Polycentric Pricing Summary of Polycentric Pricing A pricing policy in a multinational firm that permits substantially uniform products to be priced differently in various countries, to accommodate local conditions.
What is a fully polycentric strategy?
In a fully polycentric strategy, each business center develops its own autonomous product line extensions, positioning and promotions customized to a particular nationality and competitive landscape in its respective market.
What is polycentric marketing?
Polycentric marketing is one of three dimensions in the EPG model. This model includes ethnocentric, polycentric and geocentric marketing. Ethnocentrism segments the global market by race or ethnicity. Polycentric marketing segments the market by nationality.
What is polycentric approach to subsidiary operations?
In Polycentric Approach, the nationals of the host country are recruited for the managerial positions to carry out the operations of the subsidiary company. The rationale behind this approach is that the locals of the host country know their culture better and can run the business more efficiently as compared to their foreign counterparts.
What is adaptation/polycentric pricing policy?
The second pricing policy can be termed adaptation/polycentric. This policy permits subsidiary or affiliate managers to establish whatever price they feel is most desirable in their circumstances.
What is a polycentric pricing?
Summary of Polycentric Pricing. A pricing policy in a multinational firm that permits substantially uniform products to be priced differently in various countries, to accommodate local conditions.
What is a polycentric strategy?
Definition: The Polycentric Approach is the international recruitment method wherein the HR recruits the personnel for the international businesses. In Polycentric Approach, the nationals of the host country are recruited for the managerial positions to carry out the operations of the subsidiary company.
What is an example of polycentric?
Example of Polycentricism McDonald's is a prominent example of a firm following polycentric approach. Having originated in USA, its menu in USA is centered around their local preference which is beef and meat. When coming to India, it realized that Indians are culturally averse to eating beef.
What does polycentric mean in marketing?
Polycentrism marketing is a kind of marketing wherein an attempt is made to extend the appeal of its product to other countries. In this kind of marketing, the international sales are thought to be a key part.
What is the meaning of polycentric?
Definition of polycentric : having more than one center (as of development or control): such as. a : having several centromeres polycentric chromosomes. b : characterized by polycentrism.
What is the difference between polycentric and geocentric?
Polycentric Attitude: Polycentric attitude refers to the belief that the best approach of work and practices of business are known by the employees of the host country. Geocentric Attitude: Geocentric attitude refers to a global view that emphasizes the usage of the best approach and people from around the world.
Why McDonald's is polycentric?
For McDonald's the polycentric staffing policy is the most appropriated one in which host-country nationals are recruited to manage subsidiaries in their own country, while the parent-country nationals occupy key positions at corporate headquarters.
Which company is a good example of polycentric approach?
John Deere and Cisco are large corporations pioneering the practice of polycentric innovation out of India.
What are the advantages of polycentric approach?
Advantages of Polycentric Approach The hiring of locals or the nationals of the host country is comparatively less expensive. The morale of the local staff increases. Better productivity due to better knowledge about the host market. The career opportunities for the nationals of the host country increases.
What are advantages and disadvantages of Polycentrism?
The advantages of the polycentric approach are: (1) Alleviates cultural myopia, and (2) It is inexpensive to implement. The disadvantages of the polycentric approach are: (1) Limits career mobility, and (2) Isolates headquarters from foreign subsidiaries.
Is McDonald's geocentric or polycentric?
The Meaning of Polycentric Marketing Take McDonald's as an example. The familiar offerings in their restaurants in the United States may be somewhat less familiar if you venture abroad. In India, where many people do not eat beef, McDonald's offers the McAloo Tikki, a vegetable patty with characteristic Indian spices.
Advantages of Polycentric Approach
The difficulty in the adjustment of expatriates from the parent country gets eliminated.
Disadvantages of Polycentric Approach
Lack of coordination between the host and the parent company, due to the absence of a link that gets created when expatriates from the parent country hold the managerial positions at the subsidiary.
What is a polycentric marketing campaign?
Share on Facebook. Polycentric marketing is a model for international business that aims to build a brand’s appeal in multiple countries. The word polycentric itself means having many centers, and this is a characteristic of polycentric marketing as well. A polycentric marketing campaign doesn’t overlook national or regional audiences close ...
Is the independence of each business unit an obstacle to unified leadership?
The independence of each business unit can be an obstacle to unified leadership. This contradicts the goal of polycentric marketing’s push into multiple nations when each business unit begins to function as its own single-nation business.
What is the third approach to international pricing?
