Global Distribution Decisons

Distribution Distribution Channels and Channels and Global MarketsGlobal Markets

Sources for Finding Intermediaries

Governmental Agencies US Department of Commerce Trade Opportunity Program (TOP) Country Directories of International Contacts (CDIC) The US Exporters Yellow Pages, Commercial News

USA Private Sources

Trade directories Banks Airlines Chambers of Commerce

Small Businesses as Global Enterprises

Globalization - The expansion of international business, promoted by

converging market preferences, falling trade barriers, and the integration of national economies.

- Size does not limit a firm’s international activity, and small companies often become global competitors to take advantage of their unique resources.

Emerging Global Markets

Before Going Global

Decide if firm is up to the task of globalization. Firms need to obtain adequate, initial exporting

knowledge Study the different cultural, political and

business practices in foreign markets. Identify viable sales prospects abroad Understand business protocols

Be prepared to modify products to meet design specifications that may vary from country to country.

Select suitable target markets abroad

Questions to Consider Before Going Global

Performance Problems and Remedies When Using Overseas Distributors

Separate Ownership

• Divided Loyalties• Seller-Buyer Atmosphere• Unclear Future Intentions

Offering good incentives, helpful support schemes, discussing plan frankly, and interacting a mutually beneficial way

Geographic:Economic: andCultural Separation

• Communication Blocks• Negative Attitudes towards foreigners• Physical Distribution Strains

Marking judicious use of two-way visits, establishing a well-managed communication program, including distributor advisory council

Different Rules of Law

• Vertical Trading Restrictions

Full compliance with the law, drafting a strong distributor agreement

Seiko’s Authorized and Unauthorized Channels of Distribution

Japan UnitedStates Rest of

the World

K. Hattori & Co. Ltd.

Tokyo, Japan

Unauthorized Importers Authorize

d Importers

Seiko Time Corp.

(Importer)

Regional Distributor

s

15 Regional

Distributors

Unauthorized

Distributors

Regional Distributor

s

Numerous

Retailers

15,000 to 20,000

RetailersAuthorized Seiko Dealers

Unauthorized

Retailers

Numerous Retailers

Japanese Consumer

sAmerican Consumers

Other Consumers

E-Commerce

Marketers are networking and selling products and services through the Internet. Delivery can be outsourced by DHL, FedEx, and UPS

Popular websites are as follows Priceline.com http://www.priceline.com eBay http://www.ebay.com Quadrem http://www.quadrem.com ECnet http://www.ecnet.com Alibaba http://www.alibaba.com Even Facebook is used for marketing

Global Logistics and Materials Management

Involves making decisions on the following issues Channel Structure Channel Design Channel Management Selection of Intermediaries Channel Management E-commerce

International Logistics Defined

International logistics refers to the design and management of a system that controls the flow of materials. It involves… Materials management- the timely movement of raw

materials, parts, and supplies into and through the firm Physical distribution- involves the movement of the firm’s

finished product to it’s customers Supply Chain Management- refers to the whole system of

value-adding activities connecting the source to the end-user Complexities of logistics

Evaluation Transportation Choices

Mode of Transportation______________________________________________

Characteristics of Mode Air Pipelines Highway Rail Water__________________________________________________________________________Speed (1=fastest) 1 4 2 3 5Cost (1=highest) 1 4 2 3 5Loss and Damage (1=least) 3 1 4 5 2Frequency *(1=best) 3 1 2 4 5Dependability (1=best) 5 1 2 3 4Capacity+ (1=best) 4 5 3 2 1Availability (1=best) 3 5 1 2 4____________________________________________________________________________*Frequency: number of times mode is available during a given time period.+Capacity: ability of mode to handle large or heavy goods.

Documentation for an International Shipment

Documentation is sometimes considered to be a trade barrier

Trading regions such as the European Union have greatly simplified their documentation requirements

Bill Of Lading

Inland Bill Of LadingA legal document required for the transportation of materials over land. An inland bill of lading serves as both the carrier's receipt to the shipper and the carriage contract. The document specifies the details of the goods being transported, such as quantity, type and destination.A bill of lading (sometimes abbreviated as B/L or BoL) is a document issued by a carrier which details a shipment of merchandise and gives title of that shipment to a specified party.

Dock ReceiptDocument issued by a shipping company to acknowledge that goods have been received for shipment. Dock receipt transfers the accountability for the safe custody of the cargo from the shipper to the carrier, and serves as the basis for preparing the bill of lading

Consular InvoiceA document certifying a shipment of goods and shows information such as the consignor, consignee and value of the shipment. A consular invoice can be obtained through a consular representative of the country you're shipping to. The consular invoice is required by some countries to facilitate customs and collection of taxes.

A letter of credit is a document issued by a financial institution or a similarly accredited professional party. The letter assures payment to a seller of goods or services provided certain documents have been presented to the bank.

Documentation for an International Shipment – Bill of Lading

International Inventory Issues

Order Cycle Time The length of the total order cycle : order transmission,

order filling, packing and preparation for shipment, and transportation

Consistency Customer Service Levels

How is a firm able to fill all orders within a set time, quality of service

Inventory as a Strategic Tool Avoid currency risk and high inflation

International Storage Issues

Customers expect quick responses to orders and rapid delivery.

Warehousing space is expensive. The trade-offs between service and cost

International Storage Issues

Outsourcing Shifting of traditional corporate activities to

parties outside of the firm and often outside of the country

Foreign Trade Zones (FTZ) Trade zones are considered to be outside the

customs territory of the country within which they are located

International Packaging Issues

Climate Transportation mode The weight Customer Requirements Government Requirements Cost (shipping, insurance, pilferage)

Management of International Logistics

Centralized logistics management - Headquarters retain decision-

making power and control over logistic activities Decentralized

Each subsidiary is made a profit center Leads to greater local management satisfaction and

better adaptation to local market condition Contract logistics (Outsourcing)

Helps firms improve service at equal or lower cost Leads to loss of the firm’s control in the supply chain

International Transportation Issues

International transportation is one of the major concerns because it determines how and when goods will be received. The concerns are… Transportation infrastructure The availability of modes Choice of modes depends on transit time,

reliability/predictability, cost, noneconomic factors

Logistics and Security

Terrorists Government Cargo Security Impact of security measures for international

shipment Affect the firm’s ability to plan their international

shipments and distributions Increases the cost of supply chain activities

THANX