7Rules of

International
Distribution

General Problem statements from
MNC Managers
"The distributor didn't know how to grow the
market

"The distributors didn't invest in business grow


"The distributor Just wasn't ambitious
enough."



MANAGING THE MULTINATIONAL-
DISTRIBUTOR PARTNERSHIP

We follow two hypothetical multinational
corporations (MNCs) as they enter new markets
in developing countries.
The markets and countries are comparable, but
M NCI follows a beachhead strategy, reacting to
problems as they come up.
This strategy culminates in a serious disruption of
business. In contrast, MNC2 retains control of
marketing strategy from the outset and
anticipates changes.

Managing the Life Cycle
of the International Distributor

1. Select distributors. Don't let them select
you.
Initial moves into new countries occurred in
reaction to proposals from potential
distributors.


Managing the Life Cycle
of the International Distributor

2. Look for distributors capable of developing
markets, rather than those with a few obvious
customer contacts.
The choice of distributors and the terms of the
relationships should serve the multinational's
long-term goals

look for what we call 'company fit'-a partner with
a culture and a strategy we feel comfortable with,
in terms of the investment they'll make, the
training they'll give their people, and the support
they'll ask from MNCs



3. Treat the local distributors as long-term
partners, not temporary market-entry vehicles.

Structure the relationships so that distributors
become marketing partners willing to invest in
long-term market development.

One traditional way of doing this is to grant
national exclusivity to a distributor, although such
an agreement can become unproductive if
conflicts of interest arise once entry is
established.


4. Support market entry by committing money,
managers, and proven marketing ideas

To retain strategic control, multinationals must
commit adequate corporate resources.


5. From the start, maintain control over
marketing strategy.
An independent distributor should be allowed
to adapt a multinational's strategy to local
conditions.
Multinationals should convene and lead
planning sessions and exercise authority
about which products to sell, how to position
them, and budgeting.



6. Make sure distributors provide you with
detailed market and financial performance data
A multinational's ability to exploit its
competitive advantages in an emerging
market depends heavily on the quality of
information it obtains from the market.
A contract with a distributor must therefore
require detailed market and financial
performance data.


The reaction to a request for market and financial
data reveals a lot about a distributor. Most
distributors, of course, regard data like customer
identification and price levels as key sources of
power in their relationships with suppliers.
the willingness of potential distributors to
provide such information is one of the prime
indicator of whether successful relationships
could be achieved.

7. Build links among national distributors at the
earliest opportunity.
the company should create links among its
national distributors
The transfer of ideas within local markets can
improve performance and result in greater
consistency in the execution of international
strategies.

Conclusion
Multinationals need to do a better job of
selecting and working with local distributors
They must understand that distributors are
implementers of marketing strategy, rather
than marketing departments in the country-
market