Distribution

Channels and
Global 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 firms 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.

Study the different cultural, political and

business practices in foreign markets.

Firms need to obtain adequate, initial exporting

knowledge

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

High Export
Performance
Inhibitors

Bring

Remedy Lies In

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: and
Cultural Separation

Communication Blocks
Negative Attitudes towards
foreigners
Physical Distribution Strains

Marking judicious use of two-way

visits, establishing a wellmanaged communication
program, including distributor
advisory council

Different
Rules of Law

Vertical Trading Restrictions

Full compliance with the law,

drafting a strong distributor
agreement

Seikos Authorized and Unauthorized Channels of

Distribution
K. Hattori &
Co. Ltd.
Tokyo, Japan
United
States

Japan
Seiko Time
Corp.
(Importer)

Regional
Distributors

Numerous
Retailers

Japanese
Consumers

15 Regional
Distributors
15,000 to
20,000
Retailers
Authorized
Seiko
Dealers

Rest of the
World
Unauthorized
Importers

Authorized
Importers

Unauthorized
Distributors

Regional
Distributors

Unauthorized
Retailers

Numerous
Retailers

American
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 firms
finished product to its 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
5
Cost (1=highest)
1
4
2
3
5
Loss and Damage (1=least)
3
1
4
5
2
Frequency *(1=best)
3
1
2
4
5
Dependability (1=best)
5
1
2
3
4
Capacity+ (1=best)
4
5
3
2
1
Availability (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 Lading
A 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 Receipt
Document 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 Invoice
A 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 decisionmaking 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 firms 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 firms ability to plan their international
shipments and distributions
Increases the cost of supply chain activities

THANX