AUTHOR
Lindgren, Lena; Rosendahl, Anna

DATE
2004-01-28

DEPARTMENT
Business Administration and Social Sciences / Industrial marketing and e-commerce

SUMMARY
Most SMEs expand internationally by forming partnerships with foreign distributors, as they often lack the resources and international experience to successfully perform all export functions themselves. However, the management of foreign distributors is often regarded as problematic since it is a highly demanding task. Our research investigates three specific problems that SMEs are faced with when managing foreign distributors, namely the selection, support, and control of foreign distributors. To describe these problems, we have conducted case studies of four exporting SMEs; Propulse AB, Composite Scandinavia AB, Liko AB, and Index Braille.

The conclusions drawn in this thesis are as follows:

1. When selecting foreign distributors, SMEs generally rely on selection criteria such as prior experience, networks and connections, market coverage, and distributor size. The prospective distributors are located by using recommendations and connections, the personal knowledge of the territory, trade fairs, and by distributors contacting SMEs directly. Then the evaluation of candidates and the final choice is made based on visits to the distributor and a marketing, promotion, and/or business plan provided by the distributor. The selection is later finalized in a written contract covering obligations and expectations of both parties.

2. SMEs support their foreign distributors by nurturing strong relationships, regular communication, field visits, invitations for the distributor to visit, territorial protection, promotional support, technical support, training, business advice, psychological rewards, and finally by providing distributors with adequate margins.

3. For control of foreign distributors, SMEs start by evaluating their performance by implementing standards such as sales volume, the cost of having the distributor, and the distributors’ sales and marketing input. The performance is monitored employing the SMEs’ own statistics and performance appraisals, and is then compared to mutually set objectives. In addition, SMEs utilize strong relationships, motivation, resources needed by the distributor, favourable terms of trade, and coercive threats and actions in order to increase the control over distributors.

ISSN 1404-5508 / ISRN LTU-SHU-EX--04/072--SE / NR 2004:072