What is an ethnocentric approach to global markets?

An ethnocentric or domestic approach treats the home market as the model, exporting the same product, marketing and management practice abroad with little or no adaptation.

What is a polycentric approach to global markets?

A polycentric or international approach treats each country as a distinct market, with local subsidiaries setting their own products, marketing and often their own management.

Give two advantages of an ethnocentric approach.

It is cheap and quick because no adaptation or local research is needed, and it keeps tight central control over the brand and quality.

Why does a polycentric approach usually raise costs?

Separate products, campaigns and management structures in each country mean duplicated overheads and shorter production runs, so economies of scale are lost.

Edexcel A-Level Economics B 9EB0

Scarcity, Choice and Potential Conflicts

Topic overview Scarcity and the economic problem Choice, trade-offs and opportunity cost Profit maximisation, sales maximisation and satisficing Survival, market share and other business objectives Stakeholders and their objectives Stakeholder conflicts and corporate social responsibility

Enterprise, Business and the Economy

Topic overview The entrepreneur and creative destruction Adding value Entrepreneurial motives Factors of production Division of labour and specialisation The wider economic environment and the firm

Introducing the Market

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The Role of Credit in the Economy

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Globalisation

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Impact of Globalisation on Global Companies

Topic overview Globalisation and glocalisation Ethnocentric, polycentric and geocentric approaches to global markets Price and non-price competition in global markets Branding and differentiation in global markets Cultural and language barriers in global markets Adapting marketing strategy for niche and mass markets

Impact of Globalisation on Local and National Economies

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Inequality and Re-Distribution

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Market Power and Market Failure

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Market Failure Across the Economy

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Impact of Globalisation on Global Companies

Ethnocentric, polycentric and geocentric approaches to global markets

3 things to know
Papers 2 and 3

Overview

Ethnocentric, polycentric and geocentric approaches to global markets, the advantages and disadvantages of each, costs of polycentrism, managing a geocentric firm and its use of talent, which approach suits industrial components and which suits food products, how approaches change with experience, subsidiary independence, and scale with local adaptation.

What you need to know

Answer each one before you reveal it.

Your recallNot started

Evaluation

Give two disadvantages of an ethnocentric approach.

Evaluation

Give two advantages of a polycentric approach.

Key term

What is a geocentric approach to global markets?

Questions from this subtopic

Each one with the model answer underneath.

1
What is an ethnocentric approach to global markets?
Model answer
An ethnocentric or domestic approach treats the home market as the model, exporting the same product, marketing and management practice abroad with little or no adaptation.
2
What is a polycentric approach to global markets?
Model answer
A polycentric or international approach treats each country as a distinct market, with local subsidiaries setting their own products, marketing and often their own management.
3
What is a geocentric approach to global markets?
Model answer
A geocentric or mixed approach treats the world as a single market, combining one global strategy with adaptation where it is needed and drawing staff and ideas from anywhere in the business.
4
Give two advantages of an ethnocentric approach.
Model answer
It is cheap and quick because no adaptation or local research is needed, and it keeps tight central control over the brand and quality.
5
Give two disadvantages of an ethnocentric approach.
Model answer
The product may not suit local tastes or regulations, and local managers have little authority, so the firm responds slowly to what customers there actually want.
6
Why does a polycentric approach usually raise costs?
Model answer
Separate products, campaigns and management structures in each country mean duplicated overheads and shorter production runs, so economies of scale are lost.

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