MANAGEMENT ORIENTATIONS : MANAGEMENT ORIENTATIONS The form and substance of a company’s response to global markets opportunities depend greatly on management’s assumptions and beliefs (both conscious and unconscious) about the nature of the world. The worldview of a company’s personnel can be described as :
Geocentric Ethnocentric Orientation : Ethnocentric Orientation A person who assumes his or her home country superior compared to the rest of the world is said to have an ethnocentric orientation. The ethnocentric orientation means company personnel see only similarities in markets and assume the products and practices that succeed in the home country will, due to their demonstrated superiority, be successful anywhere. Ethnocentric Orientation (Contd..) : Ethnocentric Orientation (Contd..) At some companies, the ethnocentric orientation means that opportunity outside the home country are ignored. Such companies are called domestic companies.
Ethnocentric companies that do conduct business outside the home country can be described as international companies. They adhere to the notion that the products that succeed in the home country are superior and, therefore, can be sold everywhere without adaptation.
In the ethnocentric international company, foreign operations are viewed as being secondary or subordinate to domestic ones. Ethnocentric Orientation (Contd..) : Ethnocentric Orientation (Contd..) Valuable managerial knowledge and experience in local markets may go unnoticed.
For a mfg. firm, ethnocentrism means foreign markets are viewed as a means of disposing of surplus domestic production.
Even if consumer needs or wants differ from those in the home country, those differenced are ignored at headquarters. [Ex : Nissan] Polycentric Orientation : Polycentric Orientation The polycentric orientation is the opposite of ethnocentrism. The term polycentric describes management’s belief that each country in which a company does business is unique. This assumption lays the groundwork for each subsidiary to develop its own unique business and marketing strategies in order to succeed.
The term multinational company is often used to describe such a company. Regiocentric Orientation : Regiocentric Orientation In a company with a regiocentric orientation , management views regions as unique and seeks to develop an integrated regional strategy.
For example, a US company that focuses on the countries included in the NAFTA is a regiocentric orientation.
Similarly, a European company that focuses its attention on the Europe is regiocentric. Geocentric Orientation : Geocentric Orientation A company with a geocentric orientation views the entire world as a potential market and strives to develop integrated world market strategies.
A company whose management has a regiocentric or geocentric orientation is known as a global or a transnational company. Centralized, Decentralized or Integrated ? : Centralized, Decentralized or Integrated ? The ethnocentric company is centralized in its marketing management (home country superiority)
The polycentric company is decentralized (there are so many differences in cultural, economic, and marketing conditions that it is impossible and futile attempt to transfer experience across national boundaries).
The regiocentric company is integrated on a regional scale, and
The geocentric company is integrated on a global scale. Evolution of GM from DM-Stage-I : Evolution of GM from DM-Stage-I Domestic in focus, with all activity concentrated in the home market.
Whilst many organizations can survive like this, solely domestically oriented organizations are probably doomed to long term failure. Evolution of GM from DM-Stage-2 : Evolution of GM from DM-Stage-2 Home focus, but with exports (ethnocentric). Probably believes only in home values, but creates an export division. Evolution of GM from DM-Stage-3 : Evolution of GM from DM-Stage-3 stage two organisations which realise that they must adapt their marketing mixes to overseas operations. The focus switches to multinational (polycentric) and adaptation becomes paramount. Evolution of GM from DM-Stage-4 : Evolution of GM from DM-Stage-4 Global organizations which create value by extending products and programmes and focus on serving emerging global markets (geocentric). This involves recognising that markets around the world consist of similarities and differences and that it is possible to develop a global strategy based on similarities to obtain scale economies, but also recognises and responds to cost effective differences. Its strategies are a combination of extension, adaptation and creation. It is unpredictable in behaviour and always alert to opportunities.