Ethnocentric, Polycentric, Regiocentric, And Geocentric Management Orientations For International Business

Ethnocentric orientation for global pursuit

Question:

Discuss about the Design of Decision Support Systems.

Global marketing is a practice that allows the business organization to take advantage of the different global operations. Therefore, the business organizations get opportunities through the global marketing in order to meet the global objectives in a business. However, global marketing has a close relationship with the management orientations (Keegan and Green 2013). Ethnocentric, geocentric, regiocentric and polycentric are the four types of management orientations that influence the global marketing. The products that have universal demand are important for the global marketing. In order to sell a product internationally global marketing is important to adopt for an organization. However, it is crucial for the business organization to concentrate on the global market besides the domestic market. Global pursuit is impacted by the different orientations of the management. This assignment deals with the effects of polycentric, geocentric, ethnocentric and regiocentric management orientations on the Global pursuit and different aspects of such orientations.

Ethnocentric orientation is the important type of management orientation and leaves a big impact on the global pursuit. Ethnocentric orientation is one type of international recruitment. In this process, the HR recruits the right candidate for the right designation (Rao-Nicholson et al. 2017). The main aim of the ethnocentric approach is to select a candidate based on their skill and willingness in order to become flexible and mix with the organizational culture. In the context of Global pursuit, ethnocentric orientation is significant as it enables the candidates to mix with the organizational culture. However, if the Global pursuit follows the ethnocentric orientation then the main key positions of the organizations will be filled with the candidates of the parent country. Therefore, in this management orientation, the entire decision related to the management is undertaken by the headquarters of the organization. As for example, Zara follows ethnocentric orientation, which enables such organization to make a better coordination between the parent and the host organization. However, the core culture of the parent organization is transferred to the subsidiary organizations through the ethnocentric management process (Mihai et al. 2017). This orientation enables an organization to keep control over its subsidiary in an effective manner. On the other hand, the parent organization can observe the business operation of the subsidiary in a proper way. Therefore, technical skill can be transferred through this way from one branch to another branch. As for example, Zara has established an effective communication between its parent organization and the subsidiaries through this ethnocentric management orientation (Viardot and Nylund 2017).

Polycentric orientation and its impact on global marketing

The global pursuit influenced both positively and negatively through this management orientation.  As for example, the employee of the parent country often face difficulties in the host countries due to cultural differences as they are not able to flexible in the working place in the context of Zara (Kim and Tanner 2017).  However, often-cultural clashes occur between the employees of the host country and the executive of the parent country. For the subsidiaries, it is costly to hire the experts from the parent country that is a big drawback of such orientation, which affects the global pursuit. On the other hand, government restriction is another big barrier of such management orientation to expand or establish branches in a new country. In this approach, failure rate is higher than the success rate. This approach can be effective for the business organization while the organization establishes a new branch in a host country and the executives come from the parent country to give shape the operation process in the host country. Hence, it can be said that the ethnocentric orientation is good for the Global pursuit to enhance the global marketing, however, it is important to carry out such management practice in a proper way to establish a business in a new country.

Polycentric orientation is another type of management orientation that is followed by many organizations in order to develop the global marketing strategies. The management of an organization holds the polycentric approach believe that polycentric orientation is suitable for a business that allows the organization to make a unique operation in the business in global market. However, the business organizations can develop more strategies to run their business in a particular country via polycentric management orientation. As for example, Lidl follows the polycentric orientation while establishes the new business in a country. In the polycentric orientation, the management adopts new strategies for a particular country, which is beneficial for their business. However, Lidl developed their strategy based on UK market as their first business established in that country. Hence, when the subsidiaries are improved and got more profit then they are separated from the mother company. These let to develop their businesses according to their strategy in particular country (Das and Saha 2017).

According to management orientation, it is difficult for the parent organization to understand the local market of a country (Keegan and Green 2013). Hence, by following this orientation the subsidiaries become independent and enhance the business based on the demand of the local market in different countries. Hence, it can be said that polycentric marketing is the enhancement of the ethnocentric viewpoint in the context of a business. Therefore, the business owner understands that it is important to develop the new strategy based on the current market of a country, which gives shape the business in a host country. As for example, Phillips Electronic having their headquarters in Netherland recently following the polycentric orientation in order to develop their products. However, every country is unique in terms of price, product quality, and consumer behavior. Based on this thought Phillips Electronic uses the Polycentric orientation to identify the present criteria of the local market in each country where they have established their subsidiaries. Thus, the marketing executives of such organization develop new marketing approaches with the high degree of autonomy in a country (Zulkafli et al. 2017). Hence, the polycentric orientation enables an organization to create the marketing strategy based on the specific country, which enhances the global operation of an organization and influences the global pursuit. A major difference of the ethnocentric orientation and polycentric orientation is ethnocentric orientation focuses on the integration of organizational culture and the employees while polycentric orientation highlights on the establishment of strategy in a particular country for business.

