Description
types of international companies viz., MNC,Global,etc. and the EPRG model followed by them.
International Marketing
•MNC, Global companies •EPRG Model
Multinational Companies
MNCs, also known as TNCs are organizations which extend their industrial and marketing operations through a network of their branches or MOFAs -40,000 MNCs with 2,50,000 overseas MOFAs in the world. -Financial assets in at least one country other than home country -Usually a centralized head office for global management -Create jobs, wealth and improve technology of host country -Critics : Undue political influence on government, can exploit developing nations
e.g. IBM, PepsiCo, Ranbaxy, TCS, Vodafone, Tata Motors
Multinational Companies
A multinational company can organize it?s operations in different countries either of the following five alternatives Branches Subsidiary Companies Joint venture companies Franchise holders Turnkey Projects The manifold reasons are 1. Expansion of market territory 2.Marketing Superiorities 3.Financial Superiorities 4.Technological Superiorities 5.Product Innovation
Multinational Companies
OBJECTIVES OF MNCs
To expand the business beyond the boundaries of a home country Minimize cost of production, especially labor cost Capture lucrative foreign market against international competitors Make diversification internationally effective so that a steady growth of business could be achieved Make best use of technological advantages by setting up production facilities abroad
Multinational Companies
BENEFITS RECEIVED FROM MNCs
Transfer of technology Increase in export and decrease in import Contribution to research and development Quality improvement and reduced domestic monopoly Increased standard of living Professionalization of management in the host country MNCs are profit making organizations which pay high dividends, motivating resource mobilization among investors in host country.
Global Companies
Global companies have invested and are present in many countries. They market their products through the use of the same coordinated image/brand in all markets. Generally one corporate office that is responsible for global strategy. Emphasis on volume, cost management and efficiency. •About 1/3 of world GDP is generated by business activities. •Growth also is generated by business activities.
Global Companies
1. DRAWS RESOURCES FROM A GLOBAL POOL capital, labor, materials 2. VIEWS THE WORLD AS ITS HOME 3. ESTABLISHES A WORLDWIDE PRESENCE IN ONE OR MORE BUSINESSES but may go global by chance or design 4. PURSUES A GLOBAL BUSINESS STRATEGY
5. TRANSCENDS EXTERNAL AND INTERNAL BOUNDARIES
Global Companies
Rank Company Country Industry 2011 revenue in USD 1 2 3
Royal Dutch Shell Exxon Mobil Wal-Mart Stores
Netherlands† United States United States
Petroleum Petroleum Retail
$484.4 billion $452.9 billion $446.9 billion
4
5
BP
Sinopec
United Kingdom
China
Petroleum
Petroleum
$386.4 billion
$375.2 billion
6 7 8 9 10
China National Petroleum State Grid Chevron ConocoPhillips Toyota Motor
China China United States United States Japan
Petroleum Power Petroleum Petroleum automobile
$352.3 billion $259.1 billion $245.6 billion $237.2 billion $235.3 billion
Source : Fortune Global 500 list
Management Orientations
• EPRG is an International business model
• This model was proposed by Wind, Douglas, & Perlmutter in1973 • Includes four dimensions ? Ethnocentric ? Polycentric ? Regiocentric ? Geocentric
Ethnocentric
• The term was coined by American Yale University professor, William Sumner • Word derives from the Greek word "ethnos", meaning “nation” or “people,” and the English word center or centrism • Ethnocentric individual will judge other groups relative to his or her own particular ethnic group or culture • Ethnocentrism is the view that a particular ethnic group?s system of beliefs and values is morally superior to all others
Historical Examples
• European Imperialism
• Apartheid policy in South Africa
• Nazi Germany
Ethnocentric Organization
• Management believes that products and practices that succeed in home country will be successful in host country • Head quarters holds decision-making authority
• Business practices of the home country are predominant
• These companies with business outside home country are often described as International companies
• Example-Nissan in early days
Costs & Benefits of Ethnocentrism
Costs Benefits
Ineffective planning Difficulties while handling local issues Fewer Innovations Lack of flexibility & responses
Greater control Uniform standards
Polycentric
• Opposite of ethnocentric • Management believes that each country where company does a business is unique • So each subsidiary develops its own business & marketing strategy • These companies are often described as Multinational companies • Ex.Unilever
Costs & Benefits polycentrism
Costs
Inefficient use of homecountry experience Additional localization cost of of universal product
Benefits
Better sales due to betterinformed local management Better understanding of local market More Innovations
Geocentric
• Management views that entire world is the potential market
• Believes in developing Integrated world market strategy • Known as Transnational or Global companies • Its main goal is to globally unite both headquarters and subsidiaries
Costs & Benefits Geocentrism
Costs Time spent in consensus decision-making Benefits Integrated global outlook
„Too wide 'distribution of Improved local country power management
Higher cost involved Better quality of products and services Worldwide utilization of best resources
Regiocentric
• Management views regions as unique & seeks to develop integrated regional strategies
• Selects management personnel from within a region of the world which most closely resembles that of the host country • Disadvantage of this policy is that sometimes employees from home countries are not unselected
• Ex. Tata Steel operations in Europe
doc_957989327.pptx
types of international companies viz., MNC,Global,etc. and the EPRG model followed by them.
