CH 8 - LOGO Part3 Transactions with Higher and Stronger...

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Unformatted text preview: LOGO Part3 Transactions with Higher and Stronger Foreign Market commitments Chapter 8 International Distribution LOGO Chapter Objectives In this chapter, we discuss international distribution and Strategic business consideration requiring responses in law National and multinational law touching on issues in international distribution Private rights and responsibilities in contract between agents and principals and between supplier-exporters and distributor-importers LOGO Introduction A more complex relationship might be required for expanding and developing the foreign market for the exported products or services, providing after-sales service, or maintaining a presence to develop goodwill or brand loyalty or to obtain market feedback on sales or the product attributes as perceived by that market. How a relationship between a strategic business and a foreign market should be accomplished? Look at the following diagram Strategic Market Entry Options for Exporters LOGO Strategic Market Entry Options for Exporters Domestic exporting firm Option2 Direct sales Option3 Overseas Representative (employee) Option4 Foreign agent (unrelated)-Sales Agent-Distributor Agent Option 5 Foreign Distributor (unrelated) Option 6 Foreign Distributor (subsidiary) Option1 Domestic interna- tional trading house Foreign consumer or industrial end user LOGO Agency versus Distribution Agents are bound by a contracts with a principal (the exporter) to represent him or her, and to speak and make contracts with others in the name of the principal. Distributors are bound to a supplier (the exporter) by a contract of sale with further contract terms on how the process will be managed to properly service the market and end-user demand. LOGO While agents and distributors can be differentiated in fact and law on the basis of a number of criteria, two factors are of chief importance: 1.Agents are empowered to make contracts binding the principal to those terms, and for this reason owe a legal duty to their principal to act with utmost good faith (known as a fiduciary duty). Neither of these circumstances applies to distributors, who need only act in general good faith. 2.Distributors actually buy and take title of goods, then resell them on their own account. Agents do not; the principal retains title to the goods until such time as it is transferred directly to the purchaser. LOGO Export option4: Agents in Distribution The agency relationship, seen from a liberal free-...
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This note was uploaded on 05/11/2010 for the course BUSINESS S 390 taught by Professor Terryryan during the Summer '10 term at Winthrop.

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CH 8 - LOGO Part3 Transactions with Higher and Stronger...

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