INTERNATIONAL

DISTRIBUTION OF
ELECTRONICS

Presented by:
Rachi Agrawal 102
Piyush Kohli 121
Apurva Srivastava 154
ELECTRONIC GOODS
 The consumer durables segment can be segregated into :
 Consumer Electronics (TVs, VCD players and audio systems
etc.), and
 Consumer Appliances (also known as white goods) like
refrigerators, washing machines, air conditioners (A/Cs),
microwave ovens, vacuum cleaners and dishwashers.
CUSTOMER SERVICE STRATEGIES
FOR GLOBAL MARKETS
 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.
INTERNATIONAL DISTRIBUTION: GOAL
 Optimum distribution should meet the following criteria:
 Place
 Time
 Form
 Information
 Distribution Factors
 To be effective as an electronic distributor, one must establish:
 Number of clients.
 Geographic distribution.
 Disposable income.
 Relevant buying habits of prospective clients.
 Attribute of the product viz., Quantity, Service, Form, Price etc.
 External environment.
INTERNATIONAL DISTRIBUTION:
PROCESS
INTERNATIONAL DISTRIBUTION:
METHODS
 Direct Sales.
 Door-to-Door Sales.

 Franchising.

 Wholly owned retail outlets.

 Worldwide retail sales.

 Matching
Matching Negotiation
Negotiation
Physical
Physical
Contact
Contact Distribution
Distribution
Promotion
Promotion Financing
Financing
Information
Information Risk
Risk Taking
Taking
CHANNEL: FUNCTIONS
INTERNATIONAL DISTRIBUTION
 Designing International Distribution Channels
Evaluating the Major Alternatives
Exclusive Selective Intensive
Distribution Distribution Distribution
Identifying Major Alternatives
Setting Channel Objectives & Constraints
Analyzing Consumer Service Needs
CHANNEL: DESIGN DECISIONS
INTERNATIONAL DISTRIBUTION
DISTRIBUTION CHANNELS
 Indirect Exports
 A company’s products sold in a market without any actual
intervention by the company itself.
 Direct Exports
 Companies must take on the export activity .
 Distribution is done by importers or agents, own personnel,
licenses, franchises, subsidiaries etc.
 Export Consortia
 Small and medium size companies resource a separate
organization for promotion and/or sale of their products
abroad.
 Involves uniting the export departments of several companies
to form one common one for use by all.
DISTRIBUTION CHANNELS (CONT.)
 Associated Exports
 Not all companies may have the capital/expertise required to
set up a foreign trade department.
 In such situations, an agreement with an Associate export
company is done.
 The company wishing to export, identifies another company
with presence in the market. For a consideration (fee) the
latter agrees to sell the former’s products through its
international network. (Piggybacking)
EXPORT-IMPORT FLOWCHART
STRATEGIC CHANNEL
INTERMEDIARIES
 Foreign Freight Forwarders:
 Consolidate small shipments into economical container or larger-sized
lots.
 Used by small or inexperienced shippers.
 Consolidators and agents regulated by the Federal Maritime Commission.
 Fee for service and/or commission from shipping companies.
 Use ocean and air modes.

 Custom House Brokers:

 Oversee the movement of goods through customs and ensures that
paperwork accompanying a shipment is in order.
 Operate under power of attorney from the shipper and can pay any duty
on freight.
 Much of the paperwork is done ahead of the shipment using integrated
computer systems, greatly reducing the time it takes to clear customs,
thereby reducing transit times.
STRATEGIC CHANNEL INTERMEDIARIES
(CONT.)
 Export Management Companies:
 Export Management Companies (EMCs) act as a knowledgeable
shippers agent in a foreign country.
 Act as the sellers agent in getting orders, and arranging for
distribution, promotion, and dealing with the foreign government.
 Exclusive arrangements are possible and the EMC may sell with
or without taking title to the goods.
 Export Trading Companies:
 Similar to the EMCs, the Export Trading Companies (ETCs)
export goods and services.
 The ETC locates buyers, arranges for inland and international
transportation, and meeting foreign government requirements.
 Allows small and medium-sized firms the ability to compete
globally.
STRATEGIC CHANNEL
INTERMEDIARIES (CONT.)
 Ship Brokers/Ship Agents/Export Packers:
 Ship brokers act as agents in securing the charter of a ship.
 Ship agents are the local (port) agent of the ship operator
when the ship is in port.
 Export packers supply a shipper specialized export packing
services to help with customs and to protect the goods.
GLOBAL TRANSPORTATION OPTIONS
Air
• Large compression of transit times.
• Linkages with package delivery and courier services provide true
point-to-point service.
• Rates have traditionally restricted cargo to low density, high value
goods.
• Volume is approximately 1% of movements, but nearly 20% of the
value.

Motor
• 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 warehouse seal the
container at point of shipment and not opened until it reaches its
destination country.
GLOBAL TRANSPORTATION OPTIONS
(CONT.)
Rail
• 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.

Ocean
• Ocean structure:
• Liner – scheduled service; regular routes.
• Charter – contract service; no set routes.
• Private – service firm’s own logistics needs.
• Include bulk, container.
• Most pervasive and important global mode.
• Revenues are substantial.
FACILITIES
 Storage:
 Storage may be necessary for either bulk or finished goods.
 This may require different types of in-transit facilities depending
upon the method of shipment and cargo type.
 Longer term storage may require a public or bonded warehouse.

