DIVINE WORD COLLEGE OF LAOAG
School of Business and Accountancy
Name: Aileen E. Balagot
Regine Gale E. Ulnagan
Course and Year: Bachelor of Science in Accountancy 3
Subject: International Business and Trade (AE 18)
EXPORTING FOREIGN DISTRIBUTORS
It involves the sale of goods or services to customers in foreign markets
through intermediaries known as distributors. These distributors purchase
the products from the manufacturer and then sell them in their respective
countries.
EXPORTING EXPORTING EXPORTING
FOREIGN IMPORT AGENT
DISTRIBUTORS
Role Exporting Distributor Import agents
company sells becomes the negotiate
directly to supplier in the contracts on
foreign buyers foreign market behalf of the
supplier
Ownership Exporting Distributors own Import agents
company retains products and do not own
ownership of contract directly products; they
products until with customers. act as
sold. intermediaries.
Risk Exporting Distributors bear Import agents
company bears the risk of do not bear the
the risk of unsold unsold risk of unsold
inventory. inventory. inventory.
Compensatio Entire export Distributors add Import agents
n process managed margin for profit earn commission
independently by and costs. on transactions
the exporting facilitated.
company.
ADVANTAGES OF EXPORTING FOREIGN
DISTRIBUTOR
● Market Access and Expansion
● Local Expertise
● Cost Savings
● Risk Sharing
DISADVANTAGES OF EXPORTING FOREIGN
DISTRIBUTOR
● Loss of Control
● Dependency
● Communication Challenges
● Intellectual Property Risks
DIVINE WORD COLLEGE OF LAOAG
School of Business and Accountancy
PROCESS OF EXPORTING FOREIGN DISTRIBUTOR
● Research and Choose a Market:
- Identify the country where you want to introduce your
product.
- Understand the target audience, their preferences, and their
demand for your product.
● Find a Distributor:
- Seek out companies in the target country that can assist in
distributing your product.
- Find a reliable distributor who understands your product and
the local market.
● Negotiate and Sign a Deal:
- Discuss terms with the distributor regarding pricing and
payment.
- Reach an agreement and sign a contract.
● Get Your Product Ready:
- Ensure your product meets all legal requirements in the
target country.
- Pack and label your product correctly for the market.
● Ship Your Product:
- Arrange for your product to be shipped to the distributor's
warehouse in the target country.
- Ensure smooth customs clearance.
● Market and Sell:
- Allow the distributor to handle sales to stores or customers.
- Collaborate with them to advertise and promote your product
effectively.
● Manage the Relationship:
- Maintain communication with the distributor to ensure a
smooth partnership.
- Address any issues or concerns promptly.
● Review and Improve:
- Evaluate the performance of your product in the market.
- Identify areas for improvement to enhance future exports.
EXAMPLE OF EXPORTING FOREIGN DISTRIBUTOR
Nike is a big company that makes sportswear.
REFERENCES
https://pressbooks.pub/internationalbusiness/chapter/chapter-11-
exporting-and-importing/
https://www.malaysiaexports.com/inex9.3.import.agent.htm
DIVINE WORD COLLEGE OF LAOAG
School of Business and Accountancy
QUESTIONS IN EXPORTING FOREIGN DISTRIBUTORS
1. What is the process involved in exporting through foreign
distributors?
a) Direct selling to customers in foreign markets
b) Selling products directly to manufacturers
c) Selling products to intermediaries known as distributors who then
sell them in their respective countries
d) Setting up retail outlets in foreign markets for direct sales
ANSWER: C
2. In terms of ownership, distributors do not own products; they
act as intermediaries.
ANSWER: False (Exporting Import Agent)
3. What step comes after negotiating terms with a chosen
distributor in the process of exporting through foreign
distributors?
a) Find a distributor.
b) Ship the product.
c) Sign a formal contract.
d) Market and sell the product.
ANSWER: C
4. Enumerate at least 1 advantage and disadvantage of exporting
foreign distributors.
ANSWER: (Any one of the following)
ADVANTAGES DISADVANTAGES
Market Access and Expansion Loss of Control
Local Expertise Dependency
Cost Savings Communication Challenges
Risk Sharing Intellectual Property Risks
5. How does Nike's approach to selling its products in Japan
illustrate the concept of exporting through foreign
distributors?
a) Nike sells its products directly to customers in Japan.
b) Nike collaborates with Japanese companies who understand the
local market to sell its products in Japan.
c) Nike establishes its own shops in Japan to sell its products.
d) Nike relies solely on online sales to reach customers in Japan.
ANSWER: C
