PHYSICAL DISTRIBUTION MANAGEMENT IN INTERNATIONAL MARKETING

Abstract

The International Physical Distribution Environment Involvement in international markets requires an awareness of the variables — both controllable and uncontrollable — which impact on a firm's distribution network. Political, legal, social and economic conditions, market structure and competition and the level of distribution technology available are all uncontrollable factors which influence a firm's distribution planning. Strategy must be directed towards administering physical distribution components so as to minimise costs and provide an acceptable level of customer service. Companies should acknowledge the differences that exist between domestic and foreign activities, and within overseas markets, country variations, regarding levels of customer service and inventory and transportation facilities that can be provided and the associated costs involved. Key managerial elements include packaging and labelling and warehousing and storage facilities dependent upon distribution systems required. Channel of Distribution Strategies Besides market potential, there are a number of reasons for entering international markets — an advanced domestic product life cycle, excess capacity, less internal overseas competition, geographical diversification and, perhaps, for materials/components saving. Four principle strategies for overseas involvement are available: exporting, licencing, joint ventures and ownership. In general firms may follow more than one strategy between markets and as circumstances change in individual market areas. Management of the Export Shipment Export distributors, customs house brokers and foreign freight forwarders are amongst the major organisations involved in exporting activity. Documentation remains of paramount importance. Operating in an unfamiliar financial environment, it is essential that account is taken of exchange rates, tax considerations, levels of inflation and other financial aspects affecting physical distribution; all will impact on profit levels and, if mismanaged or overlooked, will generate losses. Managing International Physical Distribution Activities International distribution management is complex. Success requires the correct answers to a number of difficult issues in order to develop the optimal distribution system for each target market. Planning, implementation and control of all international physical distribution activities is essential to the success of any foreign marketing efforts.