Date post: | 19-Jan-2015 |
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PROF. RAGHAVENDRAN VENUGOPAL
Entry mode & Global Distribution
Entry mode
ExportingJoint ventureAcquisitionAssembly operationsTurnkey operationsWholly owned subsidiaryLicensingStrategic alliancesFranchisingManagement contractsFree Trade ZonesContract Manufacture
Strategic Alliance
Types of SA: Technology based alliances Production based alliances Distribution based alliances R&D alliances
OEM
Original Equipment manufacturing a company selling an unbranded product or component to another company in global market.
Problems solved through OEM: Branding Budget constraint Eliminate bottle necks & improve efficiency
Key Aspects of working with OEM: Quality Manufacturers with best practices Corrective action Want ISO vendors Competitive prices
Significance of OEM
Low prototype costsShort lead timeMin stock levelsNo need for costly post – cast machiningHighly damped structureHigh dynamicTotally machine structureHigh dimensional accuracyExcellent supplier – customer relationship
Entry modes & Marketing Control
Control
Risk
Co-operative StrategiesJVSA
Direct ExportingAgents
DistributorsManagement Contracts
FranchisingDirect marketing
Direct InvestmentAssembly
Own SubsidiaryAcquisition
Indirect ExportPiggybacking
Ex management companies
Domestic Purchasing
Optimal entry strategy
Company strategic posture
Product/Market situation
Emerging High-growth
Mature Services
Incremental IDExp IDExp Dexp Licen/Alli
Protected JV IDExp Licen/Alli Licensing
Control WOS Acqi/Alli WOS Fran/Alli/Exp
Global Distribution
3 essential functions have to be performed Transfer of title The physical movement of the products Storage
GD is complex, multimodal world of logistics, shipping, insurance, warehousing & documentation.
Global Firms have 2 options when selecting distributing system Indigenous channels of distribution Develop a global distribution system
Channel members in international distribution Types of intermediaries
Indirect channel Direct channel
International channels of distribution
• Export broker• Export agent• Cooperative
exporter
• Purchasing or Buying office
• Country controlled Buying Agent
• Resident Buyer
• Export Merchant• Export drop Shipper• Export distributor• Trading company
• Foreign Distributor
• Foreign Retailer• State controlled trading company• End user
For Manufacturer
Domestic Agent
Indirect
Channel
For/Buyer
Domestic Merchant
Direct
Wholesaling
Vertical integration
Wholesaler
Merchant WH
Agents & Brokers Manufactur
er’s WHFull
Service WH
Limited service
Merchant WH
General MerchandiseLimited line WHRack JobbersSpecialty Line WHCooperatives
Cash N Carry WHDrop ShippersMail Order WHTruck WH
Retailing
Self study, as discussed in depth in SADMAN
Global Logistics
Operational factors Warehouse management Packaging Inventory management Material handling Information systems Transportation Insurance Shipment packing
Transportation
RoadwaysRailwaysWaterwaysInland waterRope waysAirwaysPipelinesPackage serviceIntermodal transport
Parallel distribution
Few mechanism to avoid parallel distribution: Create different packaging for the different countries. Maintain the price differentials & minimize the gaps in
such a way as to make it less appealing for the parallel distributor.
Limit the quantity that distributors in lower priced markets can receive per order.
Gray trade: it is known as parallel distribution. 3 main factors are
Price discrepancies between 2 national markets Limited availability of certain models or version in one market. Less logistics problem due to increased availability of global
modes of transportation
Effects of gray trade
Erosion of Brand equityDisturbed relationships with authorized
channel membersLegal liabilitiesComplicating international marketing
strategiesMeasures against gray trade ( Reactive)
Strategic confrontation, Collaborationparticipation, Acquisitionprice cuttingsupply interferencePromotion
Measures against gray trade ( Proactive)Product DifferentiationStrategic pricingDealer developmentMkISLong term Image reinforcementEstablishing Legal ProceduresLobbying
Multiple Distribution Channel
Internet SalesCatalogue SalesSales RepresentativeMulti-Level MarketingInfomercialsCross Consignment
Effective Global Distribution System
Find out customers want, services, delivery, choice, technical help & so on.
Find out about costs & feasibility for the company, Support systems & suppliers.
Determine Management Objectives & Ideal global Distribution system.
Compare given OptionsEvaluate assumptions by bringing present
system.Develop plan to rectify the difference.Implement the plan.
International Retailing
Home reading from SADMAN
Issue in International Retailing
Legislation & RegulationTaxation & Cross Border ShoppingVariation in Retail Practices– Consumer
PerspectivesVariation in Retail Practices– Salespeople &
Management
Thank you