international stages and orientations
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INTERNATIONAL
STAGES ANDORIENTATIONS
A GROUP PRESENTATIONS BY,FINAL YEAR M.COM STUDENTS
MANASAGANGOTRI
SHRUTHI.D
SHAHSHIDHARSHALINI
SHOBHASANDEEP
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INTRODUCTION
BUSINESS
TRADE
WANTS
INTERNATIONAL TRADE
INTERNATIONAL MARKETING
INTERNATIONAL BUSINESS
17 CENTURY
18 CENTURY
19 CENTURY
20 CENTURY
16 CENTURY
GLOBAL
TRANSNATIONAL
MULTINATIONAL
DOMESTIC
INTERNATIONAL
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ETHNOCENTRIC The word ethnocentrism derives from the Greek word "ethnos",
meaning nation or people, and the English word center orcentrism.
In this context, ethnocentrism is the view that a particular ethnicgroups system of beliefs and values is morally superior to allothers. Ethnocentrism is characterized by or based on the attitude
that ones own group is superior to others. The ethnocentric attitude is found in many companies that havemany nationalities and culture groups working together.
It is a natural tendency for people to act ethnocentrically becauseit is what they feel comfortable with.
It is based on past experiences and learned behaviors and norms.
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Ethnocentric Orientation
Overseas operations are viewed as secondary todomesticoperations.A means of disposing of surplus domestic production.
Overseas operations are conducted from home- countrybase-strong reliance on export agents.
Domestic product-mix without major modifications for the overseasmarkets.
International marketing characterized by Extensionstrategy.Cultural factors in overseas markets are overlooked for instancemost Indian handicrafts exporters hardlyappreciated the market
difference and need for adaptationof marketing strategyA number of Indian products sold abroad such as dresseslike
salwar kurta, Saries and food items suchas dosa mix, idli mix vada mix,
sambhar mix, gulab jamoon mix, papad and Indian sweets are
primarily targeted at Indian population abroad
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Benefits
Simple organization
Greater communication and control
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Costs
Ineffective Planning due to poorfeedback
Subsidiary valuable executive flight
Fewer innovations
Inability to build a high caliber local
org. Lack of flexibility and responsiveness
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POLYCENTRIC Polycentrism can be defined as a host
country orientation; which reflects hostcountries goals and objectives withrespect to different management
strategies and planning procedures withregard to international operations. Under a polycentric perspective, a
companys management team believesthat in international business practiceslocal preferences and techniques areusually found most appropriate to dealwith the local market conditions.
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Polycentric Orientation
Polycentric approach is highly market oriented
Each market is considered unique in terms of its market environment.
Local marketing techniques are best suited to deal with local marketconditions.
Subsidies are established in overseas markets. Environment of each market is considered while formulating marketing
strategy.
Emphasis is put on local laws, custom and culture and great care is taken tounderstand the local way of doing business.
Marketing is characterized by Adaptation strategy
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BENEFITS
Intense exploitation of local markets
Better sales due to better-informedlocal management
More initiative for local products
More host government support
Good local managers with highmorale
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COSTS
Waste due to duplication
Localization costs of universalproducts
Inefficient use of home-countryexperience
Excessive regard for local traditionsat expense of global growth
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Characteristic features Ethnocentrism Polycentrism
1) Management orientation Home country orientation Host country orientation
2) Perception of themarket
Domestic market is superior.Focuses on the similaritiesbetween the home and the
foreign marketsForeign markets are extensionsof domestic market
Each national market isdistinctiveFocuses on the differences
between the home and foreignmarkets
3) Marketingstrategy
Extension of domestic strategyto foreign markets
Localization
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Regiocentric or regional orientation is defined as
a functional rationalization on a more than one
country basis.
The marketing firms here segment the markets
on the basis of regional similarities.
