international distribution - electronics

8/9/2019 International Distribution - Electronics

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INTERNATIONAL DISTRIBUTION OF

ELECTRONICS

Presented by:

Rachi Agrawal 102

Piyush Kohli 121

Apurva Srivastava 154


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ELECTRONIC GOODS

The consumer durables segment can be

segregated into :

y ConsumerElectronics (TVs, VCD players and audio

systems etc.), andy Consumer Appliances (also known as white goods) like

refrigerators, washing machines, air conditioners (A/Cs),

microwave ovens, vacuum cleaners and dishwashers.


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CUSTOMER SERVICE STRATEGIES FOR

GLOBA

L MA

RKETS

Marketing -standardized yet customized.

Shorten Product life cycles.

Outsourcing and offshore manufacturing are

becoming more prevalent. Firms are more likely to search for global sourcing

for materials and components, depots, assembly,distribution centers, and logistics.

Global firms typically design synchronous

strategies around technology, marketing,manufacturing, and logistics.


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INTERNA

TIONA

L DISTRIBUTION:

GOA

L

Optimum distribution should meet the following criteria:y Place

y Time

y Form

y Information

y Distribution Factors

To be effective as an electronic distributor, one mustestablish:y Number of clients.

y Geographic distribution.

y Disposable income.

y Relevant buying habits of prospective clients.

y Attribute of the product viz., Quantity, Service, Form, Priceetc.

y External environment.


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INTERNA

TIONA

L DISTRIBUTION: P

ROCESS


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INTERNA

TIONA

L DISTRIBUTION:

METHODS

Direct Sales.

Door-to-DoorSales.

Franchising.

Wholly owned retail outlets.

Worldwide retail sales.


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INTERNATIONAL DISTRIBUTION CHANNEL:

FUNCTIONS

Contact

Financing

InformationRisk Taking

Promotion

MatchingNegotiation

PhysicalDistribution


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Analyzing Consumer Service Needs

Setting C annel O jectives & Constraints

ExclusiveDistri ution

SelectiveDistri ution

IntensiveDistri ution

Identifying Major Alternatives

Evaluating t e Major Alternatives

Designing International Distri ution C annels

INTERNATIONAL DISTRIBUTION CHANNEL:

DESIGN DECISIONS


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DISTRIBUTION CHA

NNELS

Indirect Exports

y A companys products sold in a market without any

actual intervention by the company itself.

Direct Exportsy Companies must take on the export activity .

y Distribution is done by importers or agents, own

personnel, licenses, franchises, subsidiaries etc.

Export Consortia

y Small and medium size companies resource a separateorganization for promotion and/or sale of their products

abroad.

y Involves uniting the export departments of several

companies to form one common one for use by all.


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DISTRIBUTION CHA

NNELS

(CONT

.)Associated Exports

y Not all companies may have the capital/expertise

required to set up a foreign trade department.

y In suc

hsituations, an agreement wit

han Associateexport company is done.

y The company wishing to export, identifies another

company with presence in the market. For a

consideration (fee) the latter agrees to sell the formers

products through its international network.

(Piggybacking)


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EXP

ORT

-IM

PORT FLO

WCH

ART


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Foreign Freight Forwarders:

y Consolidate small shipments into economical container or larger-sized lots.

y Used by small or inexperienced shippers.

y Consolidators and agents regulated by the Federal MaritimeCommission.

y Fee for service and/or commission from shipping companies.

y Use ocean and air modes.

Custom House Brokers:

y Oversee the movement of goods through customs and ensures

that paperwork accompanying a shipment is in order.y Operate under power of attorney from the shipper and can pay

any duty on freight.

y Much of the paperwork is done ahead of the shipment usingintegrated computer systems, greatly reducing the time it takes toclear customs, thereby reducing transit times.

STRA

TEGIC CHA

NNEL INTERMEDIA

RIES


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STRATEGIC CHANNEL INTERMEDIARIES

(CONT

.) Export Management Companies:

y Export Management Companies (EMCs) act as aknowledgeable shippers agent in a foreign country.

y Act as the sellers agent in getting orders, and arranging for

distribution, promotion, and dealing with

th

e foreigngovernment.

y Exclusive arrangements are possible and the EMC may sellwith or without taking title to the goods.

