Strengths Underpinning International Business (Ethnocentric, Polycentric, Regiocentric & Geocentric)
Market globalization is quickly realized due to the following factors (Rusdin, 2002):
- the widespread implementation of free trade systems and policies;
- technological developments, especially telecommunications and information;
- a change in the map of world political power due to the collapse of communist socialists, especially in Eastern European and ex-Soviet countries, which resulted in a superior capitalist system.
The strengths that underlie international business (BI) are oriented towards management oriented. Orientation is an assumption or belief that is often not realized about the nature of this world. In this case, there are three orientations that become guidelines in BI, namely ethnocentric, polycentric, and geocentric, which are then expanded to become regionscentric.
Ethnocentric is an assumption or belief of the country of origin that is superior. Someone with this orientation sees similarities in the market and believes that products and habits that are successful in one's own country are superior. Therefore, it must be used everywhere.
In ethnocentric companies, operations abroad are considered less important than domestic, mainly carried out to throw off excess domestic production. Plans for foreign markets are developed in domestic offices using policies and procedures that are identical to those used in the country. There is no systematic marketing research carried out abroad, there are no fundamental product modifications, and there is no genuine attention to the needs of customers in foreign markets.
Polycentric is the opposite of ethnocentric, which is a belief based on that each country is unique and different. The way to succeed in each country is to be able to adjust to the unique differences of each country. In the polycentric stage, a subsidiary is established in the foreign market. Each subsidiary operates independently and sets its own marketing goals and plans. Marketing is organized on a country-by-country basis with each country having its own unique marketing policy.
In geocentric and re-centric, the company views the region and the rest of the world as a market and tries to develop integrated marketing strategies regionally or globally. This is called the world view that sees similarities and differences in markets and countries and tries to create a global strategy that is truly responsive to local needs and desires. Regiocentric is a geocentric orientation that is limited to a regional area. That means management must have a world view towards the regional area, but will look at the rest of the world with an ethnocentric or polycentric orientation or a combination of both. Ethnocentric companies centralize their marketing management, polycentric companies decentralize, while geocentric and regionscentric companies integrate. More details can be seen in the figure below (Rusdin, 2002).
 |
| Management and Company Orientation |