1.

The IBM s about business that at the same time it includes such key words as
capital (money) and (resources) gods. Its contemporary objective named as a modern method
, consists of that you create the cycle of understanding to explore the details deeply
(hermeneuthic method). Subject mether- how to manage the production, trade at international
scale, to increase profit of the company (micro – level of analisys), or the state of a company
( macro- level of analisys).
We have 3 keys operations of IBN: 1. Organizing- that consists of exporting (selling +
shipping,>services, raw materials, products= to other nations), importing – purchasing >
services, row materials, products = another nations , in bringing them into one own country.
Indirect and direct export – import . 1.producer appeals to outhonomas commercial
entities, to commercialize its good. 2 a producer commercializes its good thouw its own
structure, agents, etc.
Planning export, import operations Step 1. Segmentation of world market (choosing
the segment and the matching the product t this segment) Product with higher price is
characterized with qualities and fiatures. Criteria of identifying market segment – age, status,
religion, level of education, etc.
Step 2. Choosing the entry strategy. Globalized product, globalization – diversification –
adaptation > strategy (it cought be mixed)
Step 3. Treating the spending for export – import operations, not as qurent cost, but as
investment.
Controlling operation. Operations control focuses specifically on operating processes and
systems within both the firm and its subsidiaries and operating units. The firm also may need an
operations control system for each or its manufacturing facilities, distribution centers, and
administrative centers.

3.Social – economic mega trend - is a direction that produces and impact open all national
economies and which acts for centuries it determines the appierance of new kinds of goods,
services etc. It changes investment priorities in business as well as mg and marketing nowhow.
We have some megatrends (localization, socialization, industrialization, informatiosation
ecologization, etc.)
Industrialization - this megatrend is in the base of the evolution of modern society and
economy . It provides two different world social systems: 1. Being market and capital oriented

1
2. Being communist oriented. General objectives of it, are satisfaction of primary human,
social, economic = needs, rice of living standards, etc.
General solucion of it: investment in physical + human capitals, the develpement of all secors
of economy, large, scale, production, etc. General economic and business orientation in social
systems under industr., is to accelerate economic grouth, fast investments, return and profit
maximization.
Informatization megatrend by its socio-economic content, it refers to the transition from
industrial social system to the pot industrial or informatical one. In economic and business
demention, it presupposes shifts in factors of production, production technologies and
investment policies as in managerial and marketing nowhow, appearance of new tipes of
companies. Defference between industrialization – informatization.
1.. main factors of production
Ind. Traditional, physical, land
Info.labor, neo – factors (intellectual capita labor , robots)
2.Principal producer
Ind. Firm, corporation
Info. Small interprice, virtual company, transnational corp
3.Technical and technological base
Ind. Mecanisation, part –automatisation
Info. Full automatisation, cibernatisation.
4. Decision making
Ind. Autoritarism style, result - oriented
Info. Liberal style, synergy – effect oriented
Country ind. China, info. Japonia

2
3. A Socio-economic Megatrend is defined here as a direction which, first, influences all social
systems, including national economies, shaping, so far, a global socio-economic space;
secondly, acts not few years but up to centuries, constituting a global socio-economic time. By
a Social system it is understood here the complex of political, economic and cultural
subsystems which has been shaped as an outcome of the impact of the SEMs. In this sense, the
social system develops in multi-level manner: at global level (worldwide), macro level (state,
national economy), micro level (organizational), nano level (individuals as “nano-social-
systems”). As far as the interest of the research has also been placed on the business
development issues, the social system concept is often used in the article in its specified form as
a socio-economic system.