Export Trading Companies:y Similar to the EMCs, the Export Trading Companies (ETCs)

export goods and services.

y The ETC locates buyers, arranges for inland and internationaltransportation, and meeting foreign governmentrequirements.

y Allows small and medium-sized firms the ability to competeglobally.


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STRATEGIC CHANNEL INTERMEDIARIES

(CONT

.) Ship Brokers/Ship Agents/Export Packers:

y Ship brokers act as agents in securing the charter of a

ship.

y Ship agents are the local (port) agent of the ship

operator when the ship is in port.

y Export packers supply a shipper specialized export

packing services to help with customs and to protect the

goods.


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GLOBA

L TRA

NSP

ORTA

TION OP

TIONS

Large compression of transit times.

Linkages with package delivery and courier services providetrue point-to-point service.

Rates have traditionally restricted cargo to low density, highvalue goods.

Volume is approximately 1% of movements, but nearly 20% ofthe value.

Air

Speed, safety, reliability, and accessibility. Container sizes are largely standardized into 20, 40, 45, 48, and

53 foot boxes.

Paperwork can be streamlined by having a bonded warehouseseal the container at point of shipment and not opened until itreaches its destination country.

Motor


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GLOBA

L TRA

NSP

ORTA

TION OP

TIONS

(CONT

.)

International rail movements are problematic.

Rail gauges often vary.

Containers maybe transloaded from rail to ocean to rail and/or

motor if standard international sizes are used. Maritime bridge movements gain speed by using an intermodal

strategy.

Rail

Ocean structure:

Liner scheduled service; regular routes. Charter contract service; no set routes.

Private service firms o n logistics needs.

Include bulk, container.

Most pervasive and important global mode.

Revenues are substantial.

Ocean


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FACILITIES

Storage:

y Storage may be necessary for either bulk or finished goods.

y This may require different types of in-transit facilities depending

upon the method of shipment and cargo type.

y Longer term storage may require a public or bonded warehouse.

Packaging:

y Export shipments generally require a higher level of protection than

domestic shipments because of extra handling and the motion of the

ocean and its effect on cargo.

y

Shippers expect to pay more for more protection, as settling liabilityclaims can be very difficult due to the large number of firms that may

be handling the goods.


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GOVERNMENT INFLUENCES

Greatest Effect on International movement of goods.

In place to protect domestic industries from unfair or predatorycompetition, these barriers to trade are handled differently in variouscountries.

Duties expressed either as a percent of value, a fixed amount, or incombination.

Customs Regulation

Determine that the goods value and quantity is as stated.

Ensure that the goods are properly marked.

Ensure that the items are permitted for entry.

Control quota amounts.

OtherCustoms Functions

Goods enter without customs formalities, duty or bond.

Goods can be stored indefinitely and/or re-exported without payingduty.

Trade Blocks.

Free Trade Zones / Free Trade Agreements


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EXAMPLE: A TYPICAL TRUCK SHIPMENT

CROSSING INTO MEXICO


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CHANGING POLITICALAND LEGAL

ENVIRONMENTS

A Single European Market.

230 million consumers wereestablished as one market throughthe 1987 Single European Act.

Elimination of:Physicalbarriers like customs.

Technicalbarriers like health &safety issues.

Fiscalbarriers like value-addedtax and excise taxes.

Eastern Europe.y Low cost manufacturing hub.

Asian Emergence.


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ISSUES IN INTERNA

TION

AL DISTRIBUTION

Language Barriers:y The advertising and packaging will have to be translated, not

just into the generic language category but also into thespecific version spoken in the region.

Cultural

Barriers:

y Subtle cultural differences may make a product and strategiesthat tested well in one country unsuitable in another.

Currency Fluctuations:y The exchange rate / fluctuating dollar w.r.t other international

currencies affects both the volume and direction of global

trade.Advertising Regulations:

y Countries often have arbitrary rules on what can beadvertised and what can be claimed.


