In 1969, a globalization expert, Howard Perlmutter, developed a framework that showed how some corporations set up international offices in other countries and succeeded in the venture.
When a company is setting its path toward globalization, it should consider four important approaches regarding staffing and marketing. These four approaches were ethnocentric, regiocentric, polycentric, and geocentric.
EPRG framework provides a hint about how corporations decide to open their offices in foreign countries and what is the mode of operation, staffing, and marketing. These approaches are orientations based on what the businessman would think of marketing strategies and development options.
In 1969, Perlmutter did not give enough footage to R of regiocentric. In 1973 he and his colleagues added the regiocentric thing to the framework. Initially, the model was the EPG model, which became the EPRG model in 1973.
What Is The EPRG Model?
The EPRG model is a framework used in international marketing to analyze and develop strategies for global businesses. The acronym EPRG stands for Ethnocentrism, Polycentrism, Regiocentrism, and Geocentrism.
- Ethnocentrism refers to a domestic-focused approach in which a company’s values, products, and practices are based on the home country’s culture and traditions.
- Polycentrism is a more localized approach in which each market is treated independently, focusing on adapting to local needs and preferences.
- Regiocentrism takes a regional approach, focusing on the similarities and differences among markets within a particular region.
- Geocentrism is a global approach in which a company views the world as a single market and develops standardized marketing strategies that can be applied across all countries and regions.
The EPRG model helps companies determine their level of involvement and investment in international markets based on their approach to global marketing.
By understanding the EPRG model, businesses can develop effective marketing strategies tailored to each market’s needs.
Examples Of Understanding The Concept
This example of 3 companies gives you a clear idea of how they need to change their marketing and staffing approaches. Only then can they achieve success in the other country.
Company X has established a business in its home country. It wants to venture into business in other countries. The company thinks that since the staffing and marketing techniques it used in the home country were successful, the same model can also be applied in a foreign country. But within a year, the company has to wrap over the business in a foreign country.
Company Y has a good business in its home country and wants to put its feet towards globalization. The company starts with small steps and learns how to apply the strategies.
Within a few months, the company understands that there must be alterations in business, marketing, and other strategies in a foreign country. So, it moves towards the path of success. The company started slowly but knew the right approach, adopted the same, and moved forward.
Company Z has a good business in the home country. It already understands that the same venture will also be great in foreign countries.
But, there will be changes in the approaches. There has to be marketing in different ways. Understanding the locales and the culture can help in hiring the staff. The company started with proper planning and quickly established itself on foreign grounds.
The marketing strategies, work styles, culture, etc., differ in other countries. Hence, while the company looks forward to globalization, it should consider the four crucial profiles. These include ethnocentric, regiocentric, polycentric, and geocentric. It is crucial to understand these profiles individually. Read on, and you will get an idea.
Four Profiles Of The EPRG Model
Ethnocentric orientation is the company’s mindset wherein it believes that the strategies applied in the home country will also be successful in the foreign base.
This type of orientation does not let the company make products that suit the requirements of the global business. Sometimes, there may be a lack of special talents in a foreign country, which might lead to an ethnocentric orientation.
The company may have more faith in the home country staff. This kind of thinking will make the company involve the home company staff in the foreign business. The company is not ready to change its marketing and promotional strategies.
They want to keep it the same, just like in the business in the home country. An ethnocentric orientation may lead to issues in foreign business and markets. There is less room for innovation and flexibility.
However, there are some benefits too that are associated with ethnocentric orientation. These include:
- There will be cost-effective strategies and decisions when the business treads a path for globalization with the ethnocentric approach. Thus, things will start at low costs, which might make the business lucrative if things go as per the plan.
- Having a similar approach to staffing would mean that there is no change in the staff background, and hence it will be quite easy to coordinate with the staff who take care of the home business and those that take care of the foreign business.
2. Regiocentric orientation
The egocentric approach understands the difference between cultures, social values, and product demand worldwide.
