KORBEL FOUNDATION COLLEGE, INC.
Purok Spring 1, Brgy. Morales, Koronadal City
Contact No. 228-1996/887-2051
Business Department
korbelbusinessdepartment@gmail.com
Lecturer: Rey Apaez A.Y. 2ND SEMESTER, 2020-2021
SUBJECT CODE: MKTG 6
MODULE NO: Module 3
SUBJECT NAME: INTERNATIONAL MARKETING
TOPIC: EPRG FRAMEWORK, THE THREE FACTORS THAT HAVE A MAJOR IMPACT IN THE MARKETI NG
ENVIRONMENT, THREE MAJOR WAYS TO DIVIDE A MARKET ON THE BASIS OF GEOGRAPHY, THREE MAJOR
WAYS TO DIVIDE A MARKET ON THE BASIS OF GEOGRAPHY, WTO, INDIA’S EXIM POLICY
OBJECTIVE/S:
At the end of the lecture/discussion/week, the student should be able to:
Define what EPRG framework is.
Understand the role and importance of WTO.
Define what Exim policy is.
PART 1. LECTURE/DISCUSSION
EPRG framework was introduced by Wind, Douglas and Perlmutter.
This framework addresses the way strategic decisions are made and how the relationship
between headquarters and its subsidiaries is shaped.
Different attitudes towards company’s involvement in international marketing process are
called international marketing orientations. EPRG framework was introduced by Wind, Douglas
and Perlmutter. This framework addresses the way strategic decisions are made and how the
relationship between headquarters and its subsidiaries is shaped.
Four stages of Perlmutter’s EPRG framework
1. Ethnocentric Orientation
The practices and policies of headquarters and of the operating company in the home country
become the default standard to which all subsidiaries need to comply. Such companies do not
adapt their products to the needs and wants of other countries where they have operations.
There are no changes in product specification, price and promotion measures between native
market and overseas markets. The general attitude of a company’s senior management team is
that nationals from the company’s native country are more capable to drive international
activities forward as compared to non-native employees working at its subsidiaries. This
develops an affiliated corporate culture and aids transfer core competences more easily. The
major drawback of this mind set is that it results in cultural short-sightedness and does not
promote the best and brightest in a firm.
2. Regiocentric Orientation
In this approach a company finds economic, cultural or political similarities among regions in
order to satisfy the similar needs of potential consumers. For example, countries like Pakistan,
India and Bangladesh are very similar. They possess a strong regional identity.
Perlmutter’s EPRG framework consists of four stages in the international operations evolution.
These stages are discussed below.
3. Geocentric Orientation
In this approach, a company gives equal importance to every country’s domestic market
Page 1 of 8
KORBEL FOUNDATION COLLEGE, INC.
Purok Spring 1, Brgy. Morales, Koronadal City
Contact No. 228-1996/887-2051
Business Department
korbelbusinessdepartment@gmail.com
Lecturer: Rey Apaez A.Y. 2ND SEMESTER, 2020-2021
Geocentric approach encourages global marketing. This does not equate superiority with nationality.
Irrespective of the nationality, the company tries to seek the best men and the problems are solved
globally within the legal and political limits. Thus, ensuring efficient use of human resources by building
strong culture and informal management channels.
The main disadvantages are that national immigration policies may put limits to its implementation
and it ends up expensive compared to polycentrism. Finally, it tries to balance both global integration
and local responsiveness.
4. Polycentric Orientation
Polycentric Orientation
In this approach, a company gives equal importance to every country’s domestic market. Every
participating country is treated solely and individual strategies are carried out. This approach is
especially suitable for countries with certain financial, political and cultural constraints.
This perception mitigates the chance of cultural myopia and is often less expensive to execute when compared
to ethnocentricity. This is because it does not need to send skilled managers out to maintain centralized
policies. The major disadvantage of this nature is it can restrict career mobility for both local as well as foreign
nationals, neglect headquarters of foreign subsidiaries and it can also bring down the chances of achieving
synergy.
Factors involved in international marketing environment are broadly classified into three categories as stated
in the figure given below. This environment regulates organizational activities in such a way that it becomes
favorable for the entrepreneurs to identify the threats and opportunities lying ahead.
The three factors that have a major impact in the marketing environment are given below
Global factors
The global factors that are outside of the control of individual organizations, but that can affect
the way that businesses operate can be considered as the global factors affecting the international
marketing environment. These factors include cultural and social influences, legal issues,
demographics, and political conditions, as well as changes in the natural environment and technology.
Some major organizations involved in this level of international marketing are the UNO, World Bank,
and the WTO.
