Contemporary Issues In International Business

Prof. Chu Han Kyu

Individual assignment #1
Park Kyung-Ryul #4913981

Reading 1-1 The tortuous evolution of the Multinational Corporation

In these days, almost of companies in the world desire to becoming multinational corporation.

They know that multinational corporation tend to be regarded as more progressive, dynamic, geared

to the future than provincial companies. They want to spread their subsidiaries not only all over the

country, but also all over the world. Usually, the multinational corporation has headquarters in one

country and operates subsidiaries in other countries. However, globalization is going faster,

management strategy has a great change.

According to the article, there are three identifiable attitudes; ethnocentrism, polycentrism and

geocentrism, toward to building a multinational enterprise. The article said that Ethnocentrism can

be found in companies that have many nationalities and foreign partner. It has complex organization

in home country, but very simple in subsidiaries. Because ethnocentrism is based on the attitude

that one’s own group is superior to others, headquarter decide and control their management

strategy, subsidiaries just follow their decision. In this attitude, executives decision in headquarters

is most important.

As a second attitude, polycentrism is begin with the assumption that culture of various coutries are

different and that foriegners are difficult to understand. So local nationals occupy all of the key

position in their local subsidiaries and they operate company with their own management strategy.

Compare to ethnocentrism, headquarter control just financial decision. Becuase of low relative

between headquarter and subsidiaries, polycentrism is easy to immediately resonse to

unexepectable accident happen in their location.

The third attitude is geocentrism. The concept of geocentrism is to globally unite both

headquarters and subsidiaries. They form a collaborative network to establish world standards and
 Contemporary Issues In International Business
Prof. Chu Han Kyu
Individual assignment #1
Park Kyung-Ryul #4913981
make key business decisions. In geocentrism, power of headquarters tend to be decreased and

communication between subsidiaries more encouraged as contrated with ethnocentrism and

polycentrism.

In the article, authors insist that multinational corporation need for evolutinary movement from

ethnocentrism to polycentrism to geocentrism. I think that it is obviously true and geocentrism has

to be last step of the globalization. There are many kind of obstacles intrupting to globalization,

however, such as deepest economic gap between developed country and undeveloped country,

political changes in local market, cultural differnces and language barriers. In this situation, the role

of executives is very important. Most of executives are busy increasing market share, building

facilities in other country. It is not a course to geocentrism, but just window-dressing. They still

remain in ethno and polycentrism. Executives must effort to know where the company stands on,

find requires which is needed in subsidiaries.