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Sales and Distribution

Management 2e

Tapan K. Panda
Sunil Sahadev

Oxford University Press 2012. All rights reserved.


Chapter 22

Managing the International


Channels of Distribution

Oxford University Press 2012. All rights reserved.


Learning Objectives
Identify the differences between domestic and international
distribution systems

Understand the major entry strategies

Understand the implications of each entry strategy on distribution


channels

Know the major characteristics of the international logistics


function

Discuss the exporting process

Oxford University Press 2012. All rights reserved.


Factors affecting international trade
Differences in customer expectations across countries

Differences in channel structure and trade practices

Differences in governmental policies and regulations

Differences in the quality of physical infrastructure

Oxford University Press 2012. All rights reserved.


International Orientation of Companies
The Mode of Entry Decision
THE MARKET ENTRY STRATEGY
Indirect exporting
C Direct exporting
O
Licensing R
N
Franchising
I
T
S
R Contract manufacturing K
O
L Strategic alliance

Joint venture

Wholly owned subsidiary


Oxford University Press 2012. All rights reserved.
Implications of Entry Modes
Success Factors in Manufacturer-Overseas Distributor Relationships

Distribution inhibitors Outcomes Remedies


Separate ownership Divided loyalties Offering good incentives,
Seller buyer atmosphere helpful support schemes,
Unclear future intentions frank discussions, and high
levels of interactions
Geographic, economic, Communication blocks Making judicious ways of
and cultural gaps Negative attitudes two way visits, establishing
Problems in physical a well managed
distribution communication programme

Differences in the legal Vertical trading restrictions Full compliance with law,
and regulatory Dismissal difficulties drafting a strong distributor
structures agent.

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International logistics management
International distribution system

International suppliers

Offshore manufacturing

Fully integrated global supply chain

Oxford University Press 2012. All rights reserved.


International Shipment Procedures
International logistics facilitating intermediaries
Freight forwarder

a) To forward an export shipment from the point of origin


to the ultimate destination and

b) To deal with transport carriers to get space for the


shipment

Customs broker

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Export procedure
1
Exporter Importer

4 2

5 Bank in exporters 3 Importers bank Import


country warehouse

Manufacturing Customs
8
9
6
Transportation and
Documentation 7 Customs
Ship
formalities secured broker
Freight
forwarder

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Export procedure
State Process
1 The Sale
Importer makes enquiry from potential supplier
Exporter sends catalogue and price list
Importer requests samples
Exporter sends Proforma invoice
Importer sends purchase order
2 Importer arranges bank financing.
3 Letter of credit send by importers bank
4 Exporters bank notifies that the LOC has been received
5 Exporter produces or acquires goods
6 Exporter arranges transformation and documentation and space reserved on ship or
aircraft
7 Exporter ships goods to importer
8 Exporter presents documents to bank for payment
9 Importer has goods cleared through customs and delivered to the ware house

Oxford University Press 2012. All rights reserved.


Exporting documents
Letter of credit

Bill of lading

Commercial invoice

Commercial invoice

Consular invoice

Certificate of origin

Oxford University Press 2012. All rights reserved.