The EPRG Model
Growing Into a Global Company
Imagine that three different companies have decided to expand and open new international offices.
Company A struggles in its new location for several years, and ends up closing its office, because it never meets its leaders' expectations. Company B has a difficult start in its new location, but it slowly begins to improve, although not as quickly as the organization had hoped. However company C's office starts well and continues to exceed expectations, year after year.
So, what's the difference between these companies?
Each has a different perspective on international growth.
Company A believes that its home country has the best staff, resources, and practices, so it creates an exact replica of itself in the host country. Company B slowly realizes that professionals in the host country have a better understanding of the local culture and values, so it customizes its approach to reflect the needs of the new culture.
Company C, however, believes that each international office is unique, right from the start. It encourages local professionals to apply for jobs, and it customizes processes and performance metrics to fit the host culture's values and beliefs.
Companies that expand internationally have a number of challenges to overcome; and one of the biggest is to change their perspective to adapt to their new markets. Your organization is most likely to succeed if you can model it after Company C, and embrace the global culture that we are all now part of.
In this article, we'll look at the EPRG Model – a model that international organizations can use to develop a strategic, global approach to international expansion.
Last updated in 1973, this is an old model. We describe it in this article, but we then discuss how business has evolved since it was published.
About the Model
Howard Perlmutter, a professor at the Wharton School of Business and a pioneer researcher into corporate globalization, developed the original EPG Model after studying how international corporations built their businesses and evolved in host countries. Perlmutter explained the model in his 1969 article, "The Tortuous Evolution of Multinational Corporations," published in the Columbia Journal of World Business.
The original EPG Model outlined three profiles, or orientations, that defined an organization's international business strategy. In 1973, Perlmutter, along with his colleagues, Yoram Wind and Susan Douglas, added a fourth element to the EPG Model: regiocentrism. They published the updated model, now called the EPRG Model, in the Journal of Marketing.
The four profiles are:...