CONCEPTUAL DEVELOPMENT
Industrialization. This megatrend is in the base of the evolution of Modern society and
economy. It started in the XVth–XVIth centuries and attained its top in the middle of the XXth
century in economically advanced countries. The megatrend provided a foundation for the
development of two different, by their ideological considerations, world social systems: first
being market and capital-oriented, based on a private property concept and second being
communist-oriented, based on a common property concept. General “solution” presupposed the
investment in physical and human capitals, the development of all sectors of economy with a
special attention being paid to the second sector, and later on, to the third one; large–scale
production, with gradually decreasing cost and maintaining quality standards; worldwide
promotion of an “international” style which symbolized the standardized, up to unification,
mass-production and mass-consumption approach to solution of socio-economic issues, and
which became especially evident in worldwide construction of cities. General economic and
business orientation in social systems under Industrialization is to the accelerated economic
growth, fast investments return and profit maximization.
Informatization. It started in the middle of the XXth century, and is still in growth. By its
socio-economic content, it refers to the transition from industrial social system to the
postindustrial or informational one. The process found its reflection in number of outstanding
monographic works. In economic and business dimension, the passage presupposes shifts in
factors of production, production technologies, and investment policies as well as in managerial
and marketing know-how, appearance of new types of companies.
Comparative characteristics of socio-economic systems shaped by Industrialization and
Informatization

3
4
4 . International business refers to companies trading, exporting, selling products, global
sourcing, investing, manufacturing infrastructure and transferring assets across national
borders. The goals in international business are to organize, produce, conduct, source and
market business for value adding purposes on an international level. This can be done with
either physical or intellectual assets. Internationalization is a big and complicated process and it
can acquire a lot of work of companies to research different subjects, establish way of
internationalization and also start the process of actually getting internationalized. There are big
risks and difficulties that come with internationalizing, and that is why companies need to have
strong and valid reasons to consider such a big strategic move.
Stages of Business Internationalization
- Ad-hoc business internationalization (once it happens once it not)
- Contractual stage (you develop long term contrct. 1. You develop your infrastructure,
2. You are devote francising contract/ selling, 3. Buying contrat) .
- participation stage (1. Portfolio investment, 2. You have less then 15% and more then
10% you participate in some problems)
- Full investment (foreign direct investment 1. Branch, 2. Autonoma subsidiaries
More then 50% less then 100% of shares , Fully participate in strategy management, For
global company )

Along side with this traditional evolutionary logic a new kind of company appears under
business globalization.
Globalization
Business Globalization takes place when a company state becomes integrated in global market
economy. Globalization of business can be processes as: 1. Replaced production activity
oversoursing.
- Outsoursing the auxiliary activity keeping just basic competences
- Creation of value added chains world wide

Strategic goal of International Business Mnagement

Strategic goal for big company > creation of global value added chains and for
small company > finding the ways to be integrated in those chains

The world we live in today is getting smaller and smaller. The borders have been opening up
and governments are coming together to form different free trade markets, economic unions
and common markets. Political and legal policies, social and trade barriers and tariffs are
shrinking, which is making internationalization easier for companies. Know-how and
innovation is also easily shared with the help of internet and other communication tools. This
also helps companies to internationalize and still be able to share information in real time.
(Krugman;Obstfeld;& Melitz, 2012, ss. 31-39). The world has been developing and coming
together but it is starting to look like we have soon reached the top of globalization.
Globalization has the possibility of growth as long as we keep helping third world countries be
a part of it.

5
Advantages and Disadvantages
Globalization has many different advantages and disadvantages. It would be possible to continue
the list of these for very long, but in this chapter I will take up a few of the advantages and
disadvantages I think are important to be aware of.

