Module 8 Week 1 – Dq 1 - 2
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WEEK 1 – DQ 1 - ETHNOCENTRIC, POLYCENTRIC, REGIOCENTRIC AND GEOCENTRIC MANAGEMENT ORIENTATIONS WORD COUNT: 852 INTRODUCTION Today, the world is a much-interconnected marketplace than it was 5 decades ago. The ease of international travel, technology and the Internet have been cited by many scholars as key factors that have accelerated the pace at which the world has really “shrank”. However, trade and economics have probably played greater role than the 3 factors mentioned earlier. The need for expansion has driven inter-company competition. The quest for growth has driven the need to conquer new geographies. Mrak (2000) posited that internationalization of production, trade across international borders and capital flow across countries are major drivers of globalization. Protectionism is a major restraining force against globalization. Protectionism and globalization seem to be in constant struggle for dominance. However, as events of the last few decades have shown, globalization is winning the battle against protectionism. One country that seems to have embraced both sides of this paradox is China. In a bid to attain world economic dominance, it has protected the Chinese market against major global brands (mostly with U.S. and Western origins) like Apple and Google for decades while exporting its cheap local production to these same countries. Today, China has overtaken a number of countries on key economic and manufacturing indices (Morrison, 2014). China overtook Japan to become the second
Transcript of Module 8 Week 1 – Dq 1 - 2
WEEK 1 – DQ 1 - ETHNOCENTRIC, POLYCENTRIC, REGIOCENTRIC AND GEOCENTRIC MANAGEMENT ORIENTATIONS
WORD COUNT: 852
INTRODUCTIONToday, the world is a much-interconnected marketplace than it was 5 decades ago. The ease of international travel, technology and the Internet have been cited by many scholars as key factors that have accelerated the pace at which the world has really “shrank”. However, trade and economics have probably played greater role than the 3 factors mentioned earlier. The need for expansion has driven inter-company competition. The quest for growth has driven the need to conquer new geographies. Mrak (2000) posited that internationalization of production, trade across international borders and capital flow across countries are major drivers of globalization. Protectionism is a major restraining force against globalization. Protectionism and globalization seem to be in constant struggle for dominance. However, as events of the last few decades have shown, globalization is winning the battle against protectionism. One country that seems to have embraced both sides of this paradox is China. In a bid to attain world economic dominance, it has protected the Chinese market against major global brands (mostly with U.S. and Western origins) like Apple and Google for decades while exporting its cheap local production to these same countries. Today, China has overtaken a number of countries on key economic and manufacturing indices (Morrison, 2014). China overtook Japan to become the second largest world economy a few years ago. It has been predicted that if it maintains current GDP growth, China will even overtake the U.S. to become world’s largest economy by 2017. (PWC, 2013)
The ERPG framework measures the attitude and response of an organization towards market opportunities. These attitudes are a reflection of the company’s assumptions, values and beliefs on what the world truly is. (Keegan et al, 2013)
ETHNOCENTRIC MANAGEMENT ORIENTATIONEthnocentrism happens when an organization (or a person) sees the world and the opportunities therein from the point of view of its own superiority. It could also express itself as an indifference towards even bigger opportunities than the ones of the company’s country. This indifference can be as a result of bias, prejudice or simply ignorance. Foreign and domestic operations are viewed differently from the point-of-view of superiority. In the early days, Nissan was a more ethnocentric organization as it expected American owners of Nissan to replicate the Japanese culture of covering the hood with blanket to prevent engine freeze during winter. On a personal and domestic note, I believe that despite the seeming globalization of the Heineken beer and the company, quite a number of its staff in foreign operations are still ethnocentric, believing in the superiority of the Dutch system and business values/ assumptions on almost all issues – from manufacturing to marketing and advertising. In my interactions with Heineken Nigeria as advertising clients, I have had to attempt to correct and “liberalize” most of their views and reconcile it with the Nigerian cultures. One of such TV advertising that ran in Nigeria but did not resonate with the target audience is “The Date” TV commercial which can be found at (https://www.youtube.com/watch?v=57zo8O5pDXc)
POLYCENTRIC MANAGEMENT ORIENTATIONThis school of thought believes that all views are important and somewhat equal. It encourages local operations to adapt business strategies to the needs and wants of local consumers and opportunities. It believes that every country is different from the other and reflects this thinking in how it approaches each market. PepsiCo international, another client of my organization’s clients (Insight Communications http://insightnigeria.com/base/) appears to be a more polycentric organization. Not only does the local office determines and executes its business strategies, the packaging of the Pepsi bottle in Nigeria is also unique. In addition to this, we develop local advertising for the Nigerian consumers of Pepsi. PepsiCo
and every organization with this mindset can be considered as multinationals.
REGIOCENTRIC MANAGEMENT ORIENTATIONThis is a larger version of ethnocentric orientations – decisions are not made at national levels but at regional levels. It assumes that consumers and business challenges as well as opportunities are similar at regional levels and as such, should be approached with the same solution at regional levels. General Motors used to be a good example of Regiocentric Company when designs of vehicles were done at regional levels rather than national or global levels.
GEOCENTRIC MANAGEMENT ORIENTATIONThis considers the entire world as one single potential market and develops global strategies for it. A geocentric company sees similarities and differences in different markets as opportunities and develops a global strategy to appropriate them (Keegan, 2013). Today, GM is more of a geocentric organization than it was 2 decades ago. It sees the phenomenal success of Toyota and learnt its lesson.
CONCLUSIONSThe implications of each of the above orientations vary with the dynamics of the market and with time. Consumers from countries with strong national identities and values tend to consume local brands at the expense of imported or international brands. “Consumer ethnocentrism” is quite common in countries like China and possibly Japan. (Yoo et al, 2005) where they have adversarial attitude towards imports. This is true until recently in most of these countries, including Russia.
REFERENCES: Mrak, M. (2000) Globalization: Trends, Challenges
and Opportunities for Countries in Transition. United Nations Industrial Development Organization, Vienna, 2000. Available Online from http://www.unido.org/fileadmin/import/userfiles/puffk/mrak.pdf. Accessed 21st March 2014
Morrison, W.M. (2014) China’s Economic Rise: History, Trends, Challenges, and Implications for the United States. Congressional Research Service. Available Online from: https://www.fas.org/sgp/crs/row/RL33534.pdf. Accessed 21st March 2014
PWC (2013) The BRICs and beyond: prospects, challenges and opportunities. World in 2050. Pwc Economics Available Online from: https://www.pwc.com/en_GX/gx/world-2050/assets/pwc-world-in-2050-report-january-2013.pdf. Accessed 21st March 2014.
Keegan, W.J. & Green, M.C. (2013) Global marketing. 7th ed. Upper Saddle River: Prentice Hall.
Yoo, B and Donthu, N (2005) The Effect of Personal Cultural Orientation on Consumer Ethnocentrism: Evaluations and Behaviors of U.S. Consumers Toward Japanese Products. Journal Of International Consumer Marketing. Vol. 18(1/2) 2005 by The Haworth Press, Inc. Available Online from: http://iba8010kelly.alliant.wikispaces.net/file/view/Ad+Article1.pdf. Accessed 21st March 2014.
