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INTRODUCTION

To expand their business, manufacturers, exporters or importers of goods have several ways to organize the supply chain through which their products reach the final consumer.

Using distributors can reduce the risk expense of the supply chain from the manufacturer, exporter or importer, but very often this is at the price of loss of most of the control over the supply chain and a reduction in the margins received when selling to a distributor who requires remuneration himself in order to take on the risk and expense of distribution.

Using agents is a middle way where, some risk and expenses are borne by the agent, and the market knowledge of the agent is available to the principal on a basis (remuneration by way of commission) which provides the maximum incentive to the agent to act efficiently and effectively.  However, in this case the principal still remains as much in control as if he were negotiating directly with the relevant level in the supply chain.

STEPS TO TAKE

1. Defining the Relationship

• Agent
• Sole Agent
• Distributor
• Sole Distributor

2.Agency Relationship

• Appointment and authority of Agent
• Sub- Agents
• Ratification
• Revocation of Authority
• Agent’s duty to Principal
• Principal’s duty to Agent
• Effect of agency on Third Parties

3. Types of Relationships

• Exclusive and Non-Exclusive
• The provision of support by the Principal
• The use of Trademarks and Brand Names
• Termination

Siddha Param
International Business Consultant

E-mail: siddhaparam@worldwidebusinessconnection.com

PLEASE REVISIT AT A LATER DATE for Notes, Questions and Answers on Expanding with Agents and Distributors