Advantages
• Free trade and the benefits for consumers
One of the big advantages globalization provides is free trade. The barriers and tariffs between
countries and continents give more freedom to import and export different products from.
Modern technology and engineering has provided most of the world with the opportunity to
move products and information around faster and cheaper. This provides companies with the
possibility to easily expand their products and services to a larger customer base. The consumer
also profits from free trade as much as companies, because they are able to lower prices of
products and services via the more open market. They have an ability to choose products and
services from a large selection and this also pushes companies to compete with each other, which
often leads to lower prices or other kinds of benefits to consumers.
• Labor and knowledge movement
Today’s workforce can easily move around and provided knowledge and skills to the highest
bidder. Also it is easier for future workforces to educate themselves or get more knowledge from
somewhere else if their residence place cannot offer them the education they need. This leads to
labor and knowledge movement. Because of the internet the labor force does not always have to
relocate to work in another country. Companies can also have a huge benefit from this, because
if the resident country does not have enough educated labor in a certain field, they are able to get
the labor easily from somewhere else
Disadvantages
• Negative affect on developing countries
Globalization often causes rich get richer, and the poor get poorer. The big companies are taking
advantage of the developing countries and moving their production there for cheaper production
prices. For the big companies it drives down production prices while increasing their competitive
stand. The labor force in the developing countries is driven to the position where they have to
take under paid work, because the competition of work itself is so big in the developing
countries. That leads to the situation that the people living in developed countries are not able to
rise their living standards and they get stuck in a so called ‘’poverty zone’’. Due to the situation
where the workforce in the developing countries has to accept under paid work, they are also put
in jobs with high security risk. This happens because the labor force doesn’t have the power to
affect their job situation, salary, work time and work environment, which simply said means that
they really don’t have any worker’s rights.
• Negative affect on the environment
Globalization has a huge effect on the environment, which can be either direct or indirect.
Globalization is a growth-stimulating factor, and growth in the economic sector usually leads to
need of more resources, more transport and more production. This impacts the environment in
many different ways such as deforestation, increased amounts of carbon dioxide in the air, other
pollutions, and reduction of biodiversity. These are problem, which are promoted by
globalization. The situation is worse than ever and the environment is suffering
6
 5. Organizational design is a step-by-step methodology which identifies dysfunctional
aspects of work flow, procedures, structures and systems, realigns them to fit current business
realities/goals and then develops plans to implement the new changes. The process focuses on
improving both the technical and people side of the business. For most companies, the design
process leads to a more effective organization design, significantly improved results
(profitability, customer service, internal operations), and employees who are empowered and
committed to the business. The hallmark of the design process is a comprehensive and
holistic approach to organizational improvement that touches all aspects of organizational
life, so you can achieve:
 Excellent customer service
 Increased profitability
 Reduced operating costs
 Improved efficiency and cycle time
 A culture of committed and engaged employees
 A clear strategy for managing and growing your business
By design we’re talking about the integration of people with core business processes,
technology and systems. A well-designed organization ensures that the form of the organization
matches its purpose or strategy, meets the challenges posed by business realities and
significantly increases the likelihood that the collective efforts of people will be successful.

Six Key Elements in Organizational Design

I.  Work Specialization
Describes the degree to which tasks in an organization are divided into separate jobs. The main
idea of this organizational design is that an entire job is not done by one individual. It is broken
down into steps, and a different person completes each step. Individual employees specialize in
doing part of an activity rather than the entire activity.

II. Departmentalization
It is the basis by which jobs are grouped together. For instance every organization has its own
specific way of classifying and grouping work activities.

There are five common forms of departmentalization:

1. Functional Departmentalization. As shown in the Figure 2-1, it groups jobs by functions

performed. It can be used in all kinds of organizations; it depends on the goals each of them
wants to achieve.
2. Product Departmentalization. It groups jobs by product line. Each manager is responsible
of an area within the organization depending of his/her specialization
3. Geographical Departmentalization. It groups jobs on the basis of territory or geography.
4. Process Departmentalization. It groups on the basis of product or customer flow.
5. Customer Departmentalization. It groups jobs on the basis of common customers

7
 III. Chain of command
It is defined as a continuous line of authority that extends from upper organizational levels to
the lowest levels and clarifies who reports to whom. There are three important concepts
attached to this theory:

 Authority: Refers to the rights inherent in a managerial position to tell people what to do and
to expect them to do it.
 Responsibility: The obligation to perform any assigned duties.
 Unity of command: The management principle that each person should report to only one
manager.
IV. Span of Control
It is important to a large degree because it determines the number of levels and managers an
organization has. Also, determines the number of employees a manager can efficiently and
effectively manage.
V. Centralization and Decentralization
More Centralization More Decentralization
 Environment is stable  Environment is complex, uncertain.
 Lower-level managers are not as  Lower-level managers are capable and
capable or experienced at making experienced at making decisions.
decisions as upper-level managers.  Lower-level managers want a voice in
 Lower-level managers do not want decisions.
to have say in decisions  Decisions are relatively minor.
 Decisions are significant.  Corporate culture is open to allowing
 Organization is facing a crisis or the managers to have a say in what
risk of company failure. happens.
 Company is large.  Company is geographically dispersed.
 Effective implementation of  Effective implementation of company
company strategies depends on strategies depends on managers having
managers retaining say over what involvement and flexibility to make
happens. decisions

