Approaches of international business

and difference between domestic

and international business
► Approaches of International Business

1. Ethnocentric Approach
2. Polycentric Approach
3. Regiocentric Approach
4. Geocentric Approach
1. Ethnocentric Approach

 This approaches to international business focus on the values, ethics, and

belief of the home country. All the strategies first formulated for the
domestic nation or domestic business focus on the international business is
secondary. Businesses first cater to the demand of the domestic market and
trade surplus is distributed to a foreign nation. Overseas operations are
operated from the head office of the domestic country by domestic
employees.
◉ Examples of Ethnocentric Approach – Indian clothes, dresses, food, and
beverage are exported to foreign nations where a large
number of Indian live.
2. Polycentric Approach

 As per this approach, the business focuses on each host country

because they consider that each country is unique in terms of
customer demand, customer preference, and taste so if
businesses want to succeed in each country they should adapt
according to the host country’s requirements. The business
opens its subsidiary in each oversea market and businesses
adopt different marketing plans and strategies as per the host
country’s needs.
◉ Examples of Polycentric Approach – McDonald, Starbucks,
Google Doodle
3. Regiocentric Approach

 Under this approach, businesses divide the whole world into different
regions based on their common regional, social & cultural environment,
economic, and political factors. Marketing strategies and business plans
are formulated in regional headquarters for the entire group of country
or regionManagers are hired or transferred from different countries
lying within the same region. Managers are hired or transferred from
different countries lying within the same region.
◉ Example of Regiocentric Approach – Firms divide groups or regions on
the basis of unique similarities like SAARC countries, the Baltic region, and
the Scandinavian region.
4. Geocentric Approach

 According to the Geocentric approach, businesses consider the whole world is

the same as one country for their business operation. Businesses select the
best talent from the entire globe and operate with their large number of a
subsidiary that is located around the globe that coordinate with the head
office. This approach is used by big business giants which have large-scale
business operations and a significant presence around the globe.
◉ Examples of Geocentric Approach – Apple, Coca-Cola, Dell
Differences between Domestic and
International Business
Domestic Business
Definition
Domestic business involves those
economic transactions that take place
within the geographical boundaries of
a country.
Buyer and Seller
Both the buyer and seller belong to
the same country in domestic
business.
International Business
International business involves those
economic transactions that take place
outside the geographical boundaries of
a country.
The buyer and seller belong to
different countries in international
business.
Currency International businesses deal with
Domestic businesses deal with the same different currencies since the
currency since both the buyer and seller buyer and seller are not from the
are from the same country.
same country.
Customers
There is greater homogeneity in terms of
the nature of customers of domestic There is greater heterogeneity in
businesses. terms of the nature of customers of
international businesses.
Geographical Boundaries
Business Research is less complex and
relatively cheaper for domestic businesses
compared to international organisations. Business Research is more complex
and relatively expensive for
Capital Investment international businesses compared
Capital investment is lower for companies
that are involved in domestic business.
to domestic companies.

Capital investment is higher for

The Factors of Production
domestic business has greater mobility
The international business has lesser
of factors of production compared to
mobility of factors of production
international business.
compared to domestic business.

Restrictions
Domestic business involves lesser nternational business involves greater
restrictions than international restrictions than domestic business.
business.

Quality Standards
The quality standards for domestic
business tend to be relatively lower
than international business.
The quality standards for international
business tend to be relatively higher
than domestic business.
Conclusion

 The difference between Domestic and International Business indicates

that a company must do both to survive and grow in the market. Both
these forms of businesses have their advantages, for any organisation
that wants to succeed in these markets must design its business
strategies accordingly.
Kajal gupta
V. Manisha
Preeti devi pate
Shivagini Yadav