2. Ethnocentric Approach
Strategic decisions are made at headquarters
and all key positions in domestic and foreign
countries are held by headquarter employees.
The Ethnocentric approach entails the notion
that home country attitudes, management
style, knowledge, evaluation criteria and
managers are better than anything that the
host country can provide.
3. Advantages & Disadvantages of
Ethnocentric Approach
Advantages Disadvantages
When lack of qualified and or
skilled employees in the host
country.
Little need to recruit qualified host
country nationals
Greater control or loyalty over host
country nationals
Little need to train parent
company or host country nationals
Key decisions being centralized.
Limits to the promotion of
employees, which might lead to
reduced productivity.
The time taken for expatriate
managers to adapt to the host
country.
The variation in compensation
packages between different
countries.
4. Polycentric Approach
An approach where by each subsidiary is treated
as a distinct national entity with some authority
in the decision making process.
These subsidiaries are usually managed by
locals, who are seldom promoted to
headquarters.
5. Advantages and disadvantages of
Polycentric Approach
Advantages Disadvantages
Employing host country nationals
eliminates language barriers.
Avoids adjustments issues for
expatriates.
There is no need for expensive
cultural and language training.
Less expensive to employ a host
country national
Avoid the turnover of key personnel.
Parent headquarter is isolated from
the foreign subsidiaries.
Host country managers have limited
opportunities for promotion because
they do not gain experience in foreign
countries.
6. Regiocentric Approach
An approach that reflects the geographic
strategy and structure of a multinational
organization, with more managers in the pool
from which to draw talent.
It allows the movement of staff within the
geographic operations of a multicultural
operations and offers the opportunity for
development of management succession
programs.
7. Advantages and disadvantages of
Regiocentric Approach
Advantages Disadvantages
There is an interaction between
regional and subsidiary executives.
A sense of understanding for local
conditions
The ability of a multinational to
move from an ethnocentric or
polycentric approach to a
regiocentric approach.
This can constrain an organization
from globalization.
Usually employees are promoted
to regional headquarters and not
to parent headquarters.
8. Geocentric Approach
In this approach the multinational
corporation (MNC) is taking a global
approach to its operations.
Each subsidiary makes a contribution
because of its unique competencies.
9. Advantages and disadvantages of
Geocentric Approach
Advantages Disadvantages
MNC develops a pool of labour that
can be employed globally in the
organization.
It has no problem with the
isolation of employees.
Capable managers can adopt to
different cultures.
Host country usually want their
local nationals employed and could
therefore use immigration controls
to put pressure on the parent or
home company to employ locals.
Certain immigration
documentation is time consuming.
It can be expensive to implement
owing to increased training and
relocation costs.
10. Thank You
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