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Hyun-ji Kim

on 3 October 2013

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Transcript of Perlmutter's




Hyunji Kim
1. About Perlmutter
(1) Ethnocentric
(2) Polycentric
(3) Regiocentric
(4) Geocentric

3. Direction of development
2. EPRG Model
(1) Ethnocentric
(3) Regiocentric
(4) Geocentric
3. Direction of development
1. About Perlmutter
In 1979, the model was extended with an additional component. It is EPRG model.
A world authority on globalization
Pioneer on the internationalization of firms, cities and other institutions
In 1969, he bundled his insights by publishing
the EPG model.
The way strategic decisions are made
How the relationship between headquarters and its subsidiaries is shaped.
Specialized in the evolution of multinational corporations.
Home country orientation
Advantages :
Home country products are modified
Its own pricing and promotion policy
The sales force in each country
Local employees are more effective for this task
Possess a strong regional identity
belong to the same cultural dimensions.
Overseas operations = as secondary
= to dispose of “surplus”
Employees of the home country are recruited and developed for the key positions
Promotion are similar to the home country
"The foreign market does not differ from the domestic markets."
Nationals from the organization's home country are more capable to drive international activities
The subsidiary is highly dependent on headquarters.
Host country orientation
(2) Polycentric
Creates a unified corporate culture
Overcomes a potential shortage of qualified managers
Can lead to cultural short-sightedness
and to not promoting the best and brightest in a firm.
Helps transfer core competences more easily
Do not adapt their products to the needs of other countries
NISSAN : From ethnocentric to polycentric model
Its brands will not be accepted by consumers due to cultural differences
Disadvantages :
Example :
Adaptation is necessary.
Gives an equal importance to every country’s domestic market.
Each subsidiary operates independently of the others.
Separate product lines
Regional orientation
Allocates the foreign markets
in homogeneous market clusters.
In order to cover the similar needs of
potential consumers
Such as the Europe, America and Asia-Pacific
Employees of the regions origin
Example :
Denmark, Norway, Finland and Sweden
Pakistan, Bangladesh and India
Advantage :
less expensive to implement than ethnocentricity
It can limit career mobility for both local and foreign nationals
Isolate headquarters from foreign subsidiaries
Reduces opportunities to achieve synergy
Disadvantages :
Low possibility of the economies of scale
High prices of products due to high investments
Adaptation of products to the needs and wants of particular countries
Example :
Ford Motors, Toyota, General Motors, Nissan, etc.
Favors neither home country nor foreign countries
World orientation
A global approach which is to target “global consumers”
Emphasizes interdependencies and aims for a collaborative approach
between headquarters and subsidiaries
The main idea is to borrow from every country what is best.
Focuses on the world as a whole single market
The best employee available regardless of his nationality or origin.
Advantages :
Uses human resources efficiently
Helps to build a strong culture and informal management networks
Disadvantages :
National immigration policies may put limits to its implementation
A bit expensive compared to polycentrism
It fully depends on constant global market research, which requires a lot of investment and time.
European Silicon Structures
Example :
Company in Luxembourg,
Headquarter in Munich,
Research facilities in England,
Factory in France
Full transcript