International Marketing
•MNC, Global companies •EPRG Model
Multinational Companies
MNCs, also known as TNCs are organizations which extend their industrial and marketing operations through a network of their branches or MOFAs -40,000 MNCs with 2,50,000 overseas MOFAs in the world. -Financial assets in at least one country other than home country -Usually a centralized head office for global management -Create jobs, wealth and improve technology of host country -Critics : Undue political influence on government, can exploit developing nations
e.g. IBM, PepsiCo, Ranbaxy, TCS, Vodafone, Tata Motors
Multinational Companies
A multinational company can organize it?s operations in different countries either of the following five alternatives Branches Subsidiary Companies Joint venture companies Franchise holders Turnkey Projects The manifold reasons are 1. Expansion of market territory 2.Marketing Superiorities 3.Financial Superiorities 4.Technological Superiorities 5.Product Innovation
Multinational Companies
OBJECTIVES OF MNCs
To expand the business beyond the boundaries of a home country Minimize cost of production, especially labor cost Capture lucrative foreign market against international competitors Make diversification internationally effective so that a steady growth of business could be achieved Make best use of technological advantages by setting up production facilities abroad
Multinational Companies
BENEFITS RECEIVED FROM MNCs
Transfer of technology Increase in export and decrease in import Contribution to research and development Quality improvement and reduced domestic monopoly Increased standard of living Professionalization of management in the host country MNCs are profit making organizations which pay high dividends, motivating resource mobilization among investors in host country.
Global Companies
Global companies have invested and are present in many countries. They market their products through the use of the same coordinated image/brand in all markets. Generally one corporate office that is responsible for global strategy. Emphasis on volume, cost management and efficiency. •About 1/3 of world GDP is generated by business activities. •Growth also is generated by business activities.
Global Companies
1. DRAWS RESOURCES FROM A GLOBAL POOL capital, labor, materials 2. VIEWS THE WORLD AS ITS HOME 3. ESTABLISHES A WORLDWIDE PRESENCE IN ONE OR MORE BUSINESSES but may go global by chance or design 4. PURSUES A GLOBAL BUSINESS STRATEGY
5. TRANSCENDS EXTERNAL AND INTERNAL BOUNDARIES
Global Companies
Rank Company Country Industry 2011 revenue in USD 1 2 3
Royal Dutch Shell Exxon Mobil Wal-Mart Stores
Netherlands† United States United States
Petroleum Petroleum Retail
$484.4 billion $452.9 billion $446.9 billion
4
5
BP
Sinopec
United Kingdom
China
Petroleum
Petroleum
$386.4 billion
$375.2 billion
6 7 8 9 10
China National Petroleum State Grid Chevron ConocoPhillips Toyota Motor
China China United States United States Japan
Petroleum Power Petroleum Petroleum automobile
$352.3 billion $259.1 billion $245.6 billion $237.2 billion $235.3 billion
Source : Fortune Global 500 list
Management Orientations
• EPRG is an International business model
• This model was proposed by Wind, Douglas, & Perlmutter in1973 • Includes four dimensions ? Ethnocentric ? Polycentric ? Regiocentric ? Geocentric
Ethnocentric
• The term was coined by American Yale University professor, William Sumner • Word derives from the Greek word "ethnos", meaning “nation” or “people,” and the English word center or centrism • Ethnocentric individual will judge other groups relative to his or her own particular ethnic group or culture • Ethnocentrism is the view that a particular ethnic group?s system of beliefs and values is morally superior to all others
Historical Examples
• European Imperialism
• Apartheid policy in South Africa
• Nazi Germany
Ethnocentric Organization
• Management believes that products and practices that succeed in home country will be successful in host country • Head quarters holds decision-making authority
• Business practices of the home country are predominant
• These companies with business outside home country are often described as International companies
• Example-Nissan in early days
Costs & Benefits of Ethnocentrism
Costs Benefits
Ineffective planning Difficulties while handling local issues Fewer Innovations Lack of flexibility & responses
Greater control Uniform standards
Polycentric
• Opposite of ethnocentric • Management believes that each country where company does a business is unique • So each subsidiary develops its own business & marketing strategy • These companies are often described as Multinational companies • Ex.Unilever
Costs & Benefits polycentrism
Costs
Inefficient use of homecountry experience Additional localization cost of of universal product
Benefits
Better sales due to betterinformed local management Better understanding of local market More Innovations
Geocentric
• Management views that entire world is the potential market
• Believes in developing Integrated world market strategy • Known as Transnational or Global companies • Its main goal is to globally unite both headquarters and subsidiaries
Costs & Benefits Geocentrism
Costs Time spent in consensus decision-making Benefits Integrated global outlook
„Too wide 'distribution of Improved local country power management
Higher cost involved Better quality of products and services Worldwide utilization of best resources
Regiocentric
• Management views regions as unique & seeks to develop integrated regional strategies
• Selects management personnel from within a region of the world which most closely resembles that of the host country • Disadvantage of this policy is that sometimes employees from home countries are not unselected
• Ex. Tata Steel operations in Europe
doc_957989327.pptx