Five Steps in the Process of Building Channels for International Distribution

958 Words Nov 14th, 2008 4 Pages
The search for prospective middlemen should begin with study of the market and determination of criteria for evaluating middlemen servicing that market. The company 's broad policy guidelines should be followed, but expect expediency to override policy at times. The checklist of criteria differs according to the type of middlemen being used and the nature of their relationship with the company. Basically, such lists are built around four subject areas: (1) productivity or volume, (2) financial strength, (3) managerial stability and capability, and (4) the nature and reputation of the business. Emphasis is usually placed on either the actual or potential productivity of the middleman.
Setting policies and making
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When middlemen do not perform up to standards or when market situations change, requiring a company to restructure its distribution, it may be necessary to terminate relationships with certain middlemen or certain types of middlemen. In the United States, it is usually a simple action regardless of the type of middlemen; they are simply dismissed. However, in other parts of the world, the middleman typically has some legal protection that makes it difficult to terminate relationships. In Colombia, for example, if you terminate an agent, you are required to pay 10 percent of the agent 's average annual compensation, multiplied by the number of years the agent served, as a final settlement. In some countries, an agent cannot be dismissed without arbitration to determine whether the relationship should be ended. Some companies make all middlemen contracts for one year to avoid such problems. However, there have been cases where termination under these contracts has been successfully contested.
Competent legal advice is vital when entering distribution contracts with middlemen. But as many experienced international marketers know, the best rule is to avoid the need to terminate distributors by screening all prospective middlemen carefully. A poorly chosen distributor may not only fail to live up to expectations but may also adversely affixture business and prospects in the

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