Describe the ethnocentric and regiocentric approach in functional management of international business.

Ethnocentric Approach :

In the ethnocentric appproach, the company’s headquater (home country) retains a central role in decision – making, and there is a belief that the home country’s practice, products and management techniques are superior to those of other countries. This approach often involves exporting products from the home country to foreign markets. These companies ignore the opportunities outside the home country and they are reffered to as domestic companies.

Being ethnocentric in nature, these companies work on the notion that the products that are highly successful in the home country can be sold in the international markets without any required adaptation as it is superior in nature. There is no change in terms of product specification, price, promotion and other aspects and is same as compared to the native market.

Regiocentric Approach :

The company that follows the regiocentric approach of the framework studies the similarities and differences in the world and its various operating region and design the strategies accordingly. The movement of the company figuers out the economic, social, cultural and political similarities between the native area and overseas region and satisfy the similar needs and demend of potential customers.

For eg: the cultural and regional identity of India, Pakistan and Bangladesh is quite similar whereas Norway and Spain that both falls in Europe are very different in terms of culture, climate and transport.