VI. Formalization
It refers to the degree to which jobs within the organization are standardized and the extent to
which employee behavior is guided by rules and procedures. 
Types of Organizational Designs
Organizational designs fall into two categories, traditional and contemporary. Traditional
designs include simple structure, functional structure, and divisional structure. Contemporary
designs would include team structure, matrix structure, project structure, boundaryless
organization, and the learning organization. I am going to define and discuss each design in
order to give an understanding of the organizational design concept.
I. Traditional Designs
1. Simple Structure
A simple structure is defined as a design with low departmentalization, wide spans of control,
centralized authority, and little formalization. This type of design is very common in small start
8
 up businesses. For example in a business with few employees the owner tends to be the
manager and controls all of the functions of the business. Often employees work in all parts of
the business and don’t just focus on one job creating little if any departmentalization. In this
type of design there are usually no standardized policies and procedures. When the company
begins to expand then the structure tends to become more complex and grows out of the simple
structure.
2. Functional Structure
A functional structure is defined as a design that groups similar or related occupational
specialties together. It is the functional approach to departmentalization applied to the entire
organization.
3.Divisional Structure
A divisional structure is made up of separate, semi-autonomous units or divisions. Within one
corporation there may be many different divisions and each division has its own goals to
accomplish. A manager oversees their division and is completely responsible for the success or
failure of the division. This gets managers to focus more on results knowing that they will be
held accountable for them.
II. Contemporary Designs
1.  Team Structure
A team structure is a design in which an organization is made up of teams, and each team works
towards a common goal. Since the organization is made up of groups to perform the functions
of the company, teams must perform well because they are held accountable for their
performance. In a team structured organization there is no hierarchy or chain of command.
Therefore, teams can work the way they want to, and figure out the most effective and efficient
way to perform their tasks. Teams are given the power to be as innovative as they want. Some
teams may have a group leader who is in charge of the group.

2.Matrix Structure
A matrix structure is one that assigns specialists from different functional departments to work
on one or more projects. In an organization there may be different projects going on at once.
Each specific project is assigned a project manager and he has the duty of allocating all the
resources needed to accomplish the project. In a matrix structure those resources include the
different functions of the company such as operations, accounting, sales, marketing,
engineering, and human resources. Basically the project manager has to gather specialists from
each function in order to work on a project, and complete it successfully. In this structure there
are two managers, the project manager and the department or functional manager.
3. Project Structure
A project structure is an organizational structure in which employees continuously work on
projects. This is like the matrix structure; however when the project ends the employees don’t
go back their departments. They continuously work on projects in a team like structure. Each
team has the necessary employees to successfully complete the project. Each employee brings
his or her specialized skill to the team. Once the project is finished then the team moves on to
the next project.
4.Autonomous Internal Units
Some large organizations have adopted this type of structure. That is, the organization is
comprised of many independent decentralized business units, each with its own products,
clients, competitors, and profit goals. There is no centralized control or resource allocation.
9
5.Boudaryless Organization
A boundaryless organization is one in which its design is not defined by, or limited to, the
horizontal, vertical, or external boundaries imposed by a predefined structure. In other words it
is an unstructured design. This structure is much more flexible because there is no boundaries
to deal with such as chain of command, departmentalization, and organizational hierarchy.
Instead of having departments, companies have used the team approach. In order to eliminate
boundaries managers may use virtual, modular, or network organizational structures. In a
virtual organization work is outsourced when necessary. There are a small number of
permanent employees, however specialists are hired when a situation arises. Examples of this
would be subcontractors or freelancers. A modular organization is one in which manufacturing
is the business. This type of organization has work done outside of the company from different
suppliers. Each supplier produces a specific piece of the final product. When all the pieces are
done, the organization then assembles the final product. A network organization is one in which
companies outsource their major business functions in order to focus more on what they are in
business to do.
6. Learning Organization
A learning organization is defined as an organization that has developed the capacity to
continuously learn, adapt, and change. In order to have a learning organization a company must
have very knowledgeable employees who are able to share their knowledge with others and be
able to apply it in a work environment. The learning organization must also have a strong
organizational culture where all employees have a common goal and are willing to work
together through sharing knowledge and information. A learning organization must have a team
design and great leadership. Learning organizations that are innovative and knowledgeable
create leverage over competitors.

