International Channel Management Term Paper

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International Channel Management

The Japanese Distribution System has been under a lot of scrutiny and assessment and analyses by foreigners, and these analyses have attempted to find out the reason behind the absolute 'no go' principle that they find when they attempt to export any product to Japan. In a basic comparison between Japan and the United States of America, for example, while there is one single retail store for every 68 persons in Japan, in America, there is one retail store for every 120 persons. (Japanese Business Environment) The Japanese Distribution is virtually in the midst of a big controversy today, wherein the distributive structure and the various trade practices followed by the Japanese are under question. (A new perspective on the Japanese distribution system: structure and trade practices) The fact is that the Japanese Distribution System came into being during the early years of the seventeenth century, when several cottage industries in combination with the growing urban population gave rise to the phenomenon of a brand new class of people, known as the 'merchant class'. Another important fact to remember is the truth that almost all Japanese companies generally operate on the principle of very little equity, and a large amount of debts, wherein the manufacturers are ready to supply their goods to wholesalers in return for what are known as 'promissory notes' with terms that range from six months to more.

How can the manufacturer give away his goods on the basis of a mere promissory note? This is possible because of the extremely strong personal relationships between all the members of the entire channel. These members routinely share and distribute any vital information that may be pertinent to their work, and it is often said that this type of sharing information wherever and whenever necessary has its roots in the traditional village life of the people of yester years, when planting, irrigating, and the harvesting of crops had to be a shared activity rather than an individual activity if it was to actually succeed. Therefore, it can be stated that sharing is an important component of the Japanese Distribution System. In addition, the system exists in order to serve the social and the economic purposes that are required, and, more often than not, the social goals end up overshadowing the economic goals, and this means that the channel members in the distribution system are very much like the various members of one single family, whose members are tied together with the tight bonds of tradition as well as of emotion. If, as it dose tend to happen, one particular channel member had to be dropped from the system due to some reason or another that particular member would have to suffer a loss of face and pride, and this would have the tendency of leading the member into an unwonted tragic situation. (Future of Japanese Distribution Systems)

Therefore, the other members, and the entire system functions well despite the inefficiency or the incapabilities of a single member or a few members in the entire Japanese Distribution System, who's numerous members generally tolerate any inefficient members within the system. While in the United States of America, there is a well placed social welfare system that looks after the unemployed on a temporary basis, and even offers unemployment compensation, there is no similar system in Japan. In this country, the Japanese Product Distribution System acts as a provider of numerous jobs and also acts as a virtual buffer against unemployment. Most Japanese retire at the age of fifty-five, and at that age, they can avail of a lump sum pension that would actually amount to up to three years' salary, but since it is a fact that most Japanese also live up to long past the age of seventy and more, they utilize this lump sum amount and invest it in a small business of their own, and this serves the purpose of providing these individuals with a regular source of income for the rest of their lives. (Future of Japanese Distribution Systems)

Some people do attempt to find part time jobs with their previous employers or their subsidiaries or in their suppliers, and some try to invest the amount in certain small retailers or in wholesalers so that they have some sort of income during their retirement years, and most Japanese tend to opt for the latter. The distribution system therefore is seen as having the required social aims that would help maintain the retirees of the community to live a full life, and the system also ensures employment for them, as well as maintains the income flows from one point to another, and this structure serves as a guarantee of welfare for the retirees of Japan, as a result of which the Japanese Government feels little or even no need to provide welfare for these people. The system is an extremely flexible and workable device, and not only does it absorb excess workers, but it also does its bit for social service by providing retirees with a regular and steady source of income in the last days of their lives.

However, it is often felt that the Japanese Distribution System is inefficient, because of the fact that it has more than three tiers or levels, and this is not similar in any ay to the system that exists in the United States of America. For example, when a product has been manufactured, in Japan, it goes from the manufacturer to the general distributor, and from him to the special distributor, and from him to the special sub-distributor, form whom it goes on to the retailer, and then finally to the consumer. At times, it is noticed that he actual product does not change hands; everything is done on paper alone. The products are often taken from warehouse to another, and though this does create more jobs for more people, the entire cost for the exercise has to be inevitably borne by the consumer. However, the Japanese seldom complain, and this system is accepted by everyone involved as the best way in which to keep everyone working and earning a living. (Future of Japanese Distribution Systems)

What exactly is Channel Management, and how is it useful in international marketing procedures and processes? People form the major part of this system, and the fact is that they are not passive consumers but active players in the chain, they have individual needs and wants, and they apply these different needs and wants in no regular pattern; rather, they apply them however they see fit. They, in fact, allow themselves to be extremely inconsistent in their behavior, and they make individual and different choices depending on the occasion, or on the event, or even on the particular mood that they are in at that particular time. Consumers are today under more pressure, however, than they were in the previous years. They are under pressure from the paucity of time, of resources, and also from the rapid changes that are taking place everywhere today, and the unbelievable number of choices that the individual enjoys today. (Channel Management: Customer Power)

Those companies and organizations that would help the consumer of today cope with the excesses of change and choices would quite naturally thrive better than those that do not. The so-called 'pivotal players' in the game, that is, the retailers, are capable of satisfying the all powerful consumer by attempting to fully satisfy these needs, and thus doing well for themselves. The fact is that retailing in itself is in the midst of a number of dramatic changes, and these have been caused by the increasing phenomenon of globalization that has in turn been caused by E-Commerce. All these changes together affect the entire retail supply chain, wherein the manufacturer and the retailer and the consumer all play pivotal roles. Foreseeing these changes and addressing them is the most important part of any type of marketing operation anywhere. (Channel Management: Customer Power)

In the arena of channel management, the channel managers are also important players. It is these people who are often termed the 'eyes' of the organization, the eyes that the firm uses in order to look at the outside world. These people are often pitched against certain powerful internal forces within the organization, which would sometimes actually prefer not to have to hear what the other partners within the firm are thinking. These various forms of internal struggles are never talked about, and therefore there is no one way with which to deal with them. In a test that was conducted by the 'Routes to Market Association', channel managers were interviewed, and the various problems that they face were discovered. Some of them are: the organization and the culture in a firm that has no proper idea of the way in which the outside world works seemed to be a major handicap for most of them. (The Beefs of Channel Managers)

One individual states that when he was working in…[continue]

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