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Introduction
Global competition and distribution are facts of today's business environment. As firms expand internationally, their choice of distributors takes on an increased importance. An exporter can use a broker, export directly, sell directly from the home country or build a facility in the foreign country. Some sources would even say there is a natural progression in a firm's international distribution[1]. One objective of this article is to see if there is such a natural progression. The other objective is to present some scales which begin to represent the relationship between a manufacturer and the distributors.
Each of these channel arrangements has advantages in certain situations. An unanswered issue concerns the conditions under which a particular channel arrangement offers a differential advantage. Robinson[2, p. 357] calls the choice of a channel "one of the critical areas in international business". The design of the distribution system is an area where significant savings are possible, and where significant differences in the ability to satisfy customers are likely.
While international distribution is critical, the choice of a channel is often made haphazardly, with limited information[2,3]. Managers know that brokers can be more effective in certain situations, but the criteria used to evaluate a broker's performance have not been clearly defined by most firms. Because the criteria are not clearly defined, determining when to change distribution structures -- or even brokers -- is difficult. Some means of comparing the domestic and international distribution channels is needed to aid the potential exporter in evaluating channel members. Evaluation criteria will also provide information for rationally selecting alternate channel structures. The ability to monitor performance can lead to increased channel efficiency, along with increased satisfaction of all parties concerned. These goals are worthwhile, and tools to accomplish them have their place in a business environment. The other objective of this article is to present some items which can be used to evaluate distributors.
Background
There are many reasons for a firm to expand into the international arena. A ten-year span saw the dollar value of goods exported from the US increase from $1,300 billion to $2,100 billion. This increase has taken place in an environment in which firms with access to multiple markets gain differential advantages. These advantages include: business cycle risk...