abhishreshthaa
Abhijeet S
GLOBAL PRICING POLICY ALTERNATIVES
1. Extension/Ethnocentric: This policy requires that the price of an item be the same around the world and that the importer absorbs freight and import duties.
The problem with this policy is that extension pricing does not respond to the competitive and market conditions of each national market and, therefore, neither maximize the company’s profits in each national market nor globally.
2. Adaptation/Polycentric: This policy permits subsidiary or affiliate managers to establish whatever price they feel is most desirable in their circumstances. The only constraint on this approach is in setting transfer prices within the corporate system.
Under this policy, managers would take advantage of the price disparities by buying in the lower-price market and selling in the higher-price market.
There is also the problem that under such a policy, valuable knowledge and experience within the corporate system concerning effective pricing strategies would not be applied to each local pricing decision.
3. Invention/Geocentric: In this approach, a company neither fixes a single price worldwide nor remains aloof from subsidiary pricing decisions, but instead strikes an intermediate position.
The company works on the assumption that there are unique local market factors that should be recognized in arriving at a pricing decision. These factors include local costs, income levels, competition, and local marketing strategy.
1. Extension/Ethnocentric: This policy requires that the price of an item be the same around the world and that the importer absorbs freight and import duties.
The problem with this policy is that extension pricing does not respond to the competitive and market conditions of each national market and, therefore, neither maximize the company’s profits in each national market nor globally.
2. Adaptation/Polycentric: This policy permits subsidiary or affiliate managers to establish whatever price they feel is most desirable in their circumstances. The only constraint on this approach is in setting transfer prices within the corporate system.
Under this policy, managers would take advantage of the price disparities by buying in the lower-price market and selling in the higher-price market.
There is also the problem that under such a policy, valuable knowledge and experience within the corporate system concerning effective pricing strategies would not be applied to each local pricing decision.
3. Invention/Geocentric: In this approach, a company neither fixes a single price worldwide nor remains aloof from subsidiary pricing decisions, but instead strikes an intermediate position.
The company works on the assumption that there are unique local market factors that should be recognized in arriving at a pricing decision. These factors include local costs, income levels, competition, and local marketing strategy.