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CopyrightAtomicDogPublishing,2008CopyrightAtomicDogPublishing,ManagingInternationalDistributionOperationsandLogisticsDana-NicoletaLascuChapter9CopyrightAtomicDogPublishing,2008ChapterObjectives•Describethefunctionsofhome-countryandhost-countryintermediariesinvolvedininternationaldistribution.•Identifythefacilitatorsofinternationaldistributionandlogisticsanddescribetheirinvolvementintheinternationaldistributionprocess.•Addressthechallengesencounteredbydistributionincountriesofdifferentdevelopmentlevels.CopyrightAtomicDogPublishing,2008IssuesRelatedtoInternationalDistribution•Animportantdistributiondecisionforthecompanyiswhethertouseestablishedchannelsortobuilditsownchannels.•UsingEstablishedChannelsCouldchargehighprices.Couldbeblockedbycompetition.Channelpartnershipisalong-termdecision:companymaybeboundindefinitelytothechannelchoice.•BuildingOwnChannelsNecessaryiftherearenochannelsatallandiftheexistingchannelsdonotconformtocompanyneeds.Expensive.Time-consuming.CopyrightAtomicDogPublishing,2008Home-CountryMiddlemen•ExportManagementCompaniesHighlyspecializedincertainindustries,theytypicallyrepresentsmallercompaniesinaregionofthecountry.Typicallyworkasacompany'sexportdepartment.CopyrightAtomicDogPublishing,2008Home-CountryMiddlemen(contd.)•TradingCompanies•Largecompaniesthatprovideintermediaryservices,riskreductionthroughextensiveinformationchannels,andsignificantfinancialassistancetomanufacturingfirms.•InJapan,tradingcompanies(sogoshoshas)actasintermediaries,butarealsoinvolvedinmanufacturingandfinance.•IntheU.S.,theyareconsortiaofsmallersuppliers,service-orientedfirms,multinationalcorporationsandpublicandquasi-publicentities;theywerecreatedbytheExportTradingCompanyActtoencourageandpromoteexports.CopyrightAtomicDogPublishing,2008Home-CountryMiddlemen(contd.)•Home-CountryBrokersandAgentsMiddlemenwhobringinternationalbuyersandsellerstogetherinthecompany'shomecountry.Donotcarrytitletotheproduct.Manufacturer’sexportagent:representsamanufacturer.Buyingoffices:buyerslocatedinthefirm’shomecountry,representingdifferentinternationalfirms.CopyrightAtomicDogPublishing,2008Home-CountryMiddlemen(contd.)•CooperativeExportArrangementsAlsoknownaspiggybackingandmotherhenning.Involveexportersagreeingtohandleexportfunctionsforunrelatedcompaniesonacontractualbasis.Complementaryexportagentsexportcomplementaryproductsonacommissionbasis.Complementaryexportmerchantstaketitletothecomplementaryproductsthattheyexport.CopyrightAtomicDogPublishing,2008Home-CountryMiddlemen(contd.)•Webb-PomereneAssociationsofExportersCompetingcompaniesthatjoinresourcesandeffortstoexportinternationally.Companiesareexemptfromantitrustscrutiny.Companiesarepresentespeciallywherecartelsareactive.CopyrightAtomicDogPublishing,2008Home-CountryMiddlemen(contd.)•ExportmerchantsIntermediarieswhotaketitletoandpossessionoftheproductstheycarry.Responsibleforshippingandmarketingtheproductsinthetargetmarket.Carrycompetingbrands.Examples:-Exportjobber,whocarriescommoditygoods,butdoesnottakephysicalpossessionofthegoods.-Noraziagent,whodealsinillegaland/orgraymarketproducts.CopyrightAtomicDogPublishing,2008OtherTaxIncentive-BasedStructuresforInternationalization•Nolongerviableoptions:•Foryears,settingupaForeignSalesCorporation(FSC)hasbeenapopularapproachtoallowingaportionofthefirm'sforeign-sourceincometobeexemptfromU.S.incometax.•ItwasfollowedbytheExtraTerritorialIncomeAct.•Bothwererepealedin2004bytheU.S.SenateasaresultofWTOcomplaintsregardingwhatessentiallywereexportsubsidies.CopyrightAtomicDogPublishing,2008Foreign-CountryMiddlemen•MerchantMiddlemen:Carrythemanufacturer'sproductlineinaparticularcountry.Usuallycarrytitletoandhavephysicalpossessionoftheproductstheydistributeintheforeigntargetmarket.CopyrightAtomicDogPublishing,2008Foreign-CountryMiddlemen(contd.)•AgentsandBrokers:Therearemanytypesofagentsandbrokersininternationalmarkets–forexample,manufacturers’representatives,managingagents,etc.Couldactasthemanufacturer’ssalesrepresentativesandarepaidoncommission.Couldtakeontheroleofmanagingagents(alsoknownascompradors),withanexclusivearrangementwiththecompany,representingitintheforeignmarket;theyarepaidasapercentageofsales.CopyrightAtomicDogPublishing,2008Foreign-CountryMiddlemen(contd.)•AlternativeDistributionStructures:NetworkMarketingUsingacquaintancenetworksforthepurposeofbothsalesanddistribution–havebotharetailinganddistributionfunction.Havepotentialinemergingmarkets.CopyrightAtomicDogPublishing,2008InternationalLogistics•Theinternationaldistributionfunctionissupportedbyanumberofserviceproviders:•Transportationfirms•Homecountryfreightforwardersandcustomsbrokers•Governmentagencies•Nongovernmentalorganizations•Logisticsalliances•Otherfirms•LogisticscostsaccountforalargepercentageofGDP(morethan10percentintheUnitedStates),makinglogisticsthesinglehighestoperatingcost.CopyrightAtomicDogPublishing,2008InternationalTransportation•DistributionCenters•Designedtospeedupwarehousinganddeliverybychannelingdistributiontoahub.•TransportationFirms•Intermodalt
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