▪ Standardized marketing mix involves developing a standard product and

marketing it across the national border with the same communication,

pricing, and distribution strategy.
▪ With the advent and standardization of technology and more specifically that of
communications, customer needs are globally getting homogenized.
▪ This process or homogenization of needs is getting accelerated as trade barriers
come down one after another leading to globalization of markets.
▪ Worldwide communication has raised customers‘ expectations and demands for
better living standards, work life, and entertainment.
▪ This cuts across cultures and religions. Nothing better confirms this than the
success of brands like Coke, Pepsi, Levi's, Benetton readymade garments, Sony and
Panasonic electronic items, and even Hollywood films and soap operas made in the
US and different parts of the world that have diverse cultures and religions.
▪ These commonalities in customer preferences lead conclusively to the
standardization route in corporate strategy.

International Business Environment Arun Chandran 2

▪ This involves responding to differences in customer preferences arising out of cultural,
social, and religious barriers that divide nations.
▪ Helps in building sales, cost is way too high.
▪ Companies will not be able to derive economies of scale. (Which increases price or ruins business)
▪ Global firms will never be able to ensure identical brand image across the world market.
▪ Solution is to change the strategy rather than the product.
▪ Sunsilk shampoo from Unilever could achieve a higher penetration in the toiletries market in South Asia
only when it introduced sachet packs for single use and priced it at an affordable level of Re 1 in India
and comparable level in other South Asian countries as well.
▪ Maggi noodles, marketed by Nestle, could achieve a resounding success only when it included cooking
instructions in its TV commercials and on the pack and also added taste makers to suit Indian taste
buds.
▪ However, these and other successful global firms do not leave critical decisions like brand image,
brand identity, product focus or positioning to local affiliates.
▪ Nestle and Coca-Cola, standardized their product decisions but adapted their advertising, sales
promotion, distribution, and customer service to suit local country preferences and conditions .

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▪ Economies of scale refer to the cost advantage experienced by a firm when it
increases its level of output.
▪ It reduces the per-unit fixed cost. As a result of increased production, the fixed
cost gets spread over more output than before.
▪ It reduces per-unit variable costs. This occurs as the expanded scale of
production increases the efficiency of the production process.
▪ This is brought about by operational efficiencies and synergies as a result of an
increase in the scale of production.

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▪ EPRG stand for Ethnocentric, Polycentric, Regiocentric, and Geocentric.
It is a framework created by Howard V Perlmuter and Wind and Douglas
in 1969.
▪ It is designed to be used in an internationalization process of businesses and
mainly addresses how companies view international management orientations.
According to the EPRG Framework (or the EPRG Model), there are four
management approaches that an organization can take to get more involved in
international business substantially.
▪ The EPRG Framework suggests that companies must decide which approach is
most suitable for achieving successful results in countries abroad. For this
reason, the EPRG Framework can be a useful tool to utilize if a company does
not know yet how to manage business activities between companies in the
local country and a host country. The EPRG Framework is additionally useful
for making strategic decisions.

