international stages and orientations

8/4/2019 international stages and orientations'

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INTERNATIONAL

STAGES ANDORIENTATIONS

A GROUP PRESENTATIONS BY,FINAL YEAR M.COM STUDENTS

MANASAGANGOTRI

SHRUTHI.D

SHAHSHIDHARSHALINI

SHOBHASANDEEP


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INTRODUCTION

BUSINESS

TRADE

WANTS

INTERNATIONAL TRADE

INTERNATIONAL MARKETING

INTERNATIONAL BUSINESS

17 CENTURY

18 CENTURY

19 CENTURY

20 CENTURY

16 CENTURY

GLOBAL

TRANSNATIONAL

MULTINATIONAL

DOMESTIC

INTERNATIONAL


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ETHNOCENTRIC The word ethnocentrism derives from the Greek word "ethnos",

meaning nation or people, and the English word center orcentrism.

In this context, ethnocentrism is the view that a particular ethnicgroups system of beliefs and values is morally superior to allothers. Ethnocentrism is characterized by or based on the attitude

that ones own group is superior to others. The ethnocentric attitude is found in many companies that havemany nationalities and culture groups working together.

It is a natural tendency for people to act ethnocentrically becauseit is what they feel comfortable with.

It is based on past experiences and learned behaviors and norms.


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Ethnocentric Orientation

Overseas operations are viewed as secondary todomesticoperations.A means of disposing of surplus domestic production.

Overseas operations are conducted from home- countrybase-strong reliance on export agents.

Domestic product-mix without major modifications for the overseasmarkets.

International marketing characterized by Extensionstrategy.Cultural factors in overseas markets are overlooked for instancemost Indian handicrafts exporters hardlyappreciated the market

difference and need for adaptationof marketing strategyA number of Indian products sold abroad such as dresseslike

salwar kurta, Saries and food items suchas dosa mix, idli mix vada mix,

sambhar mix, gulab jamoon mix, papad and Indian sweets are

primarily targeted at Indian population abroad


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Benefits

Simple organization

Greater communication and control


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Costs

Ineffective Planning due to poorfeedback

Subsidiary valuable executive flight

Fewer innovations

Inability to build a high caliber local

org. Lack of flexibility and responsiveness


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POLYCENTRIC Polycentrism can be defined as a host

country orientation; which reflects hostcountries goals and objectives withrespect to different management

strategies and planning procedures withregard to international operations. Under a polycentric perspective, a

companys management team believesthat in international business practiceslocal preferences and techniques areusually found most appropriate to dealwith the local market conditions.


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Polycentric Orientation

Polycentric approach is highly market oriented

Each market is considered unique in terms of its market environment.

Local marketing techniques are best suited to deal with local marketconditions.

Subsidies are established in overseas markets. Environment of each market is considered while formulating marketing

strategy.

Emphasis is put on local laws, custom and culture and great care is taken tounderstand the local way of doing business.

Marketing is characterized by Adaptation strategy


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BENEFITS

Intense exploitation of local markets

Better sales due to better-informedlocal management

More initiative for local products

More host government support

Good local managers with highmorale


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COSTS

Waste due to duplication

Localization costs of universalproducts

Inefficient use of home-countryexperience

Excessive regard for local traditionsat expense of global growth


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Characteristic features Ethnocentrism Polycentrism

1) Management orientation Home country orientation Host country orientation

2) Perception of themarket

Domestic market is superior.Focuses on the similaritiesbetween the home and the

foreign marketsForeign markets are extensionsof domestic market

Each national market isdistinctiveFocuses on the differences

between the home and foreignmarkets

3) Marketingstrategy

Extension of domestic strategyto foreign markets

Localization


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Regiocentric or regional orientation is defined as

a functional rationalization on a more than one

country basis.

The marketing firms here segment the markets

on the basis of regional similarities.


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Thinks of exporting to the neighboring countriesof the host country

Considers regional environment

Regions are consistent with some naturalboundaries

Regional autonomy in decision making

Staff move with in the designated region, ratherthan globally


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Advantages:

More economical & manageable

Help the firm to move from a purely ethnocentric or

polycentric approach to a geocentric approach

Provide some importance to local conditions

Disadvantages:

Produce federalism at a regional rather than a country

basis & constrain the firm from taking a global stance

Staffs career advancement still limited to regional

headquarters, not the parent country headquarters


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o The entire world is just like a single country

o Select the employees from the entire globe

o Independence to subsidiary companies

o Focus on world oriented approach

o Does not show a bias to either home or host country

o The sole goal is to globally unite both headquarters &

subsidiaries

o Product differentiation, diversifying functions & R & D

o It attempts to balance both global integration & local

responssiveness


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Forces that push an organization to thegeocentric notion of managing MNC

