International Distribution Channels and Strategies
International Distribution Analysis
1. Analyzing International Distribution
The Business: Distribution channels are classified into two groups: wholesalers and retailers.
Logistics: Encompasses the process from receiving a purchase order to the goods reaching their final destination.
2. Defining Wholesale and Retail
Wholesale: Large, well-managed companies specializing in product lines.
Retail: Characteristics vary by market; developed markets have fewer but larger retailers, unlike less developed markets.
3. Distribution Strategies
- Intensive Distribution Strategy:
- Selective Distribution Strategy:
- Exclusive Distribution Strategy:
4. Agents vs. Distributors
Distributors are clients who buy and resell, compensated by a commercial bank. Agents act on behalf of the company, transmitting orders and earning commissions.
5. Legal Forms of Sales Subsidiaries
Sales subsidiaries can be structured as subsidiaries or business affiliates.
6. Piggyback and Export Consortia
Piggyback: Suitable for complementary products using similar channels, ideal for small companies avoiding large investments.
Export Consortia: Domestic firms cooperate in exporting, acting as a shared export department. Activities include:
- Export on behalf of the consortium
- Export Pricing
- Physical Distribution
- Selection of agents/distributors
Consortia can be created in home or foreign markets.
7. Joint Ventures and Economic Interest Groupings
International Joint Ventures: Companies from different countries collaborate for joint development, often in the same sector with different advantages.
Economic Interest Groupings (EEIG): Entities of EU companies from different countries, fostering cooperation. Requirements include:
- At least two entities from different EU countries
- Name includes EEIG
- Domiciled within the EU
Partnership agreements must be formalized and registered.
8. International Franchise and Know-How
International Franchise: Transfer of product, brand, and know-how to a foreign company for exclusive distribution. The franchisor grants the franchise to the franchisee.
Know-How: Manufacturing license.