Key words: Marketing channel, partnership, culture, internationalisation
Abstract: This paper tries to get a point of view about the internationalisation of the marketing channel. Nowadays, we cannot separate the production sphere from the distribution sphere, both become an organisational entity. We know that the environment drives firms outside the domestic market. It will be interesting to observe the behaviour of an organisational entity, the marketing channel, compared to other types of international business.
The primary purpose of this article is to develop our understanding of distribution channel relationships inside an international environment.
We think that internationalisation enables to elaborate better conditions in relational marketing for a partnership state. The understanding of a channel constitutes a first indispensable step in order to justify foundations of a co-operation identified with reference to research on channel of distribution by the census of susceptible factors that intervene in the dynamics of relations in an international context.
We are going to treat several aspects of the channel and its internationalisation: standardisation versus adaptation of the channel, cultural aspects, internationalisation of retailing and internationalisation of production (all these factors facing co-operation).
The aim of this paper is to identify concepts and theories that will help us to understand producers/retailers relationships in a context of internationalisation.
The main object of our article is the channel, an active organisational element. Therefore, retail is with difficulty separable of all entities situated upstream. The channel can be considered like an independent organisation (Baker and Hawes 1993), a first perception of such an organisation is the metamorphose. Every member of the channel can be appreciated as an element of the valuable system to which it participates in (El Ansary, Coughlan and Stern 1996). The channel is thus seen as like a system of inter-relied and interdependent components committed in the production of an output whose its goal is to reach the consumer.
Facing globalisation and the new conditions of market, scholars are trying to go beyond national borders to approach the world economy.
To conduct a retailing business or a producing business in a foreign market, a company has two choices:
- Standardisation of the channel
- Adaptation of the channel.
Each country in the world has different rules, regulations, and culture…
The international aspect
Considering the point of view at an international level, the organisational behaviour becomes a land of research: in particular, relations of power between the various members of the channel, the power or the conflict inside international chains of supply….
An understanding of the extent of the power relations between suppliers and retailers acted like a catalyst on the international expansion and remains a domain to develop.
Most of the existing literature bound to the activity of distribution, concentrated on the expansion in a strategic term, is based on studies followed in a longitudinal and a historic manner and some varied degrees of empirical studies.
Hollander (1970) states very early in value of developing international operations, highlighting the unnecessary importance of national factors such as expansion plans for distributor operators.
The internationalisation drives firms to achieve larger sales and better results abroad.
Used indifferently, terms of globalisation and internationalisation, it is necessary to keep in mind the different configurations that we will engender further on (table 1).
Table 1 Different types of internationalisation
National products or private brands : French example |
Foreign products |
|
National retailer : French example |
Case of Carrefour in Brazil with French products like Majesty |
Case of Coca-Cola in France distributed by Carrefour, Auchan… |
Foreign retailer |
Case of Dannon in The Unites States at Wal Mart |
Case of St Mickael at Mark & Spencer |
Entry strategy
When a producer is interested in developing internationally, certain choices will ascertain his level of involvement and financial commitment from export to a wholly owned subsidiary.
The export represents a minimum risk because you just have to ship a product to a foreign country.
The highest level is a wholly owned subsidiary where the producer’s own firm in the foreign country, produces the product, and sells the product there.
Between these two states, there are the levels of licensing and joint venture (Figure 1).
Retailers have different international expansion choices from franchise/licensing to a wholly owned subsidiary (Figure 2).
THE INTERNATIONALISATION OF PRODUCTION
We notice that producers do not wait for retailing to start its internationalisation in order to discover the advantages and inconveniences of it. The examples are numerous, Nestlé invented the first milky flour in 1867, became established in the United States since 1822, already covered Europe before World War I and had made Nescafé an international brand when World War II exploded.
The classification of the 100 global distributors represents 1/5 of the world market distribution.
