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  • Advantage of All The Approaches

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    Afif Nazzeri
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    The document discusses four approaches to staffing international subsidiaries: Ethnocentric approach focuses on exporting the parent company's culture and using parent country nationals. This ensures consistency but limits opportunities for local staff and risks higher costs and failure rates. Polycentric approach prioritizes using host country nationals to reduce costs and barriers but makes coordination between subsidiaries and headquarters more difficult. Geocentric approach develops an international team using parent, host, and third-country nationals to overcome limitations of other approaches, but is also the most expensive. Regiocentric approach groups subsidiaries regionally to allow some localization while facilitating interaction between regions, but can still constrain global coordination and career growth.

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    Advantage of All the Approaches

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    The document discusses four approaches to staffing international subsidiaries: Ethnocentric approach focuses on exporting the parent company's culture and using parent country nationals. This ensures consistency but limits opportunities for local staff and risks higher costs and failure rates. Polycentric approach prioritizes using host country nationals to reduce costs and barriers but makes coordination between subsidiaries and headquarters more difficult. Geocentric approach develops an international team using parent, host, and third-country nationals to overcome limitations of other approaches, but is also the most expensive. Regiocentric approach groups subsidiaries regionally to allow some localization while facilitating interaction between regions, but can still constrain global coordination and career growth.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
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    Download as ppt, pdf, or txt
    12K views5 pages

    Advantage of All The Approaches

    Uploaded by

    Afif Nazzeri
    The document discusses four approaches to staffing international subsidiaries: Ethnocentric approach focuses on exporting the parent company's culture and using parent country nationals. This ensures consistency but limits opportunities for local staff and risks higher costs and failure rates. Polycentric approach prioritizes using host country nationals to reduce costs and barriers but makes coordination between subsidiaries and headquarters more difficult. Geocentric approach develops an international team using parent, host, and third-country nationals to overcome limitations of other approaches, but is also the most expensive. Regiocentric approach groups subsidiaries regionally to allow some localization while facilitating interaction between regions, but can still constrain global coordination and career growth.

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    of 5

    Ethnocentric Approach

    Advantages:

    Disadvantages:
     To ensure new subsidiary complies
    with overall corporate objectives Limits the promotion opportunities of Host
    and policies Company Nationals, leading to reduced
     Effective communication productivity and increased turnover among
     Efficient coordination the HCNs
     Broadening the view of expatriates
    Longer time for Parent Company Nationals
    and the chance of growth for
    expatriates to adapt to host countries, leading to errors
     Direct control of foreign operations and poor decisions being made
     Diffusing central value, norms and High cost
    beliefs throughout the organization
    Adaptation of expatriates uncertain
     Has the required level of
    competence Potential failure rate likely to be higher
     No need for a well developed Government restriction
    international internal labor market
    Considerable income gap, high authority,
     Assignments as control
    and increased standard of living may relate
    to lack of sensitivity

    IBUS 618 Dr. Yang 1


    Polycentric Approach
    Advantages:
    Employment of HCNs eliminates language
    barriers, avoids adaptation of PCNs, reduces
    the need for cultural awareness training
    programs
    Employment of HCNs allows a multinational
    company to take a lower profile in sensitive
    political situations
    Employment of HCNs is less expensive
    Employment of HCNs gives continuity to the
    management of foreign subsidiaries (lower
    turnover of key managers)

    IBUS 618 Dr. Yang 2


    Polycentric Approach
    Disadvantages:
    Difficult to bridge the gap between HCN
    subsidiary managers and PCN managers at
    headquarters ( language barriers, conflicting
    national loyalties, cultural differences)
    HCN managers have limited opportunities to
    gain experience outside their own country
    PCN managers have limited opportunities to
    gain international experience
    Resource allocation and strategic decision
    making will be constrained when headquarter
    is filled only by PCNs who have limited
    exposure to international assignment

    IBUS 618 Dr. Yang 3


    Geocentric Approach
    Advantages: Disadvantage:
     Ability of the firm to Host government may use
    develop an immigration controls in
    international executive order to increase HCNs
    team employment
     Overcomes the Expensive to implement
    federation drawback of due to increased training
    the polycentric and relocation costs
    approach Large numbers of PCNs,
     Support cooperation HCNs, and TCNs need to
    and resource sharing be sent across borders
    across units Reduced independence of
    subsidiary management
    IBUS 618 Dr. Yang 4
    Regiocentric Approach
     Advantages:  Disadvantages:
    Allow interaction between Produce federalism at a
    executives transferred to regional rather than a
    regional headquarters from country basis and
    subsidiaries in the region constrain the firm from
    and PCNs posted to the taking a global stance
    regional headquarters Staff’s career
    Provide some sensitivity to advancement still limited
    local conditions to regional
    Help the firm to move from headquarters, not the
    a purely ethnocentric or parent country
    polycentric approach to a headquarters
    geocentric approach

    IBUS 618 Dr. Yang 5

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