Comparison Between Export Agents and Distributors Essay Example for Free

Comparison Between Export Agents and Distributors EssayMany companies have often imbed themselves in a dilemma on whether to use merchandise components or distributors when they decide to venture overseas. This is and then non a problem constrained to ABLE Limited only when. This dilemma often arises from the in great power to do between the functions of export agents and distributors. Even with complete knowledge of roles that agents and distributors play in the moment and export business, companies til now find it ch onlyenging to choose the channel to use for scattering of their goods. Perhaps the first step to approach shot up with a decision on whether to use agents or distributors would be to address the advantages and shortcomings of each. This paper seeks to contrast agents from distributors which will help in making proper choices when venturing into the export business. Export Agents An agent by comment refers to a person who acts on behalf of a person or caller in re unloose for an agents fee. Similarly, an import/export agent acts on behalf of a company to organize import and export deals with customers and suppliers in overseas grocery stores.Import/export agent be at times said to work like brokers only that they serve to bring two parties together for mutual trade benefit. The agents do non engage in physical contact with the goods and their major objectives argon to market the principles products, get customers and connect them to the principle who in turn executes the deal betly. To achieve these objectives, an agent usually conducts surveys, negotiates with buyers, under wins promotional activities and handles any documentation and logistics involved in the sale of goods.It is the duty of an export agent to develop market strategies in targeted countries, introduce potential customers, make contacts and in any case place orders for the principles goods. When a deal is sealed, the agent receives a commission for gross sales made in admittance to the deposit paid when the agent was hired. The principle also undertakes payment of all the expenses incurred by the agent in marketing and formalizing the deal which involves administration and tax settlements with the foreign government.Before tucking into a contract with an agent it is important to establish their affordability, their knowledge of the overseas markets and networks whether the agents offer their services to a competitor and whether they sell direct to end users or to companies. It is also important o sample sale deals they have made for different companies to establish their ability to benefit the company. The advantage of using an agent is that it saves the company from undertaking the rigorous export procedures. In other words, the company only needs to part with the agent commission and it is assured that their goods enter the overseas market.This is in addition to the fact that the agent knows the market well which is better tha n starting anew in an unknown country. The agent undertakes almost all the work so that it is relatively easy for the company. callable to their vast knowledge of the target market, agents prove crush when venturing in new overseas markets. As indicated earlier, agents take it upon themselves to advertise the companys product so as to make sales and hence earn a commission. This is belike to make them work harder which is of mutual benefit to the company when its sales increase.Another advantage that the company stands to benefit by using agents is that the company whitethorn choose to control the agents operations such that it can pay off the agent to desired territories. The company can also set the agent free to execute the deals to the best of his knowledge to maximize sales. When using an agent, the company gets to control the prices of its goods in the market since it will deal with customers at once after they are introduced by the agent. There are however disadvantages associated with using agents. Firstly, agents may prove pricey to hire and their commissions may highly reduce the companys potential profits.Secondly, the company bears any market risks and reference point risks when dealing with the customers who are introduced. Agents do not purchase from the company directly and neither do they undertake lecture and after sales services. This means that the company may need warehousing facilities as goods await spoken language in the overseas market. It must also undertake the provision of after sales services. Export distributors Distributors are companies that buy the firms product for resale in their countries. The distributor acquires possession or title of the good undertakes the risk of resale.This indicates that a distributor acts like a retailer or wholesaler and undertakes the distribution of the goods aiming at obtaining profits from the sales by selling the goods at a higher price the he bought them from the company. The distri butor takes responsibility for the dispatch of goods to their premises, undertakes the paper work so that the company does not have to bear these costs as oppose to using an agent. The company can appoint distributors available in the market from a list of distributors usually available in international directories.A company can also make use of agents to portion out distributors to undertake sale of their products. In the appointment of a distributor, the company needs to look out for the storage warehouse management skills and procedures of the distributor knowledge of technical characteristics of the companys goods ability to handle marketing campaigns credit worthiness and their ability to form a constant market for the firms products. Export distributors are advantageous to the company because they bear all the risks involved in the distribution process in the overseas country.These include tax liability, instances of loss and credit risk. They are convenient in that they p rovide any necessary after sales services that the goods may require such as installation and delivery. Since distributors aim at making more sales, they are possible to get involved in marketing campaigns which help to expand the firms competitiveness in the market. Warehousing expenses are eliminated because distributors normally have well established inventory warehouses for their merchandise. In many cases, it has proved less dear(predicate) to use distributors rather than deal with the customers directly.The distributor handles all the shipment charges and formalities which offers simplicity to the company. Further, the firm does not have to incur agent costs and other costs associated with distribution such as enrapture costs, logistics and tax liabilities. The absorption of market risks by the distributor is especially advantageous to the company. Since a distributor is apparent to offer credit to customers, more customers are attracted to the distributor which increases customer base. The disadvantages of using distributors is that the company is unlikely to maintain strict control over their operations.It is upon distributors to act in a manner that is most profitable for them and how they market sell the product cannot be limited. Anti-trust laws in certain countries prohibit companies from dictating prices such that the company may not have control over the prices that the distributor sets. Any mistakes made by the distributor represents the company and this may impact in the companys product demand. Finally, distributors are often known to demand heavy discounts and credit toll since they claim that they are eliminating many trade risks for the company.Conclusion Having identified and scrutinized the applicability of the two methods of selling overseas, it is upon the company to make a decision on which one to take based on the characteristics identified. It is notable that the dissimilarity between an agent and a distributor is that the age nt is a representative of the company to the customers but does not undertake physical distribution of the goods. The company therefore sells to the customer directly once the agent has convinced(p) him to buy form the company.A distributor on the other hand buys goods from the company which are in turn sold to customers at a profit. There are advantages and disadvantages of using either method of distribution and it is the firms requirements that will determine the choice that ABLE Limited makes. Word Count 1349 Bibliography Jansson, Hans. Industrial products a sentinel to the international marketing economics model. UK Haworth Press, 1994 Johnson, Thomas. Export/import procedures and documentation. New York AMACOM Div American Mgmt Assn, 2002