10
6. While many theories about the relationship between information technology (IT) and
organizational design have been proposed, there is little empirical evidence on the issue. We
examine the influence of organizational design on the demand for IT and the productivity of IT
investments, using data from approximately 380 US firms. We find greater demand for IT in
firms with greater decentralization of decision rights (especially the use of self-managing
teams), and greater investments in human capital, including training and screening by
education. In addition, IT has a greater contribution to output in firms that adopt a more
decentralized and human capital-intensive work system. This relationship is robust to
alternative measures of IT and of work systems, as well as alternative specifications for demand
and for productivity. These findings lend support to the idea that organizational practices are
important determinants of IT demand and productivity.

11
12
7. Global company it goes directly to global market usually of the bases if IS
Business globalization takes please when a company state becomes integrated in global market
economy. Global strategy offering the same products using the same marketing strategy in all
national market
- Globalization of business can be process as replacement production activity
- Outsoursing the auxiliary activities keeping just basic competences
- Creation of value added chains worldwide

Formuation strategy
Two international strategy
- Multinational strategy (multidomestic strategy) adapting products and their marketing
strategies in each national market to suit local prefrences
- Global strategy offering the same products using the same marketing strategy in all
national markets

International organization Structure

Organization structure
Way in which a company divides its activities among separate units and coordinates activities
between those unites to achieve the organization goals

Centralization and decentralization

Centralized decision making is when decision making is centralized at a high level in one
location, such as headquarters

Decentralized decision making is when decisions are made at lower levels, such as in
international subsidiaries

Centralization advantages
- Help to coordinate the operation of international subsidiaries
- Decisions consistent with organizational objectives
- Top managers may be more experienced and have a better decision making
- Centralization helps strong leadership (power is at the top)
- Some companies maintain strong central control over financial resources
13
Decentralization advantages
- Help to reduce the top management task because top might be overburdened
- More motivation at lower levels
- More flexibility
- Better decisions on the spot by people directly involved
- Saves time in making decision to respond to local markets (operational decisions)
- Strong commitment on their projects

Type of organization structure

- There are many different ways in which a company can organize itself to carry out its
international business activities
- There are 4 most common organizational structure of international companies such as
division structure, area structure, product structure, and matrix structure

International division structure

International Area Structure

14
Global product structure

Global matrix structure

15
16
 8. Multinational companies, especially smaller ones, face more organizational challenges
than companies operating in only one national market. They have to maintain functional
organizational units, but they have to fulfill these functions in different ways, depending on
where the business in operating. The essential challenge is to create differentiated
organizational units responsible for the foreign markets while coordinating operations across

the whole company. A MNC have investments in other countries, but do not have
coordinated product offerings in each country. It is more focused on adapting their products
and service to each individual local market. Examples: Unilever, Proctor & Gamble, Mc
Donald’s and Seven-Eleven, Accenture;

Functional Use of Organizational Structure

The list of companies that use functional structure on an international basis is endless. A
functionally organized multinational company uses corporate functions as the basis for its
organizational structure. Production, human resources, design and customer service are typical
functional units. If a functionally organized company has a centralized structure, all operations
are based in the home country and individual employees have responsibilities for different
national markets. This type of organization is efficient and effective for companies that are too
small to have overseas subsidiaries. Larger companies can have this type of organization, but in
a decentralized form, where foreign employees carry out some of the work in their own
countries. In this case, companies have to pay special attention to coordinating activities.
Grouping activities into organizational units around the dimensions of area, product, or function
is not the only way to conceptualize the structure of a multinational organization. Studies in
organization structure can include other dimensions of formation, such as: (1) the amount of
formalization in decision making, 19 communications, and control; (2) the degree to which
work-related tasks are specialized into well-defined job descriptions; (3) the amount of
centralization or decentralization of decision making throughout the organization; and (4)
analysis of communication and influence networks. Strategy includes how organizations choose
to distribute authority and independence between the headquarters and the major units in order
to address multinational environments . Since this is a very broad view of international
strategy, it seems intrinsically sound to investigate structure by looking at the way key business
units are grouped into departmental structures. The key units are important design dimensions
because these departmental structures make up the building blocks of the entire structure of
most multinational organizations. The prominent design dimensions will get more visibility,
attention, and resources because their power has been institutionalized

