International Marketing Channels - Orana Case

5706 Words Sep 3rd, 2013 23 Pages
. ORANA uses both its own sales staff and independent distributors to increase retail sales in Vietnam. Discuss the advantages and disadvantages of this strategy.

ORANA realized the huge opportunity in covering new market areas due to the increasing demand in Vietnam as an emerging market, many indications showed that annual sales has a potential growth rate of around 20%, due to the increasing purchasing power, the middle class is growing, and people are willing to try new products. Therefore ORANA wanted to take the opportunity of being a fast mover and expanded its distribution from Ho Chi Minh City (Saigon), to the central and northern parts of Vietnam, by starting direct sales through independent distributors instead of relying
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* Population Distribution: The northern and specialy central parts of Vietnam are mainly rural areas with a very low population density in some parts. (Map 3.2)
* Poverty: The majority of the poor are farmers who live in rural, isolated, mountainous or disaster prone areas, the households often have many children, the poor are disproportionately likely to be from an ethnic minority, In the rural areas, households with average income of US $150 (Wikipedia) are regarded as poor households. Poverty line percentage for Vietnam’s households was estimated 12 percent at the end of 2011. (Wikipedia).
For ORANA to collect this information will cost time and money, besides in some countries locals may not cooperate with foreigners just because of lack of understanding, or cultural reasons.
- Instant access to market by utilizing local distributers Network: The local distributers already have established distribution Networks, and most probably a complex one to deal with Vietnam special demographic and geographic elements which is difficult for ORANA to duplicate alone.
- Power dependent theory (PDT): By using both own sales staff and local distributers ORANA reduces the power dependence on local distributers which will also lead to less opportunism, and on the long run ORANA will adapt and gain the…