Regiocentric orientation, comparison and similarities between different geographical regions

Regiocentric orientation is another vital type of management orientation that followed by many organizations in the global marketing. Regiocentric orientation is an intermediary stage between the geocentric and polycentric orientation. However, the business organizations accept such regional orientation in order to cover the local markets of a group of countries by using regional marketing policies. This policy includes comparable characteristics to enhance the global marketing (Tzempelikos and Gounaris 2015). In this orientation, the organizations develop the strategy based on a large geographic region rather than the single countries. Differences and similarities between the different geographical regions are observed in this process. This orientation enables an organization to get facilities through establishing an interaction between the national and the local business executive of an organization.

As for example, Nike one of the popular organization of athletic-shoe follows the regiocentric orientation. However, in the year 2009, they have created a new regional group by including several countries like Western Europe, Eastern Europe, Greater China, emerging market of Japan and North America (Distelhorst et al. 2016). They develop their business strategies based on the differences and similarities of such regions. According to the viewpoint of such organization, the customer behavior of Western Europe is different from the Eastern Europe and Japan market demand is far away from the rest parts of Asia. Based on such differences Nike is able to create their global marketing strategy. Nike follows transformation from the single market to multiple market and products. 

Apart from Nike, Toyota is another organization that follows regiocentric management orientation. Africa, Oceania, Europe, North America, Asia, Latin America, and the Caribbean are included in their new regional orientation. This organization uses adaption approach based on the demand and economic condition of the countries. However, they offer a similar car in some regions while sometimes their offer is restricted to some specific countries. In American continents, Asia and Europe Toyota offer similar products as the economic conditions of the countries within such continents are similar (Chiarini and Vagnoni 2015). Therefore, Toyota follows hybrid strategy, as different countries possess different standards and consumer behavior. According to such management orientation, Toyota states that product adoption is based on the local market demand while there are the differences between the prices based on the different regions. Thus, they have used hybrid strategy to enhance their global marketing strategy. Regiocentric orientation has a major drawback. As for example, the mangers of different subsidiaries at different regions are not able to understand the perspectives of the managers of head office. On the other hand, it is difficult for an organization to provide more experts having international experience to each subsidiary, which ensures the poor decision-making (Chen et al. 2017).

Geocentric orientation and its universal approach

Geocentric orientation focuses on the cultural similarities and the differences. In order to achieve the orientation of an organization geocentric management orientation is beneficial (Lin 2015). According to the concept of geocentric orientation, the entire global market should be treated as the potential market. However, the strategies should be developed based on the nature of an individual market. Geocentric organization adopts the universal strategy based on the local market instead of taking individual strategy. Such universal strategy helps an organization to survive in all kinds of markets. However, a geocentric orientation enables the managers of subsidiaries and the head quarters to make a collaborative work. As for example, Samsung follows the geocentric approach in their management orientation. In order to develop a group of senior executives with international experience, this organization adopts such orientation. This enables them to make contacts across the borders. The geocentric approach allows the managers of an organization to fulfill the business objectives (Mohammadi et al. 2015).  Therefore, any unfair treatment in the organizational operation can be reduced by such management orientation as it brings cultural diversity and reduces the racial discrimination within an organization. One of the major positive aspects of such orientation it enables the employees to share knowledge and learn from each other by sharing their experience.

Geocentric orientation highlights on the cultural value of the individuals in an organization, as it is an essential part of every work sector. However, Toyota also follows geocentric orientation to bring cultural diversity to the employees. For the best organization, it is important to get the return, which is higher than their expenditure. For this purpose, it is important for such organizations to satisfy their customers and make them loyal. Hence, by following geocentric orientation Toyota is able to establish a collaborative work between their employees, which is a big part to meet the demand of the customers (Okoro 2013). For a successful organization, it is necessary to train their employees in a proper way and make them loyal. This is part of geocentric orientation. Geocentrism highlights on the collaborative work between the employees of headquarters and the subsidiary branch and it are more efficient than polycentric and ethnocentric orientation. Training is the best part of geocentric orientation, which is costly. This is the major drawbacks of geocentric orientation. However, Toyota and Samsung have successfully implemented the geocentric orientation to develop a collaborative association between the employees of the mother country and the subsidiaries, which is beneficial for their business in the global market.

The above piece of work highlights on the ethnocentric, polycentric, regiocentric and the geocentric management orientation. However, such different orientations have both positive and negative impact on the different organizations. It is important for the organization to make a similarity between the headquarters and the subsidiaries. Therefore, the executives of the headquarters need to take control over the business operation of the subsidiaries that is done by following the ethnocentric orientation. However, the polycentric orientation makes the subsidiaries independent. On the other hand, the experts should have the international business knowledge to understand the operational level of the subsidiaries. Regocentric focuses on the similarities and differences of the subsidiaries while geocentric focuses on the cultural similarities and the dissimilarities. It can be concluded that each management orientation needs to be applied properly to make an organization global and effective in the international market.

References

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