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ANTI

-DUMPING

An anti-dumping measure shall be applied only under thecircumstances provided for in Article VI ofGATT 1994 andpursuant to investigations initiated1 and conducted inaccordance with the provisions of this Agreement.

The WTO was established as a successor to GATT in 1995.

One of the issues of outstanding importance was theeffectiveness of the new Agreement on Anti-Dumping Policy.

To combat dumping, countries may levy either:y An anti-dumping duty on the dumped product, providing that the

rate of duty does not exceed the 'margin of dumping', or

y A countervailing duty where the product is being subsidizedproviding that this does not exceed the 'margin of subsidization'.

The margin of dumping is, broadly, the difference between aproduct's 'normal value' and the export price, while the marginof subsidization is the amount of subsidization bestowed onthe export product.


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ROLE OF TECHNOLOGY IN INTERNATIONAL

DISTRIBUTION

EDI.

ERP.

Bar code scanning.

Hydraulic trolley for material movement.

Pallets for safety of materials.

GPS.

RFID.


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IDEA (INTERNATIONAL DISTRIBUTION OF

ELECTRONICSA

SSOCIATION)

IDEA was formed in 1987 with the express intent to

spread good practice within the global electronic

component distribution industry.

Principal aim ofIDE

A is knowledge sharing,cooperation and partnership between companies

belonging to the various member associations.


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IDEA A

CTIVITIES

IDEA hosts and organizes meetings and workshops

with the aim of sharing a common background,

discussing the hot topics of the electronic industry,

market trends and foster cooperation and

partnership.

An International Conference is held at least once a

year at one of the major worldwide Electronics

Shows such as Electronics Forum in Italy orForum

de la Electronique in Paris (France).


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INTERNATIONAL DISTRIBUTIONAGREEMENTS

It is an arrangement whereby the distributor purchases

goods from a supplier and resells them.

These can be of great importance in an international

context, when suppliers often appoint distributors in

order to sell their goods into a particular country in which

the supplierhas no presence.

Distribution agreements must be distinguished from

agency agreements.

It is particularly important to have a distribution

agreement in writing because in the absence of a clear

contract, language and cultural differences can lead to

misunderstandings.


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SCENARIO IN INDIA

Foreign investment up to 100 per cent is possible in theIndian consumer electronics industry to set up unitsexclusively for exports.

It is now possible to import duty-free all components andraw materials, manufacture products and export it.

EHTP (Electronic Hardware Technology Park) is aninitiative to provide benefits to companies, which includeexport credits, no duties on imported components orcapital equipment, business tax incentives, and anexpedited import-export process.

The government, in an attempt to encourage

manufacture of electronics in India has changed thetariff structure significantly. Customs duty on InformationTechnology Agreement (ITA-1) items (217 items) hasbeen abolished from March 2005.


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INTELLECTUALP

ROPERTY RIGHTS

Protection ofIntellectual property rights (IPR) is aprime requisite for development ofR&D andinnovation in the consumer electronics sector.

The Government ofIndia has developed a robust IP

act to facilitate innovation, growth anddevelopment.

India is a party to the Trade Related Aspects of theIntellectual

Properties (TRIPs) Agreement Severalamendments to the Copyright Act, creation of a newTrademark Act, a new Designs Act andamendments to the Patents Act show Indiascontinued effort to protect IPR.


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SUPPLIERS SUPPLIERS SUPPLIERS

FACTORY (OEM) FACTORY (OEM)

ARE OUSE WARE OUSE WARE OUSE

CFA CFA CFA

DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR

CFA CFA

LGS OPPE DEALER DEALER

CONSUMERSINSTITUTIONS CONSUMERS CONSUMERS CONSUMERS

www.lgezbuy.com

CFA

DEALER

DISTRIBUTION NETWORK (LGINDIA)


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y The company accepts returns from their retailersas well as company owned stores.

y The job of bringing back the defects again restswith local distributor and C/F that collects them

from the s

hop.

y They are entered and kept separately at thewarehouse and proper stock is maintained andsent to warehouse.

y The damaged goods are dispatched to the

warehouse periodically.

The damaged goodsreceived from the distributor are credited to his

account and as such are only accepted afterthorough examination by the local sale executive.

REVERSE LOGISTICS


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