Domestic factors
Factors related to the personal affairs or internal affairs of a country that affect the economy of
the country participating in the international marketing are considered as domestic factors. These
include the political scenario and the approach by the government and its attitude towards
international trade, business ethics, availability and quality of infrastructure, raw-materials, and other
technological and ecological factors. The level of participation by governmental bodies at the central
and state level in a country is one of the major factors that the fate of marketing environment.
Organizational factors
These include the events, factors, people, systems, structures and conditions inside the
organization that are generally under the control of the company. The internal environment influences
the organizational activities, and also the attitudes and behavior of employees.
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KORBEL FOUNDATION COLLEGE, INC.
Purok Spring 1, Brgy. Morales, Koronadal City
Contact No. 228-1996/887-2051
Business Department
korbelbusinessdepartment@gmail.com
Lecturer: Rey Apaez A.Y. 2ND SEMESTER, 2020-2021
The internal factors that influence the decision-making process in a company are considered as
organizational factors. These include the events, factors, people, systems, structures and conditions
inside the organization that are generally under the control of the company. The internal environment
influences the organizational activities, and also the attitudes and behavior of employees. Changes in
the leadership style inside the organization can also have a profound impact on the organization.
Marketing environment is changing rapidly. Every factor, right from the domestic level, organizational
level, to the global level is interrelated.
• Geographic Description of Market
Here, an organization decides the marketing strategies or approaches that would make international
marketing possible in a specific geographic market on the basis of the climate, lifestyle, location, and
language of that region.
Geographical analysis is when a business divides its market on the basis of geography. There are
several ways that a market can be geographically divided. Here, an organization decides the marketing
strategies or approaches that would make international marketing possible in a specific geographic market
on the basis of the climate, lifestyle, location, and language of that region. Geographic markets differ in
size depending on location.
Three major ways to divide a market on the basis of Geography
• Population density
• Climate
• Language
Each of these components can further be sub divided. For example, a regional geographic market can
be subdivided as nations, metropolitan areas, rural areas, suburban areas, urban areas, or on regional basis
with respect to size, population density, etc.
The liability caused by the financial or personnel losses because of wrong political decisions or conflicts
are known as POLITICAL RISKS.
The liability caused by the financial or personnel losses because of wrong political decisions or conflicts
are known as political risks. Apart from the market based causes, business is highly influenced by political
decisions taken by the governments in different countries. For example, political decisions by a ruling party
regarding taxes currency, trade tariffs, investment, labor laws, environmental regulations and development
priorities have a major impact on the business conditions and profitability which thereby may affect the
national economy.
Similarly, non-economic factors can also alter the status of a business. For example, political conflicts at
times give rise to terrorism, civil wars, international wars, and even political elections that may replace a ruling
political party with another political party, can also affect international market.
In order to balance the political environment, we should consider the points discussed below
1. Ideology – A country undergoes change when the ideology of the ruling party changes. The past years
saw changes formulated in a nation due to change in the ideology of the ruling power.
2. Nationalism – It is primarily a peculiarity of the developing nations
3. Stability – The environment of a country may change due to violence and cultural divisions based on
language or other factors causing unstable situations
4. International relations – The relationship between countries have improved over the last twenty years.
This is mainly due to the development of GATT, NATO and the EU as they have gone a long way to
minimize the component of “foreignness”.
Page 3 of 8
KORBEL FOUNDATION COLLEGE, INC.
Purok Spring 1, Brgy. Morales, Koronadal City
Contact No. 228-1996/887-2051
Business Department
korbelbusinessdepartment@gmail.com
Lecturer: Rey Apaez A.Y. 2ND SEMESTER, 2020-2021
Quota is the limit drawn on how much of a particular product can be imported by a country.
Tariff refers to the tax imposed on the imports coming into a country
Quota is the limit drawn on how much of a particular product can be imported by a country. Whereas, a
tariff refers to the tax imposed on the imports coming into a country. Tariffs and quotas can be used for many
reasons.
Reasons highlighting the importance of tariffs and quotas
1. Protecting Domestic Employment
2. Protecting Consumers
3. Infant Industries
4. National Security
5. Retaliation
Protecting Domestic Employment – The probability of increased competition from imported goods may
threaten the local companies. As a result, these local companies may remove workers or shift production of
goods offshore. This may eventually lead to unemployment among the masses.
Protecting Consumers – A government may impose a tax on goods that could be harmful for the
people. For example, India imposed a tariff on cigarettes as it is injurious to health.
Infant Industries – The Import Substitution Industrialization (ISI) is an approach hired by many
developing nations to allow domestic infant industries to prosper.
