An Introduction To International

Business
EPRG APPROACH

Ethnocentric Approach
Polycentric Approach
Regio-centric Approach
Geocentric Approach
 Ethnocentric Approach

• The domestic companies normally formulate their strategies ,

their product design and their operations towards the national
markets , customers & competitors.

• The company exports the same product designed for

domestic markets to foreign markets under this approach

• Suitability: this approach is suitable to the companies during

the early days of internationalization and also to the smaller
companies.
 There are no changes
Such companies do not
in product specification,
adapt their products to
price and promotion
the needs and wants of
measures between
other countries where
native market and
they have operations.
overseas markets.
Examples of Ethnocentric approach

 Hero cycles(exports to US, Germany,

Japan )
 Atlas cycles(sales to Bangladesh,
Denmark)
  Hero Cycles is exporting to many
countries under the brand name HAWK
is known for its ‘mass appeal’ & ‘cost
leadership’.
 Hero Cycles Ltd, recently also announced its
acquisition of majority stake in Avocet Sports Limited,
to mark its entry into the high-value cycle market in
Europe as part of its aggressive growth plans in
Europe. Avocet is one of the top three distributors of
bicycles, e-bikes, bicycle parts and accessories in the
UK.

 Recently the company has also acquired a majority

stake in Sri Lanka’s leading bicycle manufacturer BSH
Ventures, further boosting its manufacturing
capacity.
 Atlas Cycle, Sahibabad exports cycles &
cycle spares to over dozen countries
worldwide like Denmark, Germany,
Holland, Iraq, Kuwait, Bahrain, Qatar,
Saudi Arabia, Oman, UAE, Sri-Lanka,
Bangladesh, Myanmar etc.
 Altogether different approach for
foreign markets.
Polycentric Approach

The company establishes a foreign

subsidiary company and
decentralizes all the operations
and delegates decision making
authority to its executives.
The polycentric approach mostly
focuses on the conditions of host
country.
 In this approach, a company
gives equal importance to
every country’s domestic
market.
 Every participating country
is treated solely and
individual strategies are
carried out.
 This approach is especially
suitable for countries with
certain financial, political and
cultural constraints
Examples of polycentric
approach

Ford
Toyota Suzuki
Motors
Regio-centric approach

The foreign subsidiary

Markets more or less
considers the regional
same product designed
environment(e.g. Asian
under polycentric
Environment) for
approach in other
formulating policies and
countries of the region.
strategies.
In this approach a company
For example, countries like
finds economic, cultural or
Pakistan, India and
political similarities among
Bangladesh are very similar.
regions in order to satisfy
They possess a strong
the similar needs of
regional identity.
potential consumers.
Examples of Regio-centric
approach
 Pepsi
 Coke
 NAFTA: North America Free Trade
Agreement
 Punjab( more paneer products)
 Gujarat(more sugar content in food)
Geocentric Approach
 The entire world is like a single market for the
company.

 The headquarter coordinate the activities of

the subsidiaries.

 Each subsidiary functions like an independent

and autonomous company (product, policies,
design HR etc.)

 Finally, it tries to balance both global

integration and local responsiveness.
Examples
 Companies in insurance sector ,
banking sector and food chains
generally opt geocentric approach
 McDonalds
 Pizza Hut
 KFC’s
 Colgate
STAGES OF INTERNATIONALIZATION

Domestic company

International company

Multinational company

Global company

Transnational
company
Stage 1:Domestic company
 DC limits its operations , mission and
vision to the national political
boundaries.

 Diversification strategies only for

domestic markets.

 Example: Coal India

Stage 2:International company

 Some of domestic companies which grow beyond

their production , marketing capacities and think of
internationalizing their operations.

 Exploit the opportunities outside the domestic

country.

 Focus is domestic but extends their wings to the

foreign countries.

 Implements domestic country marketing mix and

business model to foreign markets.
Stage 3 : Multinational company

 The international companies learn that

the extension strategy will not work.

 The international companies turn into

multinational companies when they
start responding to the specific needs of
the different countries markets
regarding product, price and promotion.
 Example: HSBC , PepsiCo., Infosys
 Stage 4 : Global company
 A global company is one which has either
global marketing strategy or a global
strategy.
 The organization structure and key decision
making functions have a centralized
approach.
 Decisions like M&A, product launching.
 are much more complex organizations.
 They have invested in foreign
operations, have a central corporate
facility but give decision-making, R&D
and marketing powers to each
individual foreign market.
 Google
 Microsoft
 Kellogg