The EPG Model is a framework for a firm to better pinpoint it's strategic profile in terms of International Business Strategy. It contains three elements - Ethnocentrism, Polycentrism and Geocentrism.
The Importance of the EPG Model is mainly in the firm's awareness and understanding of its specific focus. Because a strategy based mainly on one of the three elements can mean significantly different costs or benefits to the firm, it is necessary for a firm to carefully analyze how their firm is oriented and make appropriate decisions moving forward. In performing an EPG analysis, a firm may discover that they are oriented in a direction that is not beneficial to the firm or misaligned with the firm's corporate culture and generic strategy. In this case, it would be important for a firm to re-align its focus in order to ensure that it is correctly representing the firm's focus.
There is no international firm today whose executives will say that ethnocentrism is absent in their organization.The word ethnocentrism derives from the Greek word "ethnos", meaning “nation” or “people,” and the English word center or centrism. A common phrase set for ethnocentrism is “tunnel vision.” In this context, ethnocentrism is the view that a particular ethnic group’s system of beliefs and values is morally superior to all others. Ethnocentrism is characterized by or based on the attitude that one’s own group is superior to others.The ethnocentric attitude is found in many companies that have many nationalities and culture groups working together. It is a natural tendency for people to act ethnocentrically because it is what they feel comfortable with.IT is based on past experiences and learned behaviors and norms.
The ethnocentric attitude is seen often when home nationals of various countries believe they are superior to, more trustworthy and more reliable than their foreign counterparts. Ethnocentric attitudes are often expressed in determining the managerial process at home and overseas.There is a tendency towards ethnocentrism in relations with subsidiaries in developing countries and in industrial product divisions.
Organizations that are designed with an ethnocentric focus will portray certain tendencies. These include an organizations headquarters that’s decision-making authority is relatively high. Home standards are applied to the evaluation and control of the organization.These standards are to ensure performance and product quality. Ethnocentric attitudes can be seen in the organizations communication process. This is evident when there is constant advice, and counsel from the headquarters to the subsidiary. This advice usually bears the message, “This works at home; therefore it must work in your country".Organizations that portray ethnocentrism usually identify themselves with the nationality of the owner.For example, Wal-Mart is seen as an American company because its headquarters are located in America. The crucial critical concept of ethnocentrism in international organizations is the current policy that recruits from the home country are hired, and trained for key executive position in the organization. The ethnocentric attitude is a centralized approach. With the centralized approach, the training originates at the headquarters and than corporate trainers travel to the subsidiaries, and often adapt to local situations.
There are many costs that ethnocentrism can incur on an international organization. Using the centralized approach can cause inefficient staffing problems in the organization, this is because the employed staff will incur high financial costs to the global business as they have to pay for the transfer costs of the staff coming from the home country to overseas.This also could bring inefficiency to the business if the new staff is not able to fit in and be culturally compatible in their newly situated location. There is often ineffective planning due to poor feedback from the international...
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