Course summary (International distribution).
Global distribution: direct and indirect export channels. Sales / production subsidiary. Internationalization: licenses and franchises. Sales network management.
Objectives. In this unit you will learn:
- The importance planning an appropriate
International distribution
strategy when entering
new export markets, examine the
distribution options available to the exporter, outline the criteria to be used
when
selecting a distribution option and
analyze strategies which can be
implemented for consumer and/or industrial products.
- The channel options that may be used when
entering new export markets. We are going to examine the
direct and indirect
export channels open to the exporter, analyze the
functions of importers and
representatives, discuss the use of company personnel and
sales or production
subsidiaries as well as explore
franchising, licensing and other channels.
- The process of evaluating, recruiting and
managing international sales
representatives and the mechanism involved in selling into department stores and
hypermarkets.
This will be achieved by:
- Examining the distribution options available to the exporter.
- Outlining the criteria to be used when selecting a distribution option.
- Introducing strategies which can be implemented for consumer and/or industrial
products.
In finishing this Learning Unit, you will know the different possibilities that
a company has for creating a network of international representatives and
negotiation factors with possible agents at the time of signing contracts.
Example of the course International distribution:

In general, it would be ideal for an exporter to be
able to sell direct to his final client with no need for intermediaries. In this
way the exporter: reduces cost of sales, increasing the product's
competitiveness; is in direct contact with the market, obtaining a continuous
feedback of information; he can control the company's
marketing policy directly. However, the truth is that
this is not always possible (due to the costs involved or market idiosyncrasies)
and in these cases the company should seek an intermediary.
We will analyze the most appropriate profile
of a Foreign trade representative or agent, how to find him, how to apply
control mechanisms, etc. What we must keep in mind is that the representative or
agent is only useful when he starts to sell. Finding the agent isn't the end in
itself, rather obtaining orders through him.
We will learn about selling into
hypermarkets and department stores. You will outline the organization of a
purchasing department. You will learn how to best approach department stores.
You will examine the role of purchasing agents. You will analyze an interview
with a purchasing manager.
To help overcome the difficulties encountered in international
markets, it may often be in the interests of small and medium size
companies to resource a separate organisation for the promotion and/or
sale of their products abroad. It is quite common in Europe. It consists
of uniting the export departments of several companies to form one
common one for use by all.
The option “growing from zero” of the export department which can be
seen as the most effective, is the creation of shared structures between
various companies; what we will call “export consortiums”
Trading Companies are companies that sell domestically
produced products abroad. They play an important role in giving an
impetus to foreign trade and operate as commission agents for exporters.
The Trading Company usually operates by finding a client who wishes to
purchase a certain product somewhere in the world. Generally, these are
clients who require a component that is almost unique and incorporated
into their own product so it can be difficult for them to find a vendor.
Japanese trading companies (Sogo Shoshas) or the corresponding in
South Korea (Chaebols), are the ones that are furthest from the
prototype of small companies described; they have a higher number of
employees which allows them to specialize in specific products: cement,
steel, heavy machinery and food.
Sales Subsidiary. This formula enables having much stricter
control of the marketing policy. For the company, the creation of a
subsidiary means a long-term investment. Thus, the company should make a
series of really in-depth research studies, in order to prevent any
mistakes. Alternatively, the company could create a sales subsidiary but
only when the sales potential is really high. Fully owned subsidiaries
have been viewed as an international movement of capital. Now, however,
capital transfers are accompanied by technological flow, managerial
control, and access to input and output markets otherwise unattainable
to the receiving country.
The various formulae analyzed so far correspond to what we could
describe as a traditional distribution chain: from manufacturer to
importer, from importer to wholesaler, from wholesaler to the
representative, from the representative to the sales point and from the
sales point to the end user. Once the necessary experience has been
obtained, it cedes the opportunity to sell its products to those people
or companies that wish to invest, creating a direct sales point similar
to the one already set up.
Finally, we will analyze how e-business can influence international
distribution. We believe that companies nowadays should look at digital
distribution strategies. We see a business environment changing from
consolidated multinational companies with established distribution channels
selling "atoms" to pure Internet start-ups which only sell "bits". When we think
about "bits" products we automatically think about digital distribution over the
net, a global, flexible, instantaneous distribution which in many cases will not
be controlled by national customs controls. What's more, implementing digital distribution strategies can create tensions in our
traditional distribution network if we cannot create synergies.
Cases study (International Distribution):
Toshiba, a world leader in high technology, is a diversified
manufacturer and marketer of advanced electronic and electrical
products, spanning information & communications equipment and systems,
Internet-based solutions and services, electronic components and
materials, power systems, industrial and social infrastructure systems,
and household appliances. Under the management vision of
Innovation-driven, customer-focused growth, the key objective of the
Toshiba Group of companies is to provide total utmost satisfaction to
customers worldwide through leading-edge products and top-of-the-line
services.
Mitsubishi Corporation (MC) is
Japan's largest general trading
company (sogo shosha) with over 200 bases of operations in approximately
80 countries worldwide. Although the activities encompass everything
from trading to business investment, the essence can best be described
as focusing on the needs and seeds of customers and society, conceiving
business models, and reliably providing functions and services to propel
these businesses forward. Over the last 20 years, Mitsubishi
Corporation has been actively engaged in various business fields in
China, since the opening of
Beijing office in 1979.
Focused on patients’ needs, Sanofi-aventis offers a range of
essential healthcare assets, including a broad-based product portfolio
and a presence worldwide. Operating in over a hundred countries,
sanofi-aventis markets major pharmaceutical products derived from its
research and a very wide range of medicines adapted to local needs
throughout the world. Health policies and practices vary from country to
country, with different funding systems and retail channels, and wide or
restricted access to medicines. To adapt to these varied situations,
sanofi-aventis has introduced a regionalization strategy. In many
countries, sales forces have been reorganized into regional divisions
and new functions have been created to interface effectively with
institutions and administrations, as well as with patient associations.
Sumitomo Corporation is a leading general trading company,
boasting 150 locations in 70 countries throughout the world. The entire
Sumitomo Corporation Group consists of nearly 780 companies and more
than 70,000 personnel. The Company's overseas industrial complex
business (the overseas market penetration of Japanese companies has
continued to accelerate since the late 1980s) is involved in the
development and sales of industrial complexes in
Vietnam, the
Philippines and
Indonesia, supporting the
further penetration of the manufacturing industry in Asia and assisting
in building industrial infrastructure throughout
Asia in local communities. In
total, more than 240 companies have taken up residence in three
industrial locations, creating 95,000 new jobs.

