locally
• Adopts global strategy but allows values addition to the customer of a domestic company
• Allows adaptation to add value to its global offer
• Assets of a transnational company are distributed throughout the world, independent & specialized
• R&D facilities of a transnational company are spread in many countries but specialized in each country based on the local needs
• Production facilities are spread but specialized and integrated
• Subsidiary functions like an independent and autonomous company in formulating policies, strategies, product design, HR policies, operations etc.

Geocentric Orientation

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Organization structure of Geocentric Company

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What next after EPRG?

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International Business

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Gratitude

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