Thus, the company comes up with many offices in various regions. While the company caters to a broad customer base in foreign countries, it has its specialization and holds on business in many countries. The region-based approach and the likes and dislikes of the people there are considered while the businessman plans the promotional and staffing strategies.
The biggest benefit of this type of orientation is the business caters to a broad range of customers, and hence it need not think of any specific strategy that would be localized in nature. The recruitment will be from the countries where the offices are based.
Thus, the approach respects the cultural fit and understands that strategies must differ based on the region. This approach is somewhere between an ethnocentric approach and a polycentric approach.
3. Polycentric orientation
Polycentric orientation identifies that the business model in a foreign country should be different than that in the local country. When the business starts in a foreign country, the model should be like the other businesses.
For example, when it opens its restaurants in different countries, Mcdonald’s considers the likes and dislikes, tastes, and culture of the people living there. This type of orientation helps it run its business like the locales.
The staffing and marketing strategies would be based on the polycentric approach. Thus, there are two benefits that the business might achieve. The first is the business’s ability to attract customers to buy and use the products because the customers can relate to the company’s values.
The staff also stays motivated as it identifies with the company’s attitude and the company’s respect for the culture of that foreign country. Polycentric orientation works best when the companies want to expand in developing and third-world countries.
4. Geocentric orientation
Some companies think the whole world is a market and the customers’ tastes and needs are similar worldwide.
This approach works without ignoring the customer’s tastes based on where they live and the kind of demands they have as they make strategies in such a way that they can develop a new market and a new taste.
The biggest benefit here is the way staffing is done. The staff gets chosen based on their skills and not based on where they live. Large corporations may want to take risks and hire special talents at various locations.
But with the kind of strategies that they use, they are often successful. In this approach, there are no cultural barriers or language bars.
There are only a few strategies to implement. Hence, it can become easy for the company to handle things as they come on their way. They have the best talents in the world, so they never look back at any stage.
If a company seriously looks out for globalization, then it should move towards a geocentric orientation. The company should be ready to apply the strategies to develop a geocentric perspective.
Strategies To Use For Adopting A Geocentric Perspective
To become dynamic and progressive, businesses must move to a geocentric orientation when they want to start a business in other countries or adopt globalization. Apply these strategies and make your organization a geocentric organization.
Create cultural awareness for your team.
When the company adopts the geocentric approach to globalization, it should raise cultural awareness among the team members and the staff. Even though the world is seen as a market, there will always be differences in tastes, cultures, and ways of life.
The cultural and language bars should not stop the company from globalizing its business. Rather, it should work towards instruments like training and grooming the staff and team members so that they can accept any challenge.
Implementing cross-cultural management strategies
There would be changes in workplace values based on where it is located. The company must respect the same. The company must implement cross-cultural management strategies to stay in sync with the host countries.
These would include things like the leadership team meeting with the staff in the host country once a month, collaborating with the foreign managers to know the developments in the current projects, etc. There are diverse teams, so there will be a need for certain communication strategies too. The company understands this and gets ahead with the solutions.
Monitor the response, progress, and developments.
The company should be good enough to understand what kind of progress is happening in foreign business. The managers and leaders must give time to those projects and understand the development process details too. There will be different managers and different teams. The company must provide a framework for better sync and collaboration.
The organization should be ready for innovation and creativity. There will be diverse teams, people working, and cultural backgrounds; the company can expect a great talent pool. With all these positives and the right strategies, the company should move towards globalization, keeping in mind the geocentric orientation that seems to be the best.
The company’s headquarters and the subsidiaries must have a relationship that will provide the base for the company’s success.
The company must make strategic decisions so that the staff, consumers, and teams in other countries collaborate with the company’s headquarters.
There should be good control, but the company must also impart flexibility, innovation, and creativity. There are four orientations as per the EPRG framework.
It is crucial to understand that the last orientation, geocentric, is perfect when the large corporation looks forward to globalization opportunities. International marketing, staffing, and management will need specialized teams, strategies, and work cultures.
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