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▪ In this approach of the EPRG Framework, the company in a local country that wants
to do business overseas does not put in much effort to do research abroad about
the host country’s market. Instead, most of the market research is executed in the
headquarters in the local country.
▪ With this approach, the company seeks for markets abroad that share the same
characteristics as the local market so that the marketing strategy does not have to be
adapted. More specifically, the ethnocentric approach uses the same marketing
strategies that are created by local personnel and further utilized in multiple
countries.
▪ It is many times possible that companies that utilize this approach believe that local
products should not be adapted to the local need of countries abroad because the
products are already of high quality. Another reason could be that a specific product is
sold in large volume in the local market, and for this reason, it is believed it will do the
same in other markets abroad.
▪ The ethnocentric approach of the EPRG Framework has benefits but also downsides. At
first, the company saves a lot of operational costs that can be invested elsewhere.
But the downside is that the company does not build up new knowledge about the
market abroad, which could substantially increase sales volume if products and
strategies would be adopted to the needs of the host country.
International Business Environment Arun Chandran 6
▪ In the polycentric approach if a company has a local headquarter and a separate office
overseas in a host country that manages the operations in that or more countries, the
marketing strategies are locally created and implemented based on the local needs.
▪ Businesses that utilize the polycentric approach of the EPRG Framework strongly believe that
every market has its differences. For this reason, these types of companies implement different
marketing strategies for each market.
▪ In the polycentric approach, it is therefore easier to make strategic decisions based on current
cultural differences and political differences. Companies that use this approach can also more
easily adapt to changes in the market because of their decentralized decision-making authorities.
▪ The downside is that the local headquarter has less control over its operations abroad. As
long as the business operations in the host country demonstrate to be successful, this
might not be a problem. But if the business operations overseas show to be not too
profitable and result in losses, it is more difficult for the local company to minimize those
losses.
▪ However, companies that use this approach learn by doing. For this reason, a learning effect
occurs, and new knowledge is an intellectual asset of the company.
▪ If a company is the first to enter a market or offer an unfamiliar product, the local company has
first-mover advantages. It could have the best location in a host country to operate the business,
and this could additionally substantially increase profit margins.
International Business Environment Arun Chandran 7
▪ In a regiocentric approach of the EPRG Framework, businesses create and implement
internationalization strategies for specific regions. Companies that utilize this type
of approach use this for the area in which the local business is operated.
▪ It can also be that an organization utilizes two kinds of approaches. An organization can
use a regiocentric approach for the business in the region in which it operates.
And the same organization can use a polycentric or ethnocentric approach to do
business in countries outside the region.
▪ Businesses that use a regiocentric approach of the EPRG Framework many times believe
that the markets in the region share the same characteristics of the market in the home
country.
▪ It is still challenging to determine countries in one region that share the same
characteristics. Consider, for example; some companies use this approach for NAFTA
countries, which include the United States, Canada, and Mexico.
▪ All countries are in the same region but still have some different characteristics. The same
implies for the Benelux, which include Belgium, Netherlands, and Luxembourg. The
countries are in the same region, but Belgium has different market characteristic than the
Netherlands and Luxembourg.
▪ The reason why companies use this approach to group countries into for example NAFTA
and Benelux. is depending on the type of industry and product or service. Every
organization has its way of internationalization.

International Business Environment Arun Chandran 8

▪ A geocentric approach of the EPRG Framework means that a business strongly
believes that it is possible to utilize one type of strategy for all countries,
regardless of the cultural differences.
▪ However, companies that use this approach attempt to create products or offer
services in a way that best suit national and international customers. This means
that instead of believing that their product or service is excellent and that it will sell in
other markets, like in the ethnocentric approach, these organization proactively adapt
their products and services that best meet the global needs.
▪ Companies sometimes prefer this type of strategy of the EPRG Framework because it does
not involve many adoptions, which minimizes operational costs. These companies use
one strategy to sell a product or service, and could for this reason, achieve economies of
scale.
▪ Organizations that have a geocentric approach are many times considered as key
international businesses because these companies utilize a combination of the polycentric
and ethnocentric approaches.
▪ It means that organizations with a geocentric approach of the EPRG Framework can
identify similar cultural characteristic, and they can convert the different cultural
characteristics into mutual characteristics.
International Business Environment Arun Chandran 9
▪ An organizational structure is a system that outlines how certain
activities are directed in order to achieve the goals of an organization.
These activities can include rules, roles, and responsibilities.
▪ The organizational structure also determines how information flows between
levels within the company. For example, in a centralized structure, decisions
flow from the top down, while in a decentralized structure, decision-making
power is distributed among various levels of the organization.
▪ Having an organizational structure in place allows companies to remain
efficient and focused.

International Business Environment Arun Chandran 10

▪ This structure is built to handle all
international operations by a division
created for control. It is often adopted
by firms that are still in the development
stages of international business
operations.
▪ Advantages
▪ International attitude gets the attention of top
management.
▪ United approach to international operations.

▪ Disadvantages
▪ Separates domestic managers from their
international counterparts.
▪ Difficulty in ideating and acting strategically
and in allocating resources globally.