Rolls-Royce plc is a global company providing power on land,
sea and air. The company has established leading positions in civil
aerospace, defence, marine and energy markets. Rolls-Royce plc operates
in four global markets - civil
aerospace, defence aerospace, marine and energy. Annual sales total
nearly £6 billion, of which 50 per cent currently comes from aftermarket
services. The order book stands at more than £17 billion. Headquartered
in suburban Washington DC (US),
Rolls-Royce North America
provides management direction and corporate support for all Rolls-Royce
businesses and operations in the region. Purchasing in Rolls-Royce has
changed dramatically from the organisation it was just three years ago,
driven by a recognition that Purchasing performance has a massive impact
on our business success and on the service we provide to our customers.
Renault-Nissan Alliance. On March 27, 1999, Nissan and
France's Renault SA signed an agreement concerning a comprehensive
global alliance aimed at achieving profitable growth for both companies.
For 10 years, employees at Renault and Nissan have worked as partners
with attitudes of mutual respect and company pride while keeping
separate brands and corporate identities.
Nissan continues its quest to optimize product development and deliver
highly innovative technology. The Infiniti brand is highly regarded for
its advanced design and powerful performance in each of its markets,
including the U.S., Canada,
Russia, the
Middle East and Korea.
With its highly refined style and responsiveness, Infiniti promises a
driving experience with unparalleled appeal. This globalization program
has now advanced to the stage where decision-making has been localized
through the establishment of regional headquarters in North America and
Europe. Nissan North America Inc. and Nissan Europe N.V. oversee the
entire scope of Nissan's local operations in their respective regions,
including product development, manufacturing, procurement, fund-raising
and mutual complementation of parts between companies.

MANGO is a prestigious multinational company dedicated to the
design, manufacture and marketing of clothing garments and accessories
for women. MANGO bases its logistics on an in-house system which has
developed progressively since the opening of our first store in 1984
until the present day, in which MANGO has become Spain’s second largest
textile exporter. The Product Distribution team is responsible for
selecting and managing the product in stores in order to define and
offer stores a product offer that responds to the needs of each market
in all the countries in which MANGO is present.

MANGO opened its 99th store in 1992. From this point on, the
company's international expansion got underway with the opening of two
stores in Portugal and in France afterwards. In 1997, the total turnover
generated abroad exceeded the domestic turnover for the first time, and
in 2001 it reached 68% of the total turnover. They presently have
approximately 1220 MANGO/MNG stores in a total of 91 countries. Their
goal is to be present in every city in the world. The MANGO
fashion chain offers its franchise system throughout the European
Union and in the major world capitals and cities.
7-Eleven pioneered the convenience store concept way back in
1927 at the Southland Ice Company in Dallas, Texas. 7-Eleven is the
undisputed leader in convenience retailing with more than 24,000 stores
operating in the U.S. and 17 other countries and total sales of more
than $33 billion. More than 5,800 7-Eleven and other convenience stores
are operated and franchised by 7-Eleven, Inc. in the United States and
Canada.
International, Distribution, Exports, Importers, Representatives, foreign, Subsidiaries, direct, Indirect, export, channels, Sales, Production subsidiary, Internationalization, Licenses, Franchises, Sales, Network, Management, Master, international business