EXPANDING YOUR BUSINESS THROUGH
AGENCY & DISTRIBUTORSHIP
In expanding their business, manufacturers, exporters or importers of goods have several ways in which to arrange their supply chain by which their products reach the ultimate consumer.
The use of distributors effectively removes the risk expense of the supply chain from the manufacturer, exporter or importer. But this is at the price of loss of most of the control over the supply chain and a reduction in the margins received when selling to a distributor who requires remuneration himself in order to take on the risk and expense of distribution.
The use of agents is a middle way in that some of the risk and expense are borne by the agent, and the specialist marketing services of the agent are available to the principal on a basis (remuneration by way of commission) which provides the maximum incentive to the agent to act efficiently and effectively. However, the principal still remains as much in control as if he were negotiating directly with the relevant level in the supply chains.
Most of the issues concerned with agency and distribution revolve around the attempts of various jurisdictions to regulate the relevant relationships by law, particularly to ensure that such relationships are not used to restrict competition contrary to public policy.
AGENCY & DISTRIBUTORSHIP
In expanding their business, manufacturers, exporters or importers of goods have several ways in which to arrange their supply chain by which their products reach the ultimate consumer.
The use of distributors effectively removes the risk expense of the supply chain from the manufacturer, exporter or importer. But this is at the price of loss of most of the control over the supply chain and a reduction in the margins received when selling to a distributor who requires remuneration himself in order to take on the risk and expense of distribution.
The use of agents is a middle way in that some of the risk and expense are borne by the agent, and the specialist marketing services of the agent are available to the principal on a basis (remuneration by way of commission) which provides the maximum incentive to the agent to act efficiently and effectively. However, the principal still remains as much in control as if he were negotiating directly with the relevant level in the supply chains.
Most of the issues concerned with agency and distribution revolve around the attempts of various jurisdictions to regulate the relevant relationships by law, particularly to ensure that such relationships are not used to restrict competition contrary to public policy.
Siddha Param
International Business Consultant
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