The third approach to international pricing can be termed invention/geocentric, Using this approach, a company neither fixes a single price worldwide nor remains aloof from subsidiary pricing decisions, but instead strikes an intermediate position. A company pursuing this approach works on the assumption that there are unique local market factors that should be recognized in arriving at a pricing decision. These factors include local costs, income levels, competition, and the local marketing strategy. Local costs plus a return on invested capital and personnel fix the price floor for the long term. However, for the short term, a company might decide to pursue a market penetration objective and price at less than the cost-plus return figure using export sourcing to establish a market. Another short-term objective might be to estimate the size of a market at a price that would be profitable given local sourcing and a certain scale of output. Instead of building facilities, the target market might first be supplied from existing higher-cost external supply sources. If the market accepts the price and product, the company can then build a local manufacturing facility to further develop the identified market opportunity in a profitable way. If the market opportunity does not materialize, the company can experiment with the product at other prices because it is not committed by existing local manufacturing facilities to a fixed sales volume.
What is the second pricing policy?
This policy permits subsidiary or affiliate managers to establish whatever price they feel is most desirable in their circumstances. Under such an approach, there is no control or fixed requirement that prices be coordinated from one country to the next. The only constraint on this approach is in setting transfer prices within the corporate system. Such an approach is sensitive to local conditions, but it does present problems of product arbitrage opportunities in cases where disparities in local market prices exceed the transportation and duty cost separating markets. When such a condition exists, there is an opportunity for the enterprising business manager to take advantage of these price disparities by buying in the lower-price market and selling in the more expensive market. There is also the problem that under such a policy, valuable knowledge and experience within the corporate system concerning effective pricing strategies is not applied to each local pricing problem. The strategies are not applied because the local managers are free to price in the way they feel is most desirable, and they may not be fully informed about company experience when they make their decision.
What is extension pricing?
This policy requires that the price of an item be the same around the world and that the importer absorbs freight and import duties. This approach has the advantage of extreme simplicity because no information on competitive or market conditions is required for implementation. The disadvantage of this approach is directly tied to its simplicity. Extension pricing does not respond to the competitive and market conditions of each national market and, therefore, does not maximize the company’s profits in each national market.
Which approach lends itself to global competitive strategy?
Of the three methods, only the geocentric approach lends itself to global competitive strategy. A global competitor will take into account global markets and global competitors in establishing prices. Prices will support global strategy objectives rather than the objective of maximizing performance in a single country.
Why is local income important in pricing decisions?
For consumer products, local income levels are critical in the pricing decision. If the product is normally priced well above full manufacturing costs, the international marketer has the latitude to price below prevailing levels in higher-income markets and, as a result, reduces the gross margin on the product.
What is a polycentric approach to international management?
Polycentric approach to international management is the policy involved hiring and promoting employees who are citizens of the country that host and operates the company. The polycentric approach is best used in order to maintain low hiring costs. Communication is easier and companies run smoother due to the fact the employees are all related in ...
When is geocentric staffing used?
Geocentric staffing approach is used when companies implement a transnational orientation. In such an approach, rather than maintaining the same groups of people or transferring people, employees are selected regardless where they come from.
What is ethnocentric approach?
Ethnocentric approach is a staffing policy that is used in companies that has primarily international strategic orientation. While polycentric maintains employees from the same area, ethnocentric is generally adopted by headquarters by sending employees from the home or parent countries to the host country. Ethnocentric approach is best used ...
Why is the polycentric approach best used?
The polycentric approach is best used in order to maintain low hiring costs. Communication is easier and companies run smoother due to the fact the employees are all related in their geographic location. Ethnocentric approach is a staffing policy that is used in companies that has primarily international strategic orientation.
What is the difference between ethnocentric and polycentric?
While polycentric maintains employees from the same area, ethnocentric is generally adopted by headquarters by sending employees from the home or parent countries to the host country. Ethnocentric approach is best used when teams from a certain home country are sent to a new location to help direct and assist due to their experience. ...
What is ethnocentric policy?
Ethnocentric is a staffing policy that is used in companies that has primarily international strategic orientation. This policy is generally adopted by headquarters by sending employees from the home or parent countries to the host country.
When is geocentric staffing best used?
Geocentric staffing approach is used when companies adopt a transnational orientation. It is best used when companies need the best personnel to work at subsidiary. Employees are selected regardless where they come from.
What are the disadvantages of geocentric staffing?
The disadvantage of using this type of policy is that sometimes employees from home or host countries are not unselected. Instead, employees from a third are selected to subsidiary in which they may face cultural differences. Geocentric staffing approach is used when companies adopt a transnational orientation.
