Presentation on theme: "Staffing Example: a business such as PharmaCare decides to expand overseas to the USA. These are 3 alternatives that can be used for their staffing requirements."— Presentation transcript:
Staffing Example: a business such as PharmaCare decides to expand overseas to the USA. These are 3 alternatives that can be used for their staffing requirements once they have moved. Polycentric Staffing approach that uses the staff from America to run PharmaCare (Australian company). Pros: the staff know the local area, they understand the local and regional market and financial conditions and it provides employment for Americans. Cons: staff are not familiar with the business, relationships have to be built up with home country (such as Australia) and the new country they establish in and may mean very low revenue during establishment. Geocentric This approach used staff from either America or Australia dependant on the job/skills required. It is also decided on factors such as current position, geographical location and experience overseas. Pros: can be very effective if performed efficiently and expansion occurs quicker with people already involved in the company. Cons: can be a very complex and time consuming process to initiate and can also be very capital intensive. Ethnocentric The final approach used the staff from the home country (Australia) to run the business overseas. Pros: this approach means the company can operate the same way they do in Australia but with a new market to investigate and sell to. Diversification of products and target market. Cons: very costly for PharmaCare as well as the change in market condition could significantly alter their ways of conducting business. Could also mean expertise is needed from the local area as the Australian staff would not be use to the conditions.
Questions What would be the most effective approach for a business expanding overseas from Australia to a country in Southern Asia and why? Why would the ethnocentric approach pose potential problems in a foreign country? What would be the approach that requires the least amount of capital to provide staff for the company overseas (excluding costs of overseas establishment)? Explain the difference between ethnocentric and polycentric.