The EPRG Model and Global Business Strategy

A global recession, combined with failures to recognize the bulk-buying habits of average Americans, meant that Tesco was forced to leave the U.S. after just five years of trading.[1]

2. Company B also has a difficult start but eventually realizes that local professionals have a better understanding of the host country’s culture and values. They utilize this talent to adapt to local practices. Eventually, they see an uptick in sales, albeit more slowly than they initially hoped.

3. Company C, however, understands the individual needs of its international branches. From the beginning, it tailors its processes according to local cultures and prioritizes hiring local professionals. Company C has immediate success and continues to exceed its business goals year after year.

Apple is one of the most famous success stories in internationalization. Not only did their iconic product line resonate with audiences the world over, but they also developed a rich network of global suppliers that set them apart from the competition.[2]

Your organization is most likely to succeed if you can model it after Company C, and embrace the unique needs, challenges and advantages of local markets.

What Is the EPRG Model?

The EPRG model is a framework for organizations to develop their global strategy for international expansion.

Howard Perlmutter, a professor at the Wharton School of Business and a pioneer researcher in corporate globalization, developed the previously known EPG model, explaining it in his 1969 article, “The Tortuous Evolution of Multinational Corporations.”[3]

The original model outlined three profiles that defined an organization’s international business strategy. In 1973, Perlmutter, along with his colleagues, Yoram Wind and Susan Douglas added a fourth profile: regiocentrism.

They published the updated framework, now called the EPRG model, in the Journal of Marketing.[4]

The four profiles are:

1. Ethnocentrism
2. Polycentrism
3. Regiocentrism
4. Geocentrism

This model may be old but it’s still just as relevant in today’s climate of constant communication and was recently discussed in the Elgar Encyclopedia of Cross-Cultural Management.[5]

The EPRG model is reproduced from Wind, Y., Douglas, S.P., and Perlmutter, H.V. (1973), ‘Guidelines for Developing International Marketing Strategy,’ Journal of Marketing (37), by permission of SAGE Publishing.

How to Evolve Your International Business With the EPRG Model

The four profiles of the EPRG model reflect your organization’s attitude toward its international operations. You could also consider these as stages of organizational evolution; as your business expands, it’s likely to transform from ethnocentrism through to geocentrism.

Each stage requires a different management strategy as each has different costs and benefits. Let’s explore each approach to help you determine which attitude best describes your organization’s current perspective.

Ethnocentric Approach

Organizations that have recently expanded overseas sometimes have an “ethnocentric attitude,” that is, leaders and managers (sometimes subconsciously) believe that their domestic strategies, processes, performance metrics, and staff are superior.

As a result, leaders implement few, if any, changes to accommodate local markets and staff.

However, this attitude is short-sighted and misses opportunities for cultural synergy. There’s little room for innovation or flexibility and businesses may even face public backlash for not embracing local economies and practices. This can lead to poor performance, forcing businesses to adapt to survive.

Polycentric Approach

As these organizations evolve, they recognize the flaws in their one-size-fits-all approach. They accept that “different” may not always mean “bad” and learn to appreciate the unique value of local talent, techniques, and performance metrics.

They integrate local professionals and ways of working into their international offices. But soon, they struggle to control and coordinate their efforts across multiple locations.

Regiocentric Approach

Organizations with a regiocentric perspective will likely have multiple offices within one host country. The regional differences between the offices mean that organizations must embrace “glocalization” – combining global frameworks and local preferences.

With this attitude, businesses give regional offices the autonomy to develop their own approach, one that reflects their unique differences.

Geocentric Approach

For geocentric organizations, the world is their stage. International offices are no longer seen as “satellites” but rather integral parts of the whole organization.

They hire “borderless talent,” recruiting based on skill and experience over location.

Processes and culture may vary widely between locations but, in the best cases, quality is consistently high throughout the organization.

How to Become a Geocentric Organization

Geocentrism is often the most desirable outcome for businesses, as it’s the most open, flexible, and culturally attuned perspective. It enables organizations to adapt flexibly to local conditions and opportunities.

You can use several strategies to develop a more geocentric perspective in your organization, such as:

Step 1: Raise Cultural Awareness

Firstly, do your research. Tools like Hofstede’s Cultural Dimensions can help you to identify the key qualities of new regions. And invest in training to ensure that team members and leaders understand how to communicate within a diverse team and are sensitive to cultural differences.

Step 2: Develop Cross-Cultural Management Strategies

As an international business leader, you need to understand how each local office will be run to ensure that they are equipped to respond to region-specific requirements.

Arrange to meet with your new team members – either in person or virtually – to discuss how local recruitment, training, strategy development, and marketing will be run.

Step 3: Embrace Technology

Don’t underestimate the power of technology. For example, cloud-based systems and online collaboration platforms can help your teams to work seamlessly, regardless of location.

A.I. and data analytics offer insights into new markets and inform decisions on consumer behavior, regional preferences, and localized revenue streams. And you can leverage big data for real-time feedback on international projects.

Applying the EPRG Model in the Digital Age

The world has changed a lot since this model was last updated in 1973. Rapid technological advancements have fundamentally changed the way that we operate.

Now teams collaborate remotely, customers expect almost instant product delivery, and news stories and trends circulate on social media in the blink of an eye. In short, the world works faster and more globally than ever before.

You may find, therefore, that rather than a pure translation of the EPRG model, a matrix-management style is more suitable.

In this structure, local executives report to two managers: a country manager and a functional manager. The former oversees local markets, while the latter maintains quality and brand across the organization.

Frequently Asked Questions

Who created the EPRG model?

The EPRG model was developed by professor and pioneer researcher, Howard Perlmutter. Originally known as the EPG model, Perlmutter updated it in 1973, with the help of his colleagues, Yoram Wind and Susan Douglas, to include regiocentrism. Henceforth, it became known as the EPRG model and is still used by organizations to this day.

What are the four stages of the EPRG framework?

The EPRG model is made up of four profiles: ethnocentrism, polycentrism, regiocentrism, and geocentrism. These reflect the attitudes of international business but can also be seen as stages of growth for global organizations, as they learn to embrace new cultures and markets.

What are the benefits of the EPRG model?

The EPRG model is a useful tool for businesses to identify their current attitudes to international markets and to confront biases that could be impeding their progress toward a geocentric mindset. Leaders can use these findings to inform strategies that embrace cultural differences and broaden their talent pool.

How does the EPRG model affect recruitment practices?

Organizations that have recently expanded overseas sometimes believe that their domestic staff are best placed to run international offices. With the help of the EPRG model, these organizations can learn the value of local professionals and eventually adopt “borderless recruitment” practices, that prioritize experience and skill over location.