The concentration of business by these international retailers creates a decreasing pressure on the level of price and an increasing pressure on costs
As these distributors begin to use global power, producers find that their existing regional or national operational structures encountered difficulties owing to their contacts. Their capacity to answer to the global pressures is especially incompatible because of the way of which these companies spread in an international manner.
Aiming to survive and prosper in a new international distributive world, producers will need to act in a global way to answer the increasing demand of retailers in order to capitalise opportunities.
The international expansion of retailers handful provoke fear among a handful of world retailers. A firm producing consumer goods which operates in more than fifty countries dedicates 10% of its global market to the retailer Wal Mart and 25% more of its business scattered other few retailers. Producers detaining a meaningful presence in Europe, where the concentration of the distribution is important, often have a high percentage of their business offered to just a few retailers.
The risk of such concentration is clear, retailers begin to use their global spending power for a local advantage.
Although several retailers maintain some operational models traditionally multi-domestic where decisions of purchase are made locally, leaders like Carrefour, Wal Mart, Aholds, start to co-ordinate their activities on an international basis. As the channel of distribution strengthens, retailers use their global strength to get some necessary pricing-fixing concessions in order to maintain a competitive advantage. Carrefour often thought to be particularly aggressive on prices, has already negotiated global suppliers contracts in certain categories, and other retailers are going in the same direction. Auchan and Costo negotiated package or regional deals with suppliers for certain families of products.
The European retailers are allied to form purchasing groups as Promodes World Trade (PWT) created in 1992 and Carrefour International Goods (CMI) in 1995.
The members entered in the formation of these alliances to achieve savings by gathering purchases and to transfer the best practices through Europe.
Carrefour has the intention to create some additional purchasing groups in Latin America and Asia.
Other retailers also adopted strategies of regrouping purchases. The international purchasers of Wal Mart train the local purchasers and co-ordinate their activities. The Asian retailer Park-N-Shop holds regular meetings of different regional purchasers, and Ahold established the Ahold academy to maintain its leaders on an international plan.
While concentrating their spending power, retailers are capable to seek for the lowest prices and preferential terms. In these circumstances, suppliers face the choice to give up an important percentage of their business or to preserve what can be a non-profitable volume and to risk an effect on the local chains that adopt practices of retailer trade.
Retailers established some necessary systems to co-ordinate their purchases in a global way. Sophisticated information systems of Wal Mart allow it to observe differences in a price-fixing way of proposed products by suppliers and the promotional strategies through various country markets. These systems can reveal that producers’ prices vary from a country to another. These variations show less the real differences in costs than differences between the local price strategies.
All manufactures using the unexplained price differences on certain markets can find themselves an inconvenience in negotiations with international retailers. Although the price-fixing concessions attract the attention of concerned actors, retailers often have a meaningful impact on goods costs. For example, they generally impose on manufacturers to accept certain terms of payment, increasing costs of activities on markets where these retailers are present.
Retailers need to increase capacities of supply chains. Lengthening the terms of payment, making apparent the visible costs of activities and hiding costs of co-ordination are all too meaningful. The co-ordination consumes precious management time.
Suppliers need to get ready for the repercussions in the expansion of the global distribution. The passage of supplier’s multi - national statute to the international supplier statue implies generally two steps:
1 - A situation analysis: all suppliers are not concerned. Before making an expensive change, suppliers should assess the importance of these customers first for the manufacturer’s global strategy and should understand risks associated in maintaining strategies. Upstream, it is useful to analyse if differences between the local price and promotion strategies reflect costs variation. The analysis of this information is precious because it reveals the important contradictions through markets.
2 - Client strategy: most suppliers concentrate on the key aspects of every regional market. It encourages them to segment in a global manner their markets and then to manage them to optimise the profit, to construct some strategic partnerships and to minimise frictions in the channel.
Brands like Dannon have a world span concerning signs of recognition. For this brand, its strategy is to tempt to remain a local brand in every country where it becomes implanted. The strategy is to bet on products for which they have expertise in industrial terms of research and development or of marketing in the domain of the cool dairy products and cookies.