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▪ Global product divisions include
domestic divisions that are allowed to
take global responsibility for product
groups. These divisions operate as
profit centers.
▪ Advantages
▪ Helps manage product, technology,
customer diversity
▪ Ability to cater to local needs
▪ Marketing, production, and finance gets a
coordinated approach on a product-by-
product, global basis
▪ Disadvantages
▪ Duplication of facilities and staff personnel
within divisions
▪ Division manager gets attracted to
geographic prospects and neglects long-term
goals
▪ Division managers spending huge to tap
local, not international markets
International Business Environment Arun Chandran 12
▪ Global area division structure is used for
operations that are controlled on a
geographic rather than a product basis.
Firms in mature businesses with select
product lines use it.
▪ Advantages
▪ International operations and domestic operations
remain at the same level
▪ Global division managers manage business
operations in selected geographic area
▪ Ability to reduce cost per unit and price
competitively
▪ Disadvantages
▪ Difficult to align product emphasis in a
geographically oriented manner.
▪ New R&D efforts are often ignored, as sale in
mature market is where the focus is.

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▪ This structure is to primarily organize
global operations based on function;
product orientation is secondary for firms
using global function division structure.
▪ Advantages
▪ It emphasizes on functional leadership,
centralized-control, and leaner managerial staff
▪ Favorable for firms that require a tight, centralized
coordination and control over integrated
production mechanisms
▪ Helps those firms that need to transport products
and raw materials between geographic areas
▪ Disadvantages
▪ Not suitable for all types of businesses. Applicable
to only oil and mining firms
▪ Difficult to coordinate manufacturing and
marketing processes
▪ Managing multiple product lines can be
challenging, as production and marketing are not
integrated.
International Business Environment Arun Chandran 14
▪ This structure combines global
product, area, and functional
arrangements and it has a cross-
cutting committee structure.
▪ Advantages
▪ Can be designed to meet individual
needs.
▪ Promotes an integrated strategic
approach tailored to local needs and
priorities.
▪ Disadvantages
▪ Complex structure, coordinating and
getting everyone to work toward
common goals becomes difficult.
▪ Too many independent groups in the
structure.

International Business Environment Arun Chandran 15

 ▪ In 1916, Henri Fayol formulated one of the first
definitions of control as it pertains to
management:
▪ Control of an undertaking consists of seeing that
everything is being carried out in accordance with the
plan which has been adopted, the orders which have
been given, and the principles which have been laid
down. Its objective is to point out mistakes in order
that they may be rectified and prevented from
recurring.
International Business Environment Arun Chandran 16
▪ Personal control.
▪ Bureaucratic control.
▪ Output control.
▪ Cultural control.

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▪ Personal Controls: By maintaining personal relations with the subordinates, the person
control mechanism can be practiced. Mostly small business practice these personal
controls such that the operations of the employees can be managed by direct supervision. In
Multinational companies, personal controls help in building the relationships between
managers with other employees of the organization. The way in which the subordinates
behave can be influenced by setting up the personal control policies.
▪ Bureaucratic Controls: The international businesses which are inbuilt with bureaucracy
usually follow the bureaucratic controls. The functioning and actions of the sub-units are
being influenced by some of the rules and procedures laid out by this mechanism. For spending
of capital, certain rules have been formulated which requires the prior approval of the top
management for the capital to be spent.
▪ Output Controls: Certain goals have been formulated with respect to the subordinates in
such a manner that subordinates working in different departments achieve the output
as targeted. These goals set are known as output controls. The output controls are
measured on the basis of some of the parameters such as productivity, profitability, market
share, product quality etc.
▪ Cultural Controls: The output and profitability can be achieved by maintaining a proper
corporate culture. Therefore it becomes very essential to measure the efficiency of the business
and hence cultural controls become important. The cultural control rules that are being set
enable an employee to self-control the behaviour thus the work of the superiors with
regard to supervision is reduced, thus reducing the requirement of other control
mechanisms.
International Business Environment Arun Chandran 18
▪ Market Approach: The control mechanism is formed and the management behaviour
depends on the external market forces. The business organizations which have a
decentralized culture usually practice the market approach. Market approach
facilitates in easy negotiations for the transfer prices. The different market forces
direct and govern the decision-making process in this approach.
▪ Rules Approach: The organization that is rules-oriented where the rules and
procedures are followed for the purpose of decision-making applies this rules
approach. This approach requires a developed plan along with a budget system. The
combination of both the input and output controls are used by this rules approach.
▪ Corporate Culture Approach: A set of values are being built for the employees to
achieve the goals internationally by the business that follow the corporate culture
approach. The operations of the business are mostly influenced by this corporate
culture approach. Some of the organizations tend to be more informal and lack explicit
in spite of practicing the corporate culture approach. The corporate culture approach
does not accept the change quickly.

