Page 184 - DMGT547_INTERNATIONAL_MARKETING

Unit 10: International Logistics and Distribution Channels

Notes

Task Name a few companies that follow direct distribution channel and some that follow
indirect distribution channel. Give a short presentation on distribution network of any
one of the named companies.

Self Assessment

Fill in the blanks:

5. Manufacturer’s export agents and export brokers representing a combination of clients
can also be referred to as ……………………..
6. ………………….. exporter is sometimes also referred to as a ‘piggy back exporter’.

7. An intermediary who directs the exporting company to deliver the goods directly to the
foreign buyer, on receipt of order from oversees, is called ………………..
8. Foreign retailers are generally used to distribute……………….products.

9. Basically, ………………….Association is an export cartel.

10.4 Factors Involved in Distribution Systems

Distribution choices depend on several factors. One of them is the nature of the product. Is it
perishable or fragile or a product that will require after sales service? Might an authorised
company dealer better distribute it? Another consideration is the degree of control over
distribution. Greater control over the distribution process requires greater involvement by a
firm in terms of time, money and energy.
Another factor is cost. Whatever distribution mix a firm wishes to employ may be constrained
by the availability of middlemen or channels of distribution, by political limitations imposed
by the characteristics of the country or by infrastructural deficiencies in the country, which limit
types, and methods of usable distribution modes.

The development level of a nation also affects the distribution resources and network. A lack of
refrigerated methods of transportation will limit the marketing for frozen goods or fresh
produce. Similarly, income levels might support the airfreight delivery of live lobsters in rich
countries, while poorer countries rely on slow delivery by boat of less exotic foodstuffs.

!
Caution Distribution decisions can be even more complex in less developed countries
where specific ethnic groups within the country dominate distribution channels.
Examples of ethno domination are the Chinese ethnic groups who control the wholesale trade
of vanilla and cloves in Madagascar, rice distribution and milling in Vietnam, retail trade in
Philippines and Kampuchea, and poultry and pineapple trade in Malaysia.

10.5 Value Chain Concept

Value chain analysis describes the activities that take place in a business and relates them to an
analysis of the competitive strength of the business. Influential work by Michael Porter suggested
that the activities of a business could be grouped under two headings:
1. Primary Activities, those that are directly concerned with creating and delivering a product
(e.g. component assembly); and

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