Competition

For effective target

Growing World markets


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Advantages:

Better quality of products & services

worldwide utilisation of resources

Higher global profits

It makes sense for firms pursuing either a global or transnationalstrategy

Disadvantages:

High communication & travel costs

Educational costs at all levels

Time spent in consensus decision making

Too wide distribution of power


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Selection of suitable orientation depends

on following factor:

Size of the firm

Experience in overseas market

The nature of the product

Companys objectives & the specific market

situation

The size of the potential market


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DOMESTIC

The stage-one company is domestic in its focus,vision, and operations.Its orientation is ethnocentric.This company focuses upon domestic markets, domesticsuppliers, and domestic competitors.The environmental scanning of the stage-one company is limited to

the domestic familiar, home-country environment.The unconscious motto of a stage-one company is:

If its not happening in the home country, its not happening.The worlds graveyard of defunct companiesis littered with stage-one companies that were sunkby the Titanic syndrome: the belief, often unconsciousbut frequently a conscious conviction, that they were

unsinkable and invincible on their own home turf


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INTERNATIONAL The stage-two company extends marketing, manufacturing,

and other activity outside the home country. When a company decides to pursue opportunities outside

the home country, it has evolved into the stage-twocategory.

In spite of its pursuit of foreign business opportunities, thestage-two company remains ethnocentric, or home countryoriented, in its basic orientation.

The hallmark of the stage-two company is the belief thatthe home-country ways of doing business, people,practices, values, and products are superior to those foundelsewhere in the world. The focus of the stage-two

company is on the home-country market.


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INTERNATIONAL V/SDOMESTIC

1. APPROACH2. GEOGRAPHIC SCOPE3. OPERATING STYLE4. ENVIRONMENT5. FOREIGN EXCHANGE RATE6. EXPORT-IMPORT PROCEDURE7. HUMAN RESOURCES8. MARKETS AND CUSTOMERS9. TARRIFS


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MULTINATIONAL

The focus of the stage-three company is multinational or instrategic terms, multi- domestic.The orientation of this company shifts from ethnocentric to

polycentric. .A polycentric orientation is the assumption that markets and ways

of doing business around the world are so unique that the onlyway to succeed internationally is to adapt to the different aspectsof each national marketIn stage-three companies, each foreign subsidiary is managed as

if it were an independent city-stateThe subsidiaries are part of an area structure in which each

country is part of a regional organization that reports to worldheadquarters.The stage-three marketing strategy is an adaptation of the

domestic marketing mix to meet foreign preferences andpractices.


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Global

strategic departure The global company will have either a

global marketing strategy or a globalsourcing strategy, but not both

Global companies plan activities on aglobal basis. By operating in more thanone country benefits from savings oreconomies on activities such as R&D,

marketing, operations and finance areachieved which may not be available todomestic companies


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GLOBAL

Stage and Company Global

Strategy Global

Model Centralized Hub

View of the world Global Markets Or

resources

Orientation Mixed Orientation

Key Assets All in home country exceptmarketing and sourcing

Role of Country units Marketing and SourcesKnowledge Marketing and sourcing

developed jointly andshared


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Transnational

A Transnational Corporation (TNC) differsfrom a traditional MNC in that it does notidentify itself with one national home

An example of a TNC is Nestl who employsenior executives from many countriesand try to make decisions from a globalperspective rather than from one

centralised headquarters.


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Transnational

Stage and Company Transnational

Strategy Global

Model Integrated Network

View of the world Global markets and resources

Orientation Geocentric

Key Assets Dispersed, Interdependent andSpecialized

Role of Country units Contributions to companies worldwide

Knowledge All functions developed jointly and

shared

Stage and Company Transnational

Strategy Global

Model Integrated Network

View of the world Global Markets andResources

Orientation Geocentric

Key Assets Dispersed Interdependentand Specialized

Role of Country units Contributions to companyworldwide

Knowledge All functions developedjointly and shared

Key Job Best person selected

regardless of nationality


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Attributes of a TransnationalCompany

Looking forward to Global markets &resources

Special labs located different location but will

work on the same project.

Role of each country is to contributecompany world-wide.

Best Person is selected regardless ofnationality.

R&D is part of integrated worldwide R&D planand is decentralized.


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TOCONCLUDE

STRATEGY

MODEL

VIEW OF THE WORLD ORIENTATION

KEY ASSETS

ROLE OF COUNTRY UNITS KNOWLEDGE


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Thank you

international stages and orientations

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