1. Entry mode & Global
Distribution
PROF. RAGHAVENDRAN VENUGOPAL

2. Entry mode
 Exporting
 Joint venture
 Acquisition
 Assembly operations
 Turnkey operations
 Wholly owned subsidiary
 Licensing
 Strategic alliances
 Franchising
 Management contracts
 Free Trade Zones
 Contract Manufacture

3. Strategic Alliance
 Types of SA:
 Technology based alliances
 Production based alliances
 Distribution based alliances
 R&D alliances

4. 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

5. Significance of OEM
 Low prototype costs
 Short lead time
 Min stock levels
 No need for costly post – cast machining
 Highly damped structure
 High dynamic
 Totally machine structure
 High dimensional accuracy
 Excellent supplier – customer relationship

6. Entry modes & Marketing Control
Control
Direct Investment
Co-operative Strategies Assembly
JV Own Subsidiary
SA Acquisition
Direct Exporting
Agents
Distributors
Management Contracts
Franchising
Direct marketing
Indirect Export
Piggybacking
Ex management companies
Risk
Domestic Purchasing

7. Optimal entry strategy
Company Product/Market situation
strategic
posture
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

8. 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.

9.  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

10. International channels of distribution
For
Manufacturer •Export broker
•Export agent
Domestic •Cooperative exporter
Agent •Foreign Distributor
•Foreign Retailer
For/Buyer •Purchasing or Buying office •State controlled
C •Country controlled Buying trading company
h Agent •End user
a •Resident Buyer
n
n Indirect
e •Export Merchant
l •Export drop Shipper
•Export distributor
•Trading company
Domestic Merchant
Direct

11. Wholesaling
 Vertical integration
Wholesaler
Merchant Agents &
WH Brokers Manufacturer
’s WH
Full Service
Limited service
WH
Merchant WH
General Cash N Carry WH
Merchandise Drop Shippers
Limited line WH Mail Order WH
Rack Jobbers Truck WH
Specialty Line WH
Cooperatives

12. Retailing
 Self study, as discussed in depth in SADMAN

13. Global Logistics
 Operational factors
 Warehouse management
 Packaging
 Inventory management
 Material handling
 Information systems
 Transportation
 Insurance
 Shipment packing

14. Transportation
 Roadways
 Railways
 Waterways
 Inland water
 Rope ways
 Airways
 Pipelines
 Package service
 Intermodal transport

15. 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

16. Effects of gray trade
 Erosion of Brand equity
 Disturbed relationships with authorized channel
members
 Legal liabilities
 Complicating international marketing strategies
Measures against gray trade ( Reactive)
Strategic confrontation, Collaboration
participation, Acquisition
price cutting
supply interference
Promotion

17. Measures against gray trade ( Proactive)
Product Differentiation
Strategic pricing
Dealer development
MkIS
Long term Image reinforcement
Establishing Legal Procedures
Lobbying

18. Multiple Distribution Channel
 Internet Sales
 Catalogue Sales
 Sales Representative
 Multi-Level Marketing
 Infomercials
 Cross Consignment

19. 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 Options
 Evaluate assumptions by bringing present system.
 Develop plan to rectify the difference.
 Implement the plan.

20. International Retailing
 Home reading from SADMAN

21. Issue in International Retailing
 Legislation & Regulation
 Taxation & Cross Border Shopping
 Variation in Retail Practices– Consumer
Perspectives
 Variation in Retail Practices– Salespeople &
Management

22. Thank you