17
9. Transnational Corporation (TNC) is an enterprise that manages production or delivers

services in more than one country through its branches. A TNC is a corporation that has its
headquarter in one country, known as the home country, and operates in several other countries
(more than 6, according to UNO definition), known as host countries. A TNC, on the other
hand, have invested in foreign operations, have a central corporate facility but gives decision-
making, R&D and marketing powers to each individual foreign market. Examples are Shell,
Deloitte, Glaxo-Smith Klein, and Roche. With a transnational organizational structure, you
generally organize your business along several dimensions, such as geographic, product and
functional levels. This means you achieve integration either within various product categories
or within geographic areas or functions. Such an organizational structure helps you coordinate
across all related business activities simultaneously. You can adopt a structure that meets your
business needs, even using a hybrid structure that combines two or more given models. For
example, your business can have one division based on geography and another based on
products. The major issue facing organizations that use a transnational structure is complexity,
which is likely to interfere with your efforts to achieve integration and coordination at various
levels. You might find it extremely difficult to balance the needs of different functional,
geographical and product stakeholders. The command structure used by transnational
organizations can create ambiguity and conflict. Furthermore, the complex structure also
seriously hinders decision-making processes because of the involvement of various people.
These delays in decisions eventually can increase your administrative cost and outweigh the
benefits of coordination. To address your integration and coordination concerns, you can adopt
new organizational structures such as modular and virtual structures. In a modular structure,
you separate core and non-core functions of your business and focus on core functions while
outsourcing all non-core functions. With a virtual structure, groups of units from different firms
are connected to make an alliance. This alliance provides businesses an opportunity to exploit
their complementary skills and resources to achieve common strategic objectives.

18
 10. Organising operator of IBM
- Exporting - selling + shipping> services, row materials, products = to other nations
- Importing – pourcesing> services, row materials, products= in other nations is bringing then
into one own country
Indirect, direct (import/export)
Indirect a producer appeals to autonomas commercial entities to comercialze its goods
Direct producer commercialize its good throw its own > commercial, structure, agents
Managing > export, import
Planning> export, import = opportunities
Planning algoritm for> import, export
Step 1.
- Segmentation of world market (choosing the segment and matching the product to this
segment)
- Product > quality, featwes (higher price)
- Criteria identifying a market segment > age, cultural, gender, status, religion

Step 2.
Coosing the entry strategy
- Globalized product
- Globalization, diversification, adaptation= strategy ( it could be mixed)

Step 3
Treating the spending for >export, import= operations, not as current cost, but as investment

11

19
12. The distribution channels are the different entities that intervene in the business structure
and marketing of a product. Its objective is to ensure that the product is transferred from the
factory to the final consumer.
The distribution channel of a product is formed by individuals or companies that are
responsible for their physical transfer and ownership without modifying it. Because when this
happens, then a new product is born.
So, for an intermediary to be considered as a product channel, he must acquire his property
from the manufacturer or intermediary (channel), and then sell it to another or to the final
consumer.
The distribution system can include participants or primary channels (wholesalers or retailers).
Specialized participants can also take part.
This includes transport companies, cargo agents, storages, commission agents and marketers of
the product. The distribution channel is one of the four components of the marketing system,
along with the product, the price and the market or place.
Index
 1 Types of distribution channels and their characteristics
o 1.1 Consumer goods channels
o 1.2 Channels for distribution of industrial goods
o 1.3 Distribution channels services
o 1.4 Multiple channels of distribution or dual distribution
o 1.5 Non-traditional channels
o 1.6 Inverse channels
 2 Examples of distribution channels
o 2.1 Direct channel
o 2.2 Retailer channel
o 2.3 Wholesale channel
o 2.4 Double
 3 References
Types of distribution channels and their characteristics
The distribution channels can be classified as:
Consumer goods channels
In turn these are divided into:
Direct channel
It is the one that goes from the producer to the consumer. This channel is the simplest and most
immediate channel to distribute consumer goods, as it does not involve intermediaries.
Retailer channel
The distribution follows the producer - retail - consumer scheme. It includes the large
supermarket chains and warehouses.
It is the most visible channel for the final consumer. Frequently, purchases involving the
general public are made through this channel.
Wholesale channel

