What should the company's global management strategy look like?
In this essay, we will first discuss the forms of strategic employee assignment, then introduce the popular EPRG concept by Howard V. Perlmutter, which refers to international management. The geocentric approach of this concept is examined in more
detail. Finally, a practical example of the geocentric approach based on IKEA is explained.
Competition is becoming increasingly fierce in individual countries and sectors. Companies are required to adapt to the current changes in the market in order to remain competitive. And not only that, companies must also offer services that meet the requirements of their customers and stand up to the competition. Many companies must therefore expand their activities beyond their domestic borders and orientate themselves internationally.
Opening up new markets, expanding business activities, exploiting locational advantages (such as tapping global resources, lower labour costs or lower tax burdens).
„A company that wants to survive in the global competition of forces in the long term must increasingly send employees abroad.“
„To be able to operate successfully worldwide, a company needs employees who, in addition to all their skills and abilities, are also prepared to go abroad for the company.“
These statements make it clear that a majority of employees are expected to think globally and that they are aware that foreign assignments may occur.
This increase in the globalization and internationalization of companies is changing the requirements for communication between the company's divisions and for human resources management. The resulting spatial and cultural distance between the parent company and the foreign company requires a strategy.
Table of Contents
1. A world of networking
2. Forms of strategic employee deployment
3. The EPRG concept by Howard V. Perlmutter
3.1 Ethnocentric Orientation
3.2 Polycentric Orientation
3.3 Regiocentric Orientation
3.4 Geocentric Orientation
3.4.1 Advantages of Geocentric Orientation
3.4.2 Disadvantages of Geocentric Orientation
4. A practical example on IKEA
5. Summary
Objectives and Topics
The essay examines the challenges and risks associated with the geocentric approach within the EPRG management model, focusing on how multinational companies adapt their international human resources strategies. It evaluates the impact of global standardization versus local differentiation through the practical lens of IKEA's corporate structure.
- Strategic forms of international employee deployment.
- Comprehensive analysis of the EPRG model by Howard V. Perlmutter.
- Benefits and drawbacks of a geocentric organizational orientation.
- Practical application of global management strategies at IKEA.
- The relationship between diversity, corporate culture, and business success.
Excerpt from the book
3.4 Geocentric Orientation
A combination of ethnocentric and polycentric orientation is the geocentric occupation strategy. The aim of the geocentric management concept is to create a uniform, global corporate identity that is not only shaped by the values and basic attitudes of the parent company, but also contains cultural elements from each branch, in short, a worldwide standardization. Not the home country and not the foreign markets are the basis for standardization. Several groups of countries are integrated in the global approach. The aim of the company is, by means of an entire network, the optimal allocation of resources through the use of standardization and adaptation advantages. In the ideal case, there is a globalization of all value-added areas. This means worldwide procurement possibilities, not only individual production stages are relocated abroad, but entire production facilities. The nationality of the managers is not important, but their proper qualification. From a marketing point of view, a geocentric orientation means an extensive standardization of products.
Summary of Chapters
1. A world of networking: Discusses the necessity for companies to expand internationally and the resulting changes in human resources and communication requirements.
2. Forms of strategic employee deployment: Illustrates various types of international assignments and the associated contractual conditions for employees.
3. The EPRG concept by Howard V. Perlmutter: Introduces the four fundamental strategic attitudes in international management and the framework for global orientation.
3.1 Ethnocentric Orientation: Describes a management style centered on the standards and values of the home country.
3.2 Polycentric Orientation: Details an approach where management principles are adapted to the specific conditions of each host country.
3.3 Regiocentric Orientation: Explains a hybrid strategy that groups countries or regions together for better coordination.
3.4 Geocentric Orientation: Defines a global approach aimed at creating a unified identity through worldwide resource allocation.
3.4.1 Advantages of Geocentric Orientation: Highlights the flexibility in recruitment and the improvement of service quality through global networking.
3.4.2 Disadvantages of Geocentric Orientation: Addresses the high coordination effort and the complexity of managing global information flows.
4. A practical example on IKEA: Analyzes how the furniture retailer utilizes a geocentric approach to manage its global workforce and promote cultural diversity.
5. Summary: Concludes the findings by reinforcing the importance of choosing a strategic approach that aligns with a company's global objectives.
Keywords
EPRG model, Howard V. Perlmutter, Geocentric orientation, International management, Globalization, IKEA, Human resources, Standardization, Corporate identity, Strategic deployment, Secondment, Cultural diversity, Personnel management, Global competition, Business strategy.
Frequently Asked Questions
What is the primary focus of this essay?
The essay explores the geocentric approach within Howard V. Perlmutter’s EPRG model, specifically analyzing its advantages, risks, and its implementation within a multinational corporation.
What are the core pillars of the EPRG concept?
The EPRG model consists of Ethnocentric, Polycentric, Regiocentric, and Geocentric strategic orientations, which dictate how a company manages its global activities and international subsidiaries.
What is the main objective of the author regarding this research?
The objective is to explain how a company can successfully align its international management strategy and personnel deployment to maintain competitiveness in a globalized market.
Which scientific methodology is employed in the work?
The author utilizes a literature-based theoretical analysis of the EPRG management model and conducts a practical case study of IKEA to illustrate the application of geocentric principles.
What topics are covered in the main section of the paper?
The main section covers the necessity of internationalization, formal types of employee deployment (secondments), detailed descriptions of the four EPRG strategies, and a comprehensive look at IKEA's corporate culture.
Which keywords best describe the content of this document?
Key terms include the EPRG model, geocentric orientation, globalization, international human resource management, and strategic corporate standardization.
How does IKEA integrate the geocentric approach into its operations?
IKEA implements this by maintaining a global corporate culture that values diversity, encouraging international mobility, and utilizing a standardized management framework that integrates local insights.
Why is the geocentric approach considered complex for companies to manage?
It requires significant coordination efforts, complex information flow management across borders, and high costs associated with continuous global market analysis and diverse regulatory requirements.
- Quote paper
- Anonym (Author), 2020, Chances and risks of the geocentric approach of the EPRG System, Munich, GRIN Verlag, https://www.grin.com/document/1059904
