MAREX Week 2
Chapter 2 – Export A Structural Approach
Learning Objectives
• How do companies internationalize?
• What motives do they have to do so?
2.1 The Perlmutter Theory & Internationalization
Motives for internationalization:
1. Turnover oriented motives
e.g. new market opportunities, expansion of customer base, risk spreading
2. Cost oriented motives
e.g. worldwide competition, economies of scale and reduction in costs
The Perlmutter model is known as the EPRG model
Perlmutter sees the process of internationalization as a developing and learning process where
managements attitude towards other cultures plays an essential role
The type of management culture is linked to company type
, MAREX Week 2
1. Ethnocentric company
Strongly focused on the home country
Policy for the home country is used as the norm for abroad
“This works at home; therefore it must work in your country”
2. Polycentric company
Aware that all foreign markets have a different culture
Differences are taken into account when drafting an international policy
Independent businesses operate in various countries
• A positive contribution to the company’s profits is what is expected
• “gives rise to the problems of coordination and control”
• knowledge that could be beneficial across all regions is lost
3. Regionally company
Differences between global regions (EU, Africa, Middle East, Asia etc.)
External regional influences are taken into account when drafting a policy
Perlmutter: important phase in developing internationalization
4. Geocentric company
Essential differences and similarities between domestic and foreign market
One country is not perceived as superior to the other
BU’s in multiple nations that operate to achieve global and local objectives
Subsidiaries contribute unique competencies to the whole to achieve worldwide
objectives, encourages everyone to work for global goals
Perlmutter: ideal type of (international) company
Marketing
International marketing (“Glocal”) – is adapting your product, to sell all over the world
Global marketing – is selling one product all over the world
e.g. Facebook, Airbnb, Apple, Samsung, Nike
Marketing concept – focus on the market and considering how to realize the wished of the
market as a starting point for the companies (marketing) activities
Marketing policy – constant that guides the planning process and ensures each individual
strategy aligns with ethical objectives. Integration & coordination of all business functions
Motives for internationalization (related to Perlmutter)
1. Company’s objectives
a. Interest in continuity d. Growth
b. Spreading sales risk e. Internationalization
c. Profit motive
2. Growth in turnover
Home market could be too small (e.g. for large tech investments)
3. Human resources
4. Considerations concerning following customers that have gone abroad
5. Situational considerations (macro)
6. Considerations of competition (macro/micro)
Chapter 2 – Export A Structural Approach
Learning Objectives
• How do companies internationalize?
• What motives do they have to do so?
2.1 The Perlmutter Theory & Internationalization
Motives for internationalization:
1. Turnover oriented motives
e.g. new market opportunities, expansion of customer base, risk spreading
2. Cost oriented motives
e.g. worldwide competition, economies of scale and reduction in costs
The Perlmutter model is known as the EPRG model
Perlmutter sees the process of internationalization as a developing and learning process where
managements attitude towards other cultures plays an essential role
The type of management culture is linked to company type
, MAREX Week 2
1. Ethnocentric company
Strongly focused on the home country
Policy for the home country is used as the norm for abroad
“This works at home; therefore it must work in your country”
2. Polycentric company
Aware that all foreign markets have a different culture
Differences are taken into account when drafting an international policy
Independent businesses operate in various countries
• A positive contribution to the company’s profits is what is expected
• “gives rise to the problems of coordination and control”
• knowledge that could be beneficial across all regions is lost
3. Regionally company
Differences between global regions (EU, Africa, Middle East, Asia etc.)
External regional influences are taken into account when drafting a policy
Perlmutter: important phase in developing internationalization
4. Geocentric company
Essential differences and similarities between domestic and foreign market
One country is not perceived as superior to the other
BU’s in multiple nations that operate to achieve global and local objectives
Subsidiaries contribute unique competencies to the whole to achieve worldwide
objectives, encourages everyone to work for global goals
Perlmutter: ideal type of (international) company
Marketing
International marketing (“Glocal”) – is adapting your product, to sell all over the world
Global marketing – is selling one product all over the world
e.g. Facebook, Airbnb, Apple, Samsung, Nike
Marketing concept – focus on the market and considering how to realize the wished of the
market as a starting point for the companies (marketing) activities
Marketing policy – constant that guides the planning process and ensures each individual
strategy aligns with ethical objectives. Integration & coordination of all business functions
Motives for internationalization (related to Perlmutter)
1. Company’s objectives
a. Interest in continuity d. Growth
b. Spreading sales risk e. Internationalization
c. Profit motive
2. Growth in turnover
Home market could be too small (e.g. for large tech investments)
3. Human resources
4. Considerations concerning following customers that have gone abroad
5. Situational considerations (macro)
6. Considerations of competition (macro/micro)