 Packaging:
 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.
 Shippers expect to pay more for more protection, as settling liability
claims can be very difficult due to the large number of firms that may
be handling the goods.
GOVERNMENT INFLUENCES

Customs Regulation

●
Greatest Effect on International movement of goods.
●
In place to protect domestic industries from unfair or predatory competition, these barriers to trade are handled differently in
various countries.
●
Duties expressed either as a percent of value, a fixed amount, or in combination.

Other Customs Functions

●
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.

Free Trade Zones / Free Trade Agreements

●
Goods enter without customs formalities, duty or bond.
●
Goods can be stored indefinitely and/or re-exported without paying duty.
●
Trade Blocks.
EXAMPLE: A TYPICAL TRUCK
SHIPMENT CROSSING INTO MEXICO
CHANGING POLITICAL AND LEGAL
ENVIRONMENTS
 A Single European Market.
 230 million consumers were
established as one market through the
1987 Single European Act.
 Elimination of:
 Physical barriers like customs.
 Technical barriers like health &

safety issues.
 Fiscal barriers like value-added

tax and excise taxes.

 Eastern Europe.
 Low cost manufacturing hub.
 Asian Emergence.
ISSUES IN INTERNATIONAL
DISTRIBUTION
 Language Barriers:
 The advertising and packaging will have to be translated, not
just into the generic language category but also into the specific
version spoken in the region. 
 Cultural Barriers:
 Subtle cultural differences may make a product and strategies
that tested well in one country unsuitable in another.
 Currency Fluctuations:
 The exchange rate / fluctuating dollar w.r.t other international
currencies affects both the volume and direction of global trade.
 Advertising Regulations:
 Countries often have arbitrary rules on what can be advertised
and what can be claimed.
ANTI-DUMPING
 An anti-dumping measure shall be applied only under the
circumstances provided for in Article VI of GATT 1994 and pursuant
to investigations initiated1 and conducted in accordance 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 the effectiveness of the new
Agreement on Anti-Dumping Policy.
 To combat dumping, countries may levy either:
 An anti-dumping duty on the dumped product, providing that the rate of duty
does not exceed the 'margin of dumping', or
 A countervailing duty where the product is being subsidized providing that
this does not exceed the 'margin of subsidization'.
 The margin of dumping is, broadly, the difference between a product's
'normal value' and the export price, while the margin of subsidization
is the amount of subsidization bestowed on the export product.
ROLE OF TECHNOLOGY IN
INTERNATIONAL DISTRIBUTION
 EDI.
 ERP.

 Bar code scanning.

 Hydraulic trolley for material movement.

 Pallets for safety of materials.

 GPS.

 RFID.
IDEA (INTERNATIONAL DISTRIBUTION
OF ELECTRONICS ASSOCIATION)
 IDEA was formed in 1987 with the express intent to
spread good practice within the global electronic
component distribution industry.
 Principal aim of IDEA is knowledge sharing,
cooperation and partnership between companies
belonging to the various  member associations.
IDEA ACTIVITIES
 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 or Forum de la Electronique
in Paris (France).
INTERNATIONAL DISTRIBUTION
AGREEMENTS
 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 supplier has 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.
SCENARIO IN INDIA
 Foreign investment up to 100 per cent is possible in the Indian
consumer electronics industry to set up units exclusively for
exports.
 It is now possible to import duty-free all components and raw
materials, manufacture products and export it.
 EHTP (Electronic Hardware Technology Park) is an initiative to
provide benefits to companies, which include export credits, no
duties on imported components or capital equipment, business tax
incentives, and an expedited import-export process.
 The government, in an attempt to encourage manufacture of
electronics in India has changed the tariff structure significantly.
Customs duty on Information Technology Agreement (ITA-1)
items (217 items) has been abolished from March 2005.
INTELLECTUAL PROPERTY RIGHTS
 Protection of Intellectual property rights (IPR) is a prime
requisite for development of R&D and innovation in the
consumer electronics sector.
 The Government of India has developed a robust IP act
to facilitate innovation, growth and development.
 India is a party to the “Trade Related Aspects of the
Intellectual
 Properties (TRIPs) Agreement Several amendments to
the Copyright Act, creation of a new Trademark Act, a
new Designs Act and amendments to the Patents Act
show India’s continued effort to protect IPR.
DISTRIBUTION NETWORK (LG
INDIA)
SUPPLIERS SUPPLIERS SUPPLIERS

FACTORY (OEM) FACTORY (OEM)

WAREHOUSE WAREHOUSE WAREHOUSE

CFA CFA CFA CFA CFA CFA

DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR

LG SHOPPE DEALER DEALER DEALER www.lgezbuy.com

INSTITUTIONS CONSUMERS CONSUMERS CONSUMERS CONSUMERS

REVERSE LOGISTICS

 The company accepts returns from their retailers as

well as company owned stores.
 The job of bringing back the defects again rests with
local distributor and C/F that collects them from the
shop.
 They are entered and kept separately at the warehouse
and proper stock is maintained and sent to warehouse.
 The damaged goods are dispatched to the warehouse
periodically. The damaged goods received from the
distributor are credited to his account and as such are
only accepted after thorough examination by the local
sale executive.
Thank You