13
Managing Global
Distribution Channels
Learning Objectives
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List and describe the key players within both home-market channels and foreignmarket channels.
Explain the impact on national channel strategy of distribution density, channel
length, and channel alignment.
Describe how costs, product line, control, coverage, and synergy all influence the
proper choice of channel members.
Suggest ways to locate foreign distributors.
List ways to motivate and control foreign distributors.
Suggest alternative entry strategies for markets where competitors already control
distribution channels.
Identify the differences between global logistics management and global supply
chain management.
List and explain the five key areas of global logistics management.
Explain the growing global importance of large-scale retailers, international
retailing, direct marketing, on-line retailing, information technology, and
smuggling.
Chapter Outline
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The structure of the global distribution system
Foreign-market channel members
Analyzing national channels
Factors influencing the selection of channel
members
Locating and selecting channel partners
Managing global distribution
Gaining access to distribution channels
Global logistics
Global trends in retailing
Smuggling
Factors Shaping Distribution
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Level of economic development
Consumer disposable income
Infrastructure quality
Culture
Physical environment
Legal/political system
Global Distribution System
Structure
• Channels of distribution provide
essential linkages between
manufactured products and the
consumer
Foreign-Market Channel Members
• Import intermediaries
• Local wholesalers (dealers,
distributors)
• Local agents
• Retailers
Analyzing National Channels
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Distribution density
Channel length
Channel alignment and leadership
Distribution logistics
Factors Influencing the Selection
of Channel Members
• Costs
• Product and product line
• Control, coverage, and synergy
Sources Useful for Locating
Possible Distribution Partners
 U.S. Department of
Commerce
 Banks
 Directories
 Trade shows
 Competitors’
distribution partners
 Consultants
 Associations
 Foreign consulates
Process of Establishing an
International Distribution System
• Develop a distribution strategy.
• Establish criteria for selecting
distribution partners.
• Locate potential distribution partners.
• Solicit the interest of distributors.
• Screen and select distribution partners.
• Negotiate agreements.
Gaining Access to Distribution
Channels
• Piggybacking – Another company that
sells to the same consumer segments
takes on the new products
• Joint ventures – Partnership typically
between local firm with market access
with a foreign firm with no local access
• Acquisitions – Purchasing a local
company with existing distribution
system
Logistics Decision Areas
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Traffic or transportation management
Inventory control
Materials handling and warehousing
Fixed-facilities location management
Challenges Facing Firms with
Global Logistics Systems
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Resources to support the system
Exchange rate fluctuations
Availability of infrastructure
Ease of working with host governments
Costs of the system
Global Supply Chain Management
• Encompasses more than the traditional
concept of logistics
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Logistics
Marketing relationships
Product development & rollout
Management of product returns
Successful International
Retailers
• Three categories:
1. Replicators – Export model virtually
unchanged
2. Performance Managers – Acquire existing
retailers and develop as independent entities
3. Reinventors – Employ standardized backend systems and processes while creating
tailored retail format
Smuggling
• Smuggling – Illegal transport of
products across national borders
– Illicit products
– Illegal distribution of products that are legal
to sell and use