DISTRIBUTION NETWORK
There
are numerous approaches to penetrate a foreign market, and within each approach as many
variations as there are cultures, languages, currencies, etc.
* Domestic Export
Sales
* Indirect Export
Sales
* Direct Export
Sales Through Outside Distribution Channels
* Direct Export and
Sales Through Local Company Sales Organization
* Licensing
* Assembling
* Manufacturing
* Joint Venture
* Strategic
Alliances
* Combinations of
some of the above
* Others -
approaches tailored to the prevaling conditions of a specific market.
One of the major ingredients for
succes is to choose the right alternatives. How to choose the right alternatives and make
the most of them are constant problems facing every business. At this stage of your
international market penetration planning, experienced, hands-on professionals would be of
great help.
Some of the alternatives are
defined as:
* Domestic Export
Sales
We also call the
Domestic Export Sales "spot sales" and "export sales desk".
These sales are mostly "orders taking", orders coming from domestic
organizations which might have overseas subsidiaries or from export/import houses that buy
and sell for their own customers. These sales might also include bid on tenders from
foreign governments, or private organizations, with buying offices in the domestic
markets. Tenders issued by a foreign entity, in the foreign market, to be transacted
locally, require a different approach and organization than a mere "export sales
desk".
* Indirect Export Sales
It is basically marketing your products or services through another company or sales
agency. It could be an import/export house, an export managing firm or just a company that
already has an international distribution network.
* Direct Export Sales Through
Outside Distribution Channels
Direct sales to the foreign market through middlemen such as distributors, sales agents,
brokers, importers, jobbers, etc.
* Direct Export and Sales
Through Local Company Sales Organization
- Create your own branch office and/or subsidiary
- Create a joint selling company
- Create your own sales force
- Set up regional and/or distribution centers or warehouses
- Hire services and rent facilities of public warehouses
- Use combination od company distribution centers and public warehouses
- Organize an international franchise system
- Team up with another manufacturer or several
- Combinations are endless in this approach and would be affected by the host country's
regulations.
* Licensing
- License a patent and/or know-how for royalty payments and fees and/or equity
- Obtain licenses for foreign patent and/or know-how
* Assembling
- Entitle foreign manufacturers to assemble, or produce and assemble, with or without
license, your equipment or products.
- Cross-license foreign manufacturers for the same type of operations, as described above,
but with an option to assemble, or produce and assemble their equipment and products.
- Set up assembly operations in a free trade zone of free port.
* Manufacturing
- Contract out manufacture of products.
- Purchase an equity interest in an existing manufacturing or assembly operation.
- Set up manufacturing operations in a free trade zone of free port.
* Joint Venture -
Strategic Alliances
- Organize a joint ventureo r Strategic Alliances with a local partner.
Remy M. Mauduit
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