Marketing Management Individual Assignment 1. The definition of EPRG orientation and its practice in international companies/local companies * ethnocentric (home-country oriented) An ethnocentric firm views the business from the perspective and values of the home country. Policies and practices are likely to be designed by home-country nationals with little or no variation for international operations. Ethnocentric oriented international companies believe that anything worked at home must also work abroad.
For example: Nissan using ethnocentric orientation during its first few years of exporting cars and trucks to the U. S. market. Nissan’s cars were designed for mild Japanese winter, the vehicle were difficult to start in many parts of the U. S. during winter there. In northern Japan many car owners would put blankets over the hoods of their cars. Nissan’s assume that Americans would do the same. * Polycentric (host country-oriented) In contrast with ethnocentric, a polycentric firm operates according to the principle that each country of operation is different.
Polycentric is a highly market-oriented. Each market is considered unique, that’s why the marketing mix, product strategies, pricing strategies etc is different for each country. Example: Citicorp’s financial services around the world operated on a polycentric basis. James Bailey, one Citicorp executive, offered this description of the company: “we were like in a medieval state. There was a king and his court, are they in charge? No. The land barons are who were in charge. King and his court may declare this or that, but the lord barons who went and did their thing to their appointed land.
With that statement we can interpret that even the owner of company in headquarter stating this and that, but each country has some differences, and we should makes some changes in order to make our company succeed in other country. * Regiocentric (regionally-oriented) Firm treats a region as a uniform market segment and adapts a similar marketing strategy within region but not across region. For examole: Mc Donald not serving pork and slaughter animals through Halal process only in Middle East and some muslim-dominated countries. * Geocentric (world-oriented)
The geocentric approach considers the whole world as a single market and attempts to formulate integrated marketing strategies. The firm recognizes both similarities and differences in cultures and markets. Best practices are adopted on a global basis and adapted for local conditions where necessary. Nestle and other multinational company is using geocentric orientation. Colgate Palmolive is an example for a company which using geocentric approach. It has been operating internationally for 50 years and its products are households in more than 170 countries. 2.
The practice of each of the entry modes (exporting, licensing, franchising, contract manufacturing, strategic alliances, joint ventures and foreign directt investment) please provide example for each entry strategy done by each local company and international company * Exporting The home company exports their product to host country company/distributor. It is the safest entry strategy to start expanding company overseas. By exporting we would learn the market situation in overseas market. And it is less risky and less cost than to manufactures the goods in host country.
The example of exporting is kecap Bango and bumbu Bamboe in European market, especially French. Kecap Bango and bumbu Bamboe export their goods to Indian and Asian store in France. The target market is of course Indonesian consumer who lives there. Another example is Teh Botol in carton pack, it sells its product by helping of Indonesian embassy in Paris, France. * Licensing In licensing the home firm agrees to permit a company in host country to use the manufacturing, processing, trademark, know-how or some other skill provided by the licensor. For example, Coca Cola give license to United Bottlers to make Coke in Zimbabwe.
Franchising A home company which using franchising (franchisor), grants another ( a company or individual) the rights to distribute goods or services using franchisor’s brand and system in exchange for fees. Mc Donalds is known to use franchise as its market strategies through the world. In Indonesia, alfamart and indomaret are using franchising as their strategy. But they still using it within Indonesia not overseas. * contract manufacturing In contract manufacturing the firm decide to enter by contracting a manufacture of its product in target market.
In example GAP contract manufacture in developing countries to manufacture and sells them. The products can be made to the conditions and specific requirements of the local market * strategic alliances Strategic alliances firm unite with competitor to pursue a set of assented goals remain independent after the formation of the alliance. The partner firms share the benefits of the alliance and the control of the performance of assigned tasks and the partner firms contribute on a continuing basis to one or more key strategic areas.
For example, in 2005 Adidas (a German company) announced its acquisition of Reebok. Mr. Herbert Hainer, the CEO of Adidas, expected to cut costs by 125 million Euros in the next three years by sharing information technology, synergies in sales and distribution, and cheaper sourcing. However, the new combined company will continue to run separate headquarters and sales forces, and keep most distribution centers apart * joint ventures In joint ventures the firms in which two or more investors share ownership and control over property rights and operation.
In Zimbabwe, Olivine industries have a joint venture agreement with HJ Heinz in food processing. * foreign direct investment The firm makes a direct investment in a production unit in a foreign market. It is the greatest commitment since there is a 100% ownership. The international firm can obtain wholly foreign production facilities in two primary ways; It can make a direct acquisition or merger in the host market and It can also develop its own facilities from the ground up. Multinational company are already using foreign direct investment, like Nestle in many countries in the world including Indonesia, Unilever, etc