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Thinks of exporting to the neighboring countriesof the host country
Considers regional environment
Regions are consistent with some naturalboundaries
Regional autonomy in decision making
Staff move with in the designated region, ratherthan globally
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Advantages:
More economical & manageable
Help the firm to move from a purely ethnocentric or
polycentric approach to a geocentric approach
Provide some importance to local conditions
Disadvantages:
Produce federalism at a regional rather than a country
basis & constrain the firm from taking a global stance
Staffs career advancement still limited to regional
headquarters, not the parent country headquarters
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o The entire world is just like a single country
o Select the employees from the entire globe
o Independence to subsidiary companies
o Focus on world oriented approach
o Does not show a bias to either home or host country
o The sole goal is to globally unite both headquarters &
subsidiaries
o Product differentiation, diversifying functions & R & D
o It attempts to balance both global integration & local
responssiveness
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Forces that push an organization to thegeocentric notion of managing MNC
Competition
For effective target
Growing World markets
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Advantages:
Better quality of products & services
worldwide utilisation of resources
Higher global profits
It makes sense for firms pursuing either a global or transnationalstrategy
Disadvantages:
High communication & travel costs
Educational costs at all levels
Time spent in consensus decision making
Too wide distribution of power
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Selection of suitable orientation depends
on following factor:
Size of the firm
Experience in overseas market
The nature of the product
Companys objectives & the specific market
situation
The size of the potential market
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DOMESTIC
The stage-one company is domestic in its focus,vision, and operations.Its orientation is ethnocentric.This company focuses upon domestic markets, domesticsuppliers, and domestic competitors.The environmental scanning of the stage-one company is limited to
the domestic familiar, home-country environment.The unconscious motto of a stage-one company is:
If its not happening in the home country, its not happening.The worlds graveyard of defunct companiesis littered with stage-one companies that were sunkby the Titanic syndrome: the belief, often unconsciousbut frequently a conscious conviction, that they were
unsinkable and invincible on their own home turf
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INTERNATIONAL The stage-two company extends marketing, manufacturing,
and other activity outside the home country. When a company decides to pursue opportunities outside
the home country, it has evolved into the stage-twocategory.
In spite of its pursuit of foreign business opportunities, thestage-two company remains ethnocentric, or home countryoriented, in its basic orientation.
The hallmark of the stage-two company is the belief thatthe home-country ways of doing business, people,practices, values, and products are superior to those foundelsewhere in the world. The focus of the stage-two
company is on the home-country market.
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INTERNATIONAL V/SDOMESTIC
1. APPROACH2. GEOGRAPHIC SCOPE3. OPERATING STYLE4. ENVIRONMENT5. FOREIGN EXCHANGE RATE6. EXPORT-IMPORT PROCEDURE7. HUMAN RESOURCES8. MARKETS AND CUSTOMERS9. TARRIFS
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MULTINATIONAL
The focus of the stage-three company is multinational or instrategic terms, multi- domestic.The orientation of this company shifts from ethnocentric to
polycentric. .A polycentric orientation is the assumption that markets and ways
of doing business around the world are so unique that the onlyway to succeed internationally is to adapt to the different aspectsof each national marketIn stage-three companies, each foreign subsidiary is managed as
if it were an independent city-stateThe subsidiaries are part of an area structure in which each
country is part of a regional organization that reports to worldheadquarters.The stage-three marketing strategy is an adaptation of the
domestic marketing mix to meet foreign preferences andpractices.
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Global
strategic departure The global company will have either a
global marketing strategy or a globalsourcing strategy, but not both
Global companies plan activities on aglobal basis. By operating in more thanone country benefits from savings oreconomies on activities such as R&D,
marketing, operations and finance areachieved which may not be available todomestic companies
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GLOBAL
Stage and Company Global
Strategy Global
Model Centralized Hub
View of the world Global Markets Or
resources
Orientation Mixed Orientation
Key Assets All in home country exceptmarketing and sourcing
Role of Country units Marketing and SourcesKnowledge Marketing and sourcing
developed jointly andshared
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Transnational
A Transnational Corporation (TNC) differsfrom a traditional MNC in that it does notidentify itself with one national home
An example of a TNC is Nestl who employsenior executives from many countriesand try to make decisions from a globalperspective rather than from one
centralised headquarters.
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Transnational
Stage and Company Transnational
Strategy Global
Model Integrated Network
View of the world Global markets and resources
Orientation Geocentric
Key Assets Dispersed, Interdependent andSpecialized
Role of Country units Contributions to companies worldwide
Knowledge All functions developed jointly and
shared
Stage and Company Transnational
Strategy Global
Model Integrated Network
View of the world Global Markets andResources
Orientation Geocentric
Key Assets Dispersed Interdependentand Specialized
Role of Country units Contributions to companyworldwide
Knowledge All functions developedjointly and shared
Key Job Best person selected
regardless of nationality
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Attributes of a TransnationalCompany
Looking forward to Global markets &resources
Special labs located different location but will
work on the same project.
Role of each country is to contributecompany world-wide.
Best Person is selected regardless ofnationality.
R&D is part of integrated worldwide R&D planand is decentralized.
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TOCONCLUDE
STRATEGY
MODEL
VIEW OF THE WORLD ORIENTATION
KEY ASSETS
ROLE OF COUNTRY UNITS KNOWLEDGE
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Thank you