Page 14 - DMGT547_INTERNATIONAL_MARKETING

Unit 1: Basics of International Marketing

conduct business outside the home country can be described as international companies; they Notes
adhere to the notion that the products that succeed in the home country are superior and,
therefore, can be sold everywhere without adaptation.

Did u know? In the ethnocentric, international company, foreign operations are viewed as
being secondary or subordinate to domestic ones.
An ethnocentric company operates under the assumption that “tried and true” headquarters
knowledge and organisational capabilities can be applied in other parts of the world. Although
this can sometimes work to a company’s advantage.

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.
1.4.2 Polycentric

The polycentric orientation is the opposite of ethnocentrism. The term polycentric describes
management’s often-unconscious belief or assumption 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 structure. Until recently, Citicorp’s executive, offered
this description of the company: “We were like a medieval state. There was the kind and his
court and they were in charge, right? No. It was the land barons who were in charge. The kind
and his court might declare this or that, but the land barons went and did their thing.” Realizing
that the financial services industry is global sing; CEO John Reed is attempting to achieve a
higher degree of integration between Citicorp’s operating units. Like Jack Welch at GE, Reed is
moving to instill a geocentric orientation throughout his company.

1.4.3 Regiocentric and Geocentric Orientations

In a company with a regiocentric orientation, management views regions as unique and seeks to
develop an integrated regional strategy.

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 discusses its attention on Europe is regiocentric.
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, sometimes, known as a global or transnational company.
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.
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.

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