International Business Environment Arun Chandran 19

▪ Reporting Culture: One of the most powerful control mechanisms is reporting culture.
When the resources are distributed and when the performance of the business and
employees has to be monitored and reviewed by the top management, reporting culture is
used. This control mechanism usually involves rewards for the employees. But this control
mechanism tends to be more successful only when the reports have correct and accurate
information.
▪ Visits to Subsidiaries: By visiting to subsidiaries, the control can be done but one major
disadvantage is that all the required information cannot be exchanged y this control
mechanism. In order to better under the local management the corporate staff usually
practice this approach. By visiting, information about the business can be gathered and
accordingly can be advised.
▪ Management Performance Evaluation: The subsidiary managers are evaluated on their
levels of performance by the management performance evaluation approach. The mina
limitation of this approach is that only some of the aspects can be controlled and not all
the aspects. This kind of approach is best suited for the economic and political
environment which is more risky.
▪ Cost and Accounting Comparisons: As different units differ in their pattern of
expenditure, the cost and accounting comparison approach is being practiced. In order to
meet with the local reporting requirements, the rules are set that are applicable to the
home country.
International Business Environment Arun Chandran 20
▪ You are appointed as the new VP (Strategy development) for Infoware Global
limited, an international software company based out of Europe.
▪ The firm has taken over a new start-up based out of India, Tenshore software
solutions.
▪ The work culture of Tenshore is completely contrast to Infoware.
▪ Tenshore is more liberal in its approach and does not have a suitable order to it,
while infoware is a global firm and has got a set of rigid rules that is
implemented to get the desired output.
▪ Your first task is to design and implement a control system for Tenshore
organization.
▪ Use what you have discussed in the previous slides and design a strategy.

International Business Environment Arun Chandran 21

International Business Environment Arun Chandran 22
▪ ROI (Return on Investment): The performance of the international firm can be
evaluated by this Return on Investment method. The relationship between the
capital invested and profit is estimated by this method. The good sign for the
business is that the ROI should be improving.
▪ Budget as Success Indicator: The operations of the business are measured and
controlled by budget. Added to this, in order to forecast the future operations,
budget can be used. The performance standards of the individuals are set by the
managers by using the set of objectives defined in the budget. Budget also enables
to facilitate smooth functioning of the strategic planning process.
▪ Non-Financial Measures: Market Share, Exchange Variations, Quality Control,
Productivity Improvement, and Percentage of Sales are some of the non-financial
measures that are being used for performance evaluation.

International Business Environment Arun Chandran 23

▪ Budget Programming – In order to evaluate the performance with respect to
financial and operational aspects, budget programming is used. By budget
programming, the current performance is measured with respect to some of the
past performance metrics.
▪ Management Audit – With respect to the financial operations, the quality of the
management decisions are monitored by an extended financial audit system
known as management audit. The management is audited and the performance
appraisal is done by management audit.
▪ Programme Evaluation Review Technique (PERT) – A particular program or
project is being divided into activities and sub-activities. The main aim of PERT is
to optimize the time of the manager. The actual time along with the cost and the
scheduled time along with the cost are used for measuring the performance.
▪ Management Information System (MIS) – In order to redirect the management
towards the pre-defined goals and targets, the system is designed which is meant
to plan, monitor, and control and appraise the management. All the financial,
budgeting, audit and control system of PERT are encompassed by MIS
International Business Environment Arun Chandran 24
International Business Environment Arun Chandran 25