An organization with global headquarters in the United States has subsidiaries in eight other nations. If the organization operates with an…

Question breakdown

Tests

Identify characteristics of multinational management orientations

Difficulty

Easy

Key idea: An ethnocentric organization treats home-country practices and people as superior, so headquarters centralizes decisions and directs its subsidiaries.

How to reach the answer

1. Recall the EPRG framework: ethnocentric, polycentric, regiocentric, geocentric.
2. Ethnocentric means the home-country view dominates and control is centralized.
3. Find the option that shows one-way, top-down direction from the U.S. headquarters.
4. Rule out options describing local autonomy (polycentric) or collaboration (geocentric).

Each option

• AIncorrect. Standards set locally reflect a polycentric orientation, not ethnocentric central control.
• BCorrect. Under an ethnocentric orientation, orders, commands and advice flow from headquarters to the subsidiaries.
• CIncorrect. Developing local nationals for top local posts is polycentric; ethnocentric firms favor home-country staff for key positions.
• DIncorrect. Extensive two-way collaboration describes a geocentric orientation.

Common trap: Option D sounds like good global management, but collaboration belongs to the geocentric model, not the ethnocentric one.

In practice: Auditors of multinationals see this when assessing whether control frameworks and policies are imposed uniformly from headquarters or adapted locally, which affects risk at subsidiaries.

Remember: Ethnocentric means home-country centralized control with top-down direction; polycentric means local autonomy; geocentric means collaboration.

Drafted with AI assistance and checked against the answer key.