1. Managing Overseas Trading Partners
Mike Stokes

2. Assumptions You know WHY you are exporting
You checked that everything was in place before starting to export
You analysed & evaluated markets
You identified your target markets
You chose appropriate local partners
You negotiated and agreed “the deal”
You are going to drive the relationship 2

3. Routes To Market 3

4. Routes To Market Direct To End User
appropriate for low-volume, high-value items
fine for online business, with small parcels
perfect for online business with electronic delivery
only consider if you can guarantee giving overseas customers the same service as domestic customers
essential to compare operating costs with speed and quality of customer service
language considerations must not be ignored 4

5. Routes To Market Fulfilment House
Ideal where there is a need for a storage, delivery and maybe a local call centre service
Fine where no local sales representation is needed
Still requires regular training and other support
Can be difficult to control quality
Relatively low-cost and low-risk route to market 5

6. Routes To Market Sales Agent They obtain orders & receive a commission
They do not hold or deliver stock
There is no transactional relationship with the customer
They provide local expertise & contacts
You retain control of pricing
A sales agency agreement is essential
Termination can be painful 6

7. Routes To Market Distributor They buy stock from you, then sell it on
They store, deliver, market, sell & support products
They make a margin, not a commission
They mirror what you do in your home market
You have no direct customer relationship
You cannot dictate the sell-on price
A distributor agreement is a must 7

8. Routes To Market Franchising
The franchisor controls the brand, the products, the way of operating and much of the promotion
The franchisee runs the local operation, providing local resources and using local contacts
Important to ensure this is “win-win”
IP issues must be clarified up front
Franchising agreement is essential 8

9. Routes To Market Licensing
The licensee buys the right to make, sell, market or supply the licensor’s products (or services, or brands)
The licensor has little influence once permission has been agreed
There is usually an up-front payment followed by periodic royalty payments
IP issues must be clarified up front
Licensing agreement is essential 9

10. Routes To Market Joint Venture
Collaborators whereby one party (usually the local one) has management control
Important to understand the aims of both parties
Mutual commitment will be tested but the JV will fail without it
Can be the most effective route into emerging markets 10

11. Routes To Market Subsidiary or Overseas Branch
You have total control of your affairs
Important to fully understand legal, HR and comparative taxation issues before going ahead
Big commitment 11

12. Routes To Market Acquisition Ready-made presence in the local market
Important to win over the newly-acquired team
Levels of support & training need to be understood and planned for
Big commitment, can be costly
But can be the most lucrative 12

13. Routes To Market Direct Fulfilment House Sales Agent Distributor
Franchising
Licensing JV
Branch or Subsidiary
Acquisition
Compare :-
Ease of Entry
Cost of Entry
Commitment
Level of Support
Control 13

14. The Four Ps P P P P 14

15. The Four Ps Product are you merely supplying a standard UK product ?
is it really what the local end user wants ?
are there any size, format or material issues ?
have you addressed language issues – instructions, packaging, labelling ?
do you comply with local standards and regulations ?
what customisation should you have done ? 15

16. The Four Ps Price is the price to the end user competitive and fair ?
do you understand all the cost adders ?
who is taking the exchange rate risk ?
are margins for all players in the chain adequate ?
do you understand local “margin” calculations ? 16

17. The Four Ps
Price and “Margin” If a Factory sells at £100 to a Distributor, who then sells at £ % VAT to a Retailer ....
Margin (125 – 100)  125 = 20%
Mark-Up (125 – 100)  100 = 25%
Coefficient (125 x 1.2)  100 = 1.50
Note that “Mark-Up” and “Coefficient” can be referred to as “Margin” in some places. Seek clarification before you start to negotiate 17

18. The Four Ps Place have you explored ALL potential routes to market ?
should you use a combination ?
do you understand the benefits & risks of granting total or partial exclusivity ?
does your trading partner have enough of the other Ps working in his favour ?
what further training or support can you give ?
as a last resort, consider if you have the right partner 18

19. The Four Ps Promotion remind yourself WHY you are exporting
ensure that the positioning of the product and the positioning of the price is supported by the appropriate level of promotional activity
who is responsible for each element within the promotional budget ?
who is collating the various activities ?
what is the mix of traditional activity & social media ? 19

20. The Four Ps Agree 4 Ps shortcomings with trading partner
Agree time-bound Action Plan
Agree KPIs once the 4 Ps are mutually-acceptable
Regularly re-visit the 4 Ps 20

21. Vision and Objectives 21

22. Vision and Objectives Share Your Vision
be clear about your plans and aspirations for each export market
make sure your own team in the UK know “why you are doing it” – this means production, design and financial colleagues, not just export staff
get your export trading partners to educate their staff as to what you are trying to achieve 22

23. Vision and Objectives Clarify Short-Term Objectives & Expectations
remember again WHY you are exporting
quantify your short-term objectives so that all parties can recognise the milestones and the timescales
make sure that your short-term objectives fit nicely in with your longer-term plans
consider rewards
prepare a “plan B” 23

24. Vision and Objectives Agree The Support You Will Provide
many exporters are caught out by the level of support needed to get new trading relationships up and running
training – sales, service, customer care etc
promotions – national, local, trade, consumer etc
progress meetings, visits, trade show support
virtual meetings, skype calls etc
information and remote access to files 24

25. Key Performance Indicators25

26. Key Performance Indicators
SMART objectives
Clearly communicated
Mutually agreed
Regularly monitored & reviewed
Must be covered by overall Agreement 26

27. Key Performance Indicators
Sales values
Sales volumes
Number of new customers or sales outlets
Geographical coverage
Availability
Speed of service
Customer satisfaction 27

28. Key Performance Indicators
Why Bother ? You have to set the tone and take the lead You have to drive the relationship Your brand, your products, your reputation Don’t let the tail wag the dog ! 28

29. Feedback
Hopefully you found this course useful, easy to understand and enjoyable. But your feedback is very important. Please download the feedback form, print it off, add your comments – and then send a scanned copy by to Thank you 29

30. Mike Stokes Managing Overseas Trading Partners
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