National Security – The defense industries of a nation are considered pillars of state interests. Many
developed countries promote and ensure security of the defense industries which will thereby support
national security. For example, Western Europe and the United States of America, both the countries are
industrialized and developed, and both are very protective of defense-oriented companies.
Retaliation – When a particular country feels that a trading partner has not abided by the rules or
hasn’t followed policies, then tariffs can be imposed on trading partner as retaliation technique. For example,
if France imports wine, cheese, and wheat from the USA, and France places optimal tariffs on imports of these
products, then the USA could retaliate by imposing optimal tariffs on its imports of, say, lumber, televisions,
and machine tools from France.
The different types of tariffs
We have seen the importance and necessity of tariffs in international marketing. It is important to
maintain balance between companies within the home country and companies set up in the foreign countries.
A government employs several types of tariffs in favor of its economy.
The different types of tariffs hired by nations are –
Specific Tariffs – Fixed price levied on per unit of an imported product is considered special tariff. This
tariff alters on the basis of the product imported.
Ad Valorem Tariffs – The word Ad Valorem refers to the proportionate value to the estimated value of
the goods or transaction concerned. This type of tax is levied on a product according to the estimated value of
the product.
Non-Tariff Barriers
Page 4 of 8
KORBEL FOUNDATION COLLEGE, INC.
Purok Spring 1, Brgy. Morales, Koronadal City
Contact No. 228-1996/887-2051
Business Department
korbelbusinessdepartment@gmail.com
Lecturer: Rey Apaez A.Y. 2ND SEMESTER, 2020-2021
The different non-tariff barriers are
1. Licenses – Government grants license to a business and permits it to import a certain type of product
from another nation. Licenses – Government grants license to a business and permits it to import a
certain type of product from another nation. For example, there could be a limitation on the cheese to
be imported, and licenses would only be granted to certain enterprises that may import cheese from
foreign markets.
2. Import Quotas – An import quota is a trade restriction on the quantity of a particular product that can
be imported. Import Quotas – An import quota is a trade restriction on the quantity of a particular
product that can be imported. For example, a country may impose an import quota on the volume of
the material of cloth that is to be imported.
3. Voluntary Export Restraints (VER) – This type of trade obstruction is deliberately created by the
country that is exporting on the country that is importing.
A voluntary export constraint is usually imposed on the importing country, and could be followed by a
reciprocal VER. Voluntary Export Restraints (VER) – This type of trade obstruction is deliberately created by
the country that is exporting on the country that is importing. A voluntary export constraint is usually
imposed on the importing country, and could be followed by a reciprocal VER. For example, France could
place a VER on the export of wine to the USA. And, the USA could then place a VER on the export of
computer to France. This increases the cost of both computer and wine, but secures the domestic
industries.
4. Local Content Requirement – Local content requirements (LCRs) are policy measures that typically
require a certain percentage of intermediate goods used in the production processes to be sourced
from domestic manufacturers.
Local Content Requirement – Local content requirements (LCRs) are policy measures that typically
require a certain percentage of intermediate goods used in the production processes to be sourced
from domestic manufacturers. The limitation can be a proportion of the product itself, or a
proportion of the estimated value of the product. For example, an LCR on the import of car might
call for 15% of the pieces used to make the car to be manufactured domestically, or can also call for
5% of the estimated value of the product must come from domestically produced components
Tariffs come with their own advantages and disadvantages. In simple words, tariff is a form of tax that the
government charges to increase revenue on imports made by the domestic market. This eventually also helps
the domestic enterprises to flourish.
In simple words, tariffs and trade obstructions tend to be pro-producer and anti-consumer.
• The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement regulating
international trade.
Its purpose was the reduction of tariffs and other trade barriers and also elimination of
preferences.
It’s main commitment was to ensure international economic cooperation.
In 1993, the GATT was updated (GATT 1994) to include new obligations upon its signatories.
One of the most significant changes was the creation of the World Trade Organization (WTO).
The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement regulating
international trade. Its purpose was the reduction of tariffs and other trade barriers and also elimination of
preferences. Its main commitment was to ensure international economic cooperation.
In 1993, the GATT was updated (GATT 1994) to include new obligations upon its signatories. One of the
most significant changes was the creation of the World Trade Organization (WTO).
Page 5 of 8
KORBEL FOUNDATION COLLEGE, INC.
Purok Spring 1, Brgy. Morales, Koronadal City
Contact No. 228-1996/887-2051
Business Department
korbelbusinessdepartment@gmail.com
Lecturer: Rey Apaez A.Y. 2ND SEMESTER, 2020-2021
International trade liberalization is considered the biggest leap which came into existence with to the
signing of multilateral trade agreements.