20
The distribution is made according to the scheme: producer-wholesaler-retailer-consumer. The
distribution of medicinal, hardware and food products is done using this channel.
High demand goods are generally distributed through these channels. This makes it possible for
manufacturers to cover the entire market.
Agent channel / broker
Follow the pattern producer - agent - retailer - consumer. Instead of using the wholesalers
channel, producers prefer to incorporate intermediaries or commission agents to get their
products to the retail market.
The products are generally sold to large retailers. This scheme is very frequent in the
distribution chains of perishable food and oil.
Double channel
The sale of the product from the producer to the consumer is made following the scheme:
manufacturer - agent / broker - wholesaler - retailer - consumer.
Manufacturers sometimes turn to intermediary agents. These, in turn, employ wholesalers who
sell to large chain stores or small stores.
Channels for distribution of industrial goods
This class of channels distributes raw materials and other products whose final consumers are
other companies that use them in the manufacture of new products.
The distribution of industrial products is different from the distribution of consumer products.
Four channels are used in this type of distribution.
Direct channel (Producer - industrial user)
It is the most usual for the acquisition of products for industrial use, since it is the shortest and
most direct.
This channel includes manufacturers that buy large volumes of raw materials, supplies,
equipment or processed materials from other manufacturers.
Manufacturers or producers use their own sales force to market and sell their products.
Industrial distributor
Follow the scheme producer - industrial distributor - industrial user. Manufacturers use
industrial distributors as intermediaries to sell to their customers. An example of this is the
manufacturers of air conditioners.
Agent channel / broker
The intermediary can be the producer, the agent or the industrial user. It is a very useful channel
for companies that do not have their own sales department.
Channel agent / intermediary - industrial distributor
Here the intermediary can be an industrial distributor, the producer, the agent or the industrial
user. This type of channel is used when the sales scheme does not allow the industrial user to
sell directly.
Distribution channels services
Due to the nature of the services provided, these channels originate varied special distribution
needs.
Producer - consumer
The intangibility of the services provided requires personal contacts between the manufacturer /
producer and the consumer. This occurs both in the production process and in the derivative
sale activity.
Such is the case of a medical or legal consultation, an electric service, among others.
Producer - agent - consumer
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Here, personal contact between the producer and the consumer is not necessarily required to
comply with the distribution of the service. Then, the agent or intermediary enters as an active
part.
For example, the travel agency for ticket or accommodation sales comply with this feature.
Multiple channels of distribution or dual distribution
Several channels are used to better cover the market.
Non-traditional channels
They serve to establish differences between one product and another from different companies
(competitors).
Inverse channels
These are used when the products are returned to the manufacturer for repair or recycling, but
this is done through different distribution channels.
Examples of distribution channels
Direct channel
The most used forms of distribution with this type of channel are: traditional direct door-to-
door sales, telemarketing, telephone sales or mail order sales. The intermediaries do not
participate in this type of channel.
This is the case of companies such as Avon and Amway.
Retailer channel
This is the case of Wal-Mart stores that buy directly from their exclusive manufacturers. It also
includes supermarkets that purchase agricultural products directly from the producer.
Other examples are automotive dealerships, gas stations and clothing stores.
Wholesale channel
A representative case of this channel are the travel agencies that buy tour packages from
wholesalers. Another case is the small village stores, which sell products purchased from
wholesale distributors.
Double
Examples of this type of channels are the different franchises of the market and the exclusive
importers.

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