Question

In what way can the following basic predispositions affect an MNE’s strategic planning: ethnocentric, polycentric, region-centric and geocentric?

Answer 1

An MNC’s strategic planning related activities including staffing is affected by the given predispositions and these four predispositions decide on the specific steps that need to be followed by the company. If the company follows ethnocentric predisposition, they would implement the strategic decisions based on the values and interests of the parent company and the strategic decisions are made in the company headquarters. Parent company nationals manage the subsidiaries. If the company is based on polycentric predisposition, the company would try to follow the cultures of the host country in which it operates while taking decisions. Host country nationals are mostly selected to manage the overseas subsidiary operations. In the case of region-centric predisposition, the enterprise takes strategic decisions based on the interests of particular region as different regions are considered as different markets. The strategy and structure depends upon the specific region. A geocentric predisposition makes the company to consider the world as a single market and integrate the global systems approach to decision making. The company recruits the best suited individuals for the jobs across the world ignoring nationality.