INTERNATIONAL STAGES AND ORIENTATIONS

A GROUP PRESENTATIONS BY
FINAL YEAR M.COM STUDENTS MANASAGANGOTRI

SHRUTHI.D SHAHSHIDHAR SHALINI SHOBHA SANDEEP

INTRODUCTION
BUSINESS WANTS TRADE INTERNATIONAL TRADE 16 CENTURY DOMESTIC

17 CENTURY
18 CENTURY

INTERNATIONAL
MULTINATIONAL

INTERNATIONAL MARKETING
INTERNATIONAL BUSINESS

19 CENTURY
20 CENTURY

GLOBAL
TRANSNATIONAL

ETHNOCENTRIC
The word ethnocentrism derives from the Greek word "ethnos", meaning nation or people, and the English word center or centrism. In this context, ethnocentrism is the view that a particular ethnic groups system of beliefs and values is morally superior to all others. 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 have many nationalities and culture groups working together. It is a natural tendency for people to act ethnocentrically because it is what they feel comfortable with. It is based on past experiences and learned behaviors and norms.

Ethnocentric Orientation Overseas operations are viewed as secondary to domesticoperations. A means of disposing of surplus domestic production. Overseas operations are conducted from home- countrybasestrong reliance on export agents. Domestic product-mix without major modifications for the overseas markets. International marketing characterized by Extensionstrategy. Cultural factors in overseas markets are overlooked for instance most Indian handicrafts exporters hardlyappreciated the market difference and need for adaptationof marketing strategy A number of Indian products sold abroad such as dresseslike salwar kurta, Saries and food items such as dosa mix, idli mix vada mix, sambhar mix, gulab jamoon mix, papad and Indian sweets are primarily targeted at Indian population abroad

Benefits
Simple organization Greater communication and control

Costs
Ineffective Planning due to poor feedback Subsidiary valuable executive flight Fewer innovations Inability to build a high caliber local org. Lack of flexibility and responsiveness

POLYCENTRIC
Polycentrism can be defined as a host country orientation; which reflects host countries goals and objectives with respect to different management strategies and planning procedures with regard to international operations. Under a polycentric perspective, a companys management team believes that in international business practices local preferences and techniques are usually found most appropriate to deal with the local market conditions.

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 market conditions. 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 to understand the local way of doing business. Marketing is characterized by Adaptation strategy

BENEFITS
Intense exploitation of local markets Better sales due to better-informed local management More initiative for local products More host government support Good local managers with high morale

COSTS
Waste due to duplication Localization costs of universal products Inefficient use of home-country experience Excessive regard for local traditions at expense of global growth

Characteristic features

Ethnocentrism

Polycentrism

1) Management orientation

Home country orientation

Host country orientation

2) Perception of the market

Domestic market is superior. Focuses on the similarities between the home and the foreign markets Foreign markets are extensions of domestic market Extension of domestic strategy to foreign markets

Each national market is distinctive Focuses on the differences between the home and foreign markets Localization

3) Marketing strategy

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.

Thinks of exporting to the neighboring countries of the host country Considers regional environment Regions are consistent with some natural boundaries Regional autonomy in decision making Staff move with in the designated region, rather than globally

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

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

Forces that push an organization to the geocentric notion of managing MNC

Competition

For effective target

Growing World markets

Advantages:
Better quality of products & services

worldwide utilisation of resources Higher global profits It makes sense for firms pursuing either a global or transnational strategy

Disadvantages:
High communication & travel costs

Educational costs at all levels Time spent in consensus decision making

Too wide distribution of power

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

DOMESTIC
The stage-one company is domestic in its focus,vision, and operations. Its orientation is ethnocentric. This company focuses upon domestic markets, domestic suppliers, 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 companies is littered with stage-one companies that were sunk by the Titanic syndrome: the belief, often unconscious but frequently a conscious conviction, that they were
unsinkable and invincible on their own home turf

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-two category. In spite of its pursuit of foreign business opportunities, the stage-two company remains ethnocentric, or home country oriented, in its basic orientation. The hallmark of the stage-two company is the belief that the home-country ways of doing business, people, practices, values, and products are superior to those found elsewhere in the world. The focus of the stage-two company is on the home-country market.

INTERNATIONAL V/S DOMESTIC

1. 2. 3. 4. 5. 6. 7. 8. 9. APPROACH GEOGRAPHIC SCOPE OPERATING STYLE ENVIRONMENT FOREIGN EXCHANGE RATE EXPORT-IMPORT PROCEDURE HUMAN RESOURCES MARKETS AND CUSTOMERS TARRIFS

MULTINATIONAL
The focus of the stage-three company is multinational or in strategic 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 only way to succeed internationally is to adapt to the different aspects of each national market In stage-three companies, each foreign subsidiary is managed as if it were an independent city-state The subsidiaries are part of an area structure in which each country is part of a regional organization that reports to world headquarters. The stage-three marketing strategy is an adaptation of the domestic marketing mix to meet foreign preferences and practices.

Global
strategic departure The global company will have either a global marketing strategy or a global sourcing strategy, but not both Global companies plan activities on a global basis. By operating in more than one country benefits from savings or economies on activities such as R&D, marketing, operations and finance are achieved which may not be available to domestic companies

GLOBAL
Stage and Company Global

Strategy
Model View of the world

Global
Centralized Hub Global Markets Or resources

Orientation
Key Assets Role of Country units

Mixed Orientation
All in home country except marketing and sourcing Marketing and Sources

Knowledge

Marketing and sourcing developed jointly and shared

Transnational
A Transnational Corporation (TNC) differs from a traditional MNC in that it does not identify itself with one national home An example of a TNC is Nestl who employ senior executives from many countries and try to make decisions from a global perspective rather than from one centralised headquarters.

Transnational
Stage and Company
Stage and Strategy Company Strategy

Transnational
Transnational Global Global

Model Model

Viewof the world View of the world Orientation Key Assets Key Assets units Role of Country Role of Country units Knowledge Key Job
Knowledge Orientation

Integrated Network Integrated Network

Geocentric

Global markets andand Global Markets resources Resources Geocentric Dispersed, Interdependent
Specialized and

Dispersed Interdependent Contributions to companies worldwide and Specialized

All functions developed jointly and Contributions to company shared

worldwide

All functions developed jointly and shared Best person selected regardless of nationality

Attributes of a Transnational Company

Looking forward to Global markets & resources Special labs located different location but will work on the same project. Role of each country is to contribute company world-wide.

Best Person is selected regardless of nationality.

R&D is part of integrated worldwide R&D plan and is decentralized.

TO CONCLUDE
STRATEGY MODEL VIEW OF THE WORLD ORIENTATION KEY ASSETS ROLE OF COUNTRY UNITS KNOWLEDGE

Thank you