WTO
• World Trade Organization was established in 1995 after the distress of General Agreement on Tariff
and Trade (GATT). The main objective of WTO is to assist and support trade flow smoothly, freely, fairly
and predictably.
These objectives are
• Monitoring trade agreements
• Acting as a forum for trade agreements
• Settling trade conflicts
• Auditing national trade policies
• Collaborating with other international organizations
• Supporting developing countries in trade policy issues, through technical assistance and
training programs
WTO
• The WTO has 162 countries as member states reckoning for over 97% of world trade
• The top most level in WTO is the decision-making body. It is the Ministerial Conference which meets
at regular intervals once in every two years
• The next level is the General Council. The general council meets every year at the Geneva
headquarters.
The General Council also meets as the Trade Policy Review Body and the Dispute
Settlement Body
• The General Council also meets as the Trade Policy Review Body and the
• Dispute Settlement Body
The WTO Secretariat, established in Geneva, has a head count of 600 and is led by a director general.
There are no branch offices outside Geneva.
The WTO is governed by its member government.
The WTO has 162 countries as member states reckoning for over 97% of world trade. All the members
play an active role in decision-making. And, a consensus is finally drawn. A majority franchise is possible in
WTO but it has never been used. The WTO’s settlements have by far been considered by all the parliaments of
the member states.
The top most level in WTO is the decision-making body. It is the Ministerial Conference which meets at
regular intervals once in every two years. The next level is the General Council. The general council meets
every year at the Geneva headquarters. The General Council also meets as the Trade Policy Review Body and
the Dispute Settlement Body. The General Council also meets as the Trade Policy Review Body and the Dispute
Settlement Body
The WTO Secretariat, established in Geneva, has a head count of 600 and is led by a director general
There are no branch offices outside Geneva.
The WTO is governed by its member government. The members i.e. the ministers who meet at least
once every two years or ambassadors or delegates who frequently meet in Geneva make all the major
decisions.
Page 6 of 8
KORBEL FOUNDATION COLLEGE, INC.
Purok Spring 1, Brgy. Morales, Koronadal City
Contact No. 228-1996/887-2051
Business Department
korbelbusinessdepartment@gmail.com
Lecturer: Rey Apaez A.Y. 2ND SEMESTER, 2020-2021
India’s EXIM Policy
• The different policy related decision taken by the government in foreign trade is known as
Indian EXIM Policy.
• Exim policy is called Foreign Trade Policy.
It focuses on improving export potential, developing export performance, motivating
foreign trade.
The different policy related decision taken by the government in foreign trade is known as Indian EXIM
Policy. In simple words, imports and exports from and to the country. Precisely, export promotion scopes
policies and procedures regarding the trade Policy is declared by the Central Government. Exim policy is
called Foreign Trade Policy. It focuses on improving export potential, developing export performance,
motivating foreign trade.
The main objectives of EXIM policy are as follows
To enhance economic growth by facilitating access to important raw materials, intermediaries,
and other items required for production
To make the Indian agriculture, industry and services more efficient and thus, develop their
competitiveness
To create new employment opportunities
To supply quality products at reasonable prices
The main objectives of the Export Import Policy 1997 -2002
To boost the economy by increasing economic exercises and making it a universally familiar
economy and to also create channels and obtain profits with improved global existence
To enhance economic growth by facilitating access to important raw materials, intermediaries,
and other items required for production
To bring in technological reforms and make the Indian agriculture, industries, and services more
efficient thus, developing their competitiveness.
To create new employment opportunities
To provide quality products at reasonable prices
The main objectives of the Export Import Policy 2002-2007
To enhance economic growth by facilitating access to important raw materials, intermediaries,
and other items required for production
To bring in technological reforms and make the Indian agriculture, industries, and services more
efficient thus, developing their competitiveness while creating new employment opportunities
To supply customers with good quality products and services at globally competitive rates while
at the same time building a level playing field for the domestic producers.
PART II. ASSESSMENT
1. EPRG framework, Exim Policy, Quota, Tariff
Role
Importance
Advantages and disadvantages
Page 7 of 8
KORBEL FOUNDATION COLLEGE, INC.
Purok Spring 1, Brgy. Morales, Koronadal City
Contact No. 228-1996/887-2051
Business Department
korbelbusinessdepartment@gmail.com
Lecturer: Rey Apaez A.Y. 2ND SEMESTER, 2020-2021
PART III. SOURCES/REFERENCES
www.tutorialspoint.com/international_marketing/interntional_marketing_introduction
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