International distribution: importers representatives subsidiaries

EENI

 

Learning unit: Global distribution. Syllabus:

International distribution

- Introduction to international distribution policy.
- Indirect exports.
- Consultancy.
- Associated exports. Consortia.
- Trading companies.
- Case study:
   - Sogo Shoshas and Chaebols.
   - Toshiba.
   - The Third Italy.
   - Mitsubishi Corporation.
   - Sanofi-aventis

Direct exports.

- Importers.
- Representatives.
- Company personnel.
- Foreign subsidiaries:
   - Sales
   - Production.
- Internationalization:
   - Licenses
   - Franchises.
- Other distribution channels.
- Case study:
   - Set it up in Costa Rica.
   - Sumitomo.
   - Itochu.
   - Rolls-Royce.
   - Renault-Nissan Alliance.
   - 7-Eleven.
   - Mango.
   - International distribution networks in centralized economies.

Sales network management.

- Representation contracts.
- Recruitment Methods.
- Control representatives Work.
- International sales:
   - Purchasing departments,
   - Delegated agents.
- Distribution and e-business. Going international with e-business
- Case study.
   - Exclusive agent in two markets.
   - "Grey" Networks.
   - Electrolux India.

Sample of the learning unit International distribution:
Direct Exports

This learning unit "International distribution" is part of the:

Learning materials En Fr Distribution En Distribucion Pt DistribuiƧao

Learning unit summary (International distribution).

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.

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 organization 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 impulse 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.

International Distribution

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.

Joint Ventures

licenses and franchises

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EENI Business School