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Ch10

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Ch10

  1. 1. MANAGEMENT OF INTERNATIONAL DISTRIBUTION AND LOGISTICS Session 10
  2. 2. CONSIDERATIONS <ul><li>Selection of foreign country intermediaries </li></ul><ul><li>How to build a relationship with them </li></ul><ul><li>How to deal with variety of retailing structures </li></ul><ul><li>How to maximise new and innovative forms of distribution </li></ul><ul><li>How to manage logistics of physical distribution </li></ul>
  3. 3. DISTRIBUTION CHANNELS FOR BUSINESS GOODS
  4. 4. DISTRIBUTION CHANNELS FOR CONSUMER GOODS
  5. 5. 11 C MODEL: Selecting Appropriate Channel Intermediaries C ustomer characteristics C ulture C ompetition C ompany objectives C haracter of the market C ost Source: Czinkota & Ronkainen (2006) C apital required C overage needed C ontrol issues C ontinuity provided C ommunication effectiveness
  6. 6. USING A COMPANY OWNED SALES FORCE <ul><li>Advantages </li></ul><ul><ul><li>far greater control over sales and marketing effort </li></ul></ul><ul><ul><li>facilitates formation of closer manufacturer-customer relationships </li></ul></ul><ul><ul><li>can be used to identify and exploit new international marketing opportunities </li></ul></ul><ul><li>Disadvantages </li></ul><ul><ul><li>relatively larger resource commitment </li></ul></ul><ul><ul><li>higher exit costs </li></ul></ul><ul><ul><li>increased exposure to unexpected changes in political/social environment of host country </li></ul></ul>
  7. 7. <ul><li>Traditional retailing </li></ul><ul><li>Intermediary retailing </li></ul><ul><li>Structured retailing </li></ul><ul><li>Advanced retailing </li></ul><ul><ul><li>Interactive customer marketing </li></ul></ul><ul><ul><li>Mass customisation </li></ul></ul><ul><ul><li>Data mining </li></ul></ul><ul><ul><li>Category management </li></ul></ul><ul><ul><li>Effective consumer response </li></ul></ul>DIFFERING PATTERNS OF RETAILING
  8. 8. RETAILERS - TYPICAL DIFFERENCES BETWEEN DEVELOPING & DEVELOPED COUNTRIES
  9. 9. PUSH FACTORS OF THE INTERNATIONALISATION OF RETAILING <ul><li>Saturation of the home market or over-competition </li></ul><ul><li>Economic recession or limited growth in spending </li></ul><ul><li>A declining or ageing population </li></ul><ul><li>Strict planning policies on store development </li></ul><ul><li>High operating costs - labour, rents, taxation </li></ul><ul><li>Shareholder pressure to maintain profit growth </li></ul><ul><li>The ‘me too’ syndrome in retailing </li></ul>
  10. 10. PULL FACTORS OF THE INTERNATINALISATION OF RETAILING <ul><li>Underdevelopment of some markets or weak competition </li></ul><ul><li>Strong economic growth or rising standards of living </li></ul><ul><li>High population growth or high concentration of young adults </li></ul><ul><li>A relaxed regulatory framework </li></ul><ul><li>Favourable operating costs - labour, rents, taxation </li></ul><ul><li>The geographical spread of trading risks </li></ul><ul><li>Opportunity to innovate under new marketing conditions </li></ul>
  11. 11. Top 10 Global Food Retailers www.supermarketnews.com (2006)
  12. 12. GLOBAL RETAILER CATEGORIES
  13. 13. IMPLICATIONS FOR DISTRIBUTION STRATEGY DEVELOPMENT <ul><li>Power shifts in supply chains towards retailers </li></ul><ul><li>Intense concentrated competition with significant buyer power across country markets </li></ul><ul><li>Rapidly advancing technology facilitating global sourcing and global electronic transactions </li></ul><ul><li>Unrelenting performance measures being demanded of suppliers by international retailers </li></ul><ul><li>Smart, demanding consumers expecting high levels of customer service </li></ul>
  14. 14. RETAILERS DEMAND <ul><li>Streamlined and flexible supply chains </li></ul><ul><li>Suppliers who can guarantee quality and reliability across global markets </li></ul><ul><li>The ability to supply high volumes and conduct intense relationships with intermediaries in the supply chain </li></ul><ul><li>Suppliers who can meet the global sourcing requirements of large-scale retailers seeking to buy centrally across the globe </li></ul>
  15. 15. International Market Characteristics Favouring internet based distribution <ul><li>Inefficiencies in traditional distribution channels </li></ul><ul><li>Market fragmentation </li></ul><ul><li>Minimum scale barriers </li></ul><ul><li>Commodity-type products </li></ul><ul><li>Short life-cycle products </li></ul>
  16. 16. LOGISTICS APPROACH TO PHYSICAL DISTRIBUTION Customer Service <ul><li>Order to delivery time </li></ul><ul><li>Consistency and reliability of delivery </li></ul><ul><li>Inventory availability </li></ul><ul><li>Order, size constraints </li></ul><ul><li>Ordering convenience </li></ul><ul><li>Delivery time and flexibility </li></ul><ul><li>Invoicing procedures, documentation and accuracy </li></ul><ul><li>Claims procedure </li></ul><ul><li>Condition of goods </li></ul><ul><li>Salesperson’s visits </li></ul><ul><li>Order status information </li></ul><ul><li>After-sales support </li></ul>
  17. 17. LOGISTICS APPROACH TO PHYSICAL DISTRIBUTION IT and Physical Distribution <ul><li>Information Technology </li></ul><ul><ul><li>Electronic data interchange (EDI) </li></ul></ul><ul><ul><li>‘ New silc road’ </li></ul></ul><ul><ul><li>Tracking progress of products </li></ul></ul><ul><li>Restructuring Physical Distribution Operations </li></ul><ul><ul><li>Changes in trading structures </li></ul></ul><ul><ul><li>Physical movement is high-cost activity </li></ul></ul>
  18. 18. EFFECTIVE SYSTEM OF PHYSICAL DISTRIBUTION <ul><li>Requirements </li></ul><ul><ul><li>clearly define areas of responsibility </li></ul></ul><ul><ul><li>highly developed planning system </li></ul></ul><ul><ul><li>comprehensive information support system </li></ul></ul><ul><ul><li>expertise in distribution management </li></ul></ul><ul><ul><li>centralising planning body </li></ul></ul><ul><li>Considerations </li></ul><ul><ul><li>How intermediaries can enhance service </li></ul></ul><ul><ul><li>modes of transportation to be used </li></ul></ul><ul><ul><li>how to make use of export processing zones </li></ul></ul><ul><ul><li>documentation required </li></ul></ul><ul><ul><li>packaging requirements for transit & the market </li></ul></ul><ul><ul><li>how should the export sales contract be organised </li></ul></ul>
  19. 19. EXPORT PROCESSING ZONES <ul><li>The concept of EPZ </li></ul><ul><ul><li>duty-free manufacture or processing of products for export purposes within a customs-controlled environment </li></ul></ul><ul><li>Advantages </li></ul><ul><ul><li>All goods entering the EPZ are exempted from customs duties and import permits </li></ul></ul><ul><ul><li>Firms can use foreign currency to settle transactions </li></ul></ul><ul><ul><li>EPZs can be used for assembly of products and so help reduce transportation costs </li></ul></ul><ul><ul><li>EPZs give greater flexibility, and help avoid unwanted bureaucracy of customs and excise </li></ul></ul>
  20. 20. THE EXPORT ORDER & PHYSICAL DISTRIBUTION

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