Dannon chooses countries with a strong population and growth criteria:
- Central Europe where firms manufacture 150 000 tons of yoghurts in Poland, in Republic Czech, in Hungary and in Bulgaria.
- In Pacific Asia, in China where they have the control of the milk beverage leader the firm Vahala.
- In Malaysia, Indonesia and India where they have known an extremely strong development in cookies
- The American continent where they are number 1 in dairy products in the United States with Dannon, in Canada with Delisle, in Mexico and Brazil, in Argentina with Mastellone.
In every country, they work with very different channels. It was a kiosk in central Europe until the hypermarket of 12000 square meters in Mexico.
In China, it associated with people mastering the so-called "capillary" distribution representing 70% of the market.
In Argentina, they worked with Carrefour.
Situations existed where retailers opened doors of a country to a producer wanting to become implanted and in other cases the already implanted producer facilitates the installation of the retailer in that country.
So when Dannon wanted to penetrate the Argentinean market, they met the Argentinean boss of Carrefour because they are the number 1 in that country whereas in China, it was Carrefour that wanted to become implanted and it was Dannon that opened it doors.
Increasingly, we can mention many examples of co-operation between uphill and downstream besides borders.
The French retailer Carrefour invited 85 French firms, chosen among suppliers in order to discover the Brazilian and Argentinean markets. Thus, a food firm of the West South of France, Majesty, is a faithful supplier of the French retailer. Its products were first sold at a local point of sale at Carrefour Toulouse (France), after being referenced at a regional level; they are now referenced at a national level. With the support of Carrefour, they could answer to an increasing demand in the point of view of the quality and delivery times.
But before passing to an international state, it was necessary that the firm reached a respectable size, Majesty occupies the second place on its market behind a subsidiary of Dannon.
While visiting the south of America thanks to the French distributor, the head man of Majesty could observe the setting up of its products on the market and adapt its products to the local market.
Inversely, in the French food department of Carrefour, we can find some pure Mexican products under the appellation The Costena, where an only label in French is added. Carrefour in Mexico permitted some local mexican products to be known to French customers.
The internationalisation of distribution does not help necessarily the internationalisation of producers. The French cheese Roquefort tried the internationalisation slowly in more than 75 countries under different brands. We can meet this product under different shapes and packaging through Europe (Pryca, Continente, Al Campo in Spain, Metro, Rewe or Tengelmann in Germany, Marks and Spencer, Tesco or Sainsbury in England).
The roquefort Society had already exported to the United –States in 1930 before the advent of retailing.
The common interest on behalf of both producers and retailers is extremely significant in the perspective on an international strategy.
THE INTERNATIONALISATION OF RETAILING
Directions taken for retailing have important consequences on the industry. Globalisation is the major challenge for it.
A condition for success in the domain of internationalisation begins with the consumer. The accomplishment of a retailer on a given market depends extensively on the local consumer behaviour. It is necessary to take into account the socio-economic particularities of consumers and underline them. Colla (1996) while giving the example of supermarket and hypermarket that cannot be introduced in certain countries because the income of families and the availability of vehicles and electrical installations had not reached a certain level.
In France, restrictions since 1970 brought retailing firms to try the international markets. The Royer act (1973) pushed some French firms to spread abroad and others already installed outside the territory to intensify its internationalisation.
The innovation to distribute is a factor on internationalisation especially when situations as the saturation of markets and administrative constrains persists.
Nowadays, we are assisting an acceleration of internationalisation for various reasons. The internationalisation develops under different forms. P.Joffre (1997) distinguishes two distinct positions:
1 - an international opening process whose origin is found in the transfer of a competitive advantage linked to a national departure position.
2 - an internationalisation or internationalisation process of the enterprise whose geographical development if it is not ended, is the less advanced.
Facing increasingly saturated markets in the country of origin, distributors such as Wal Mart and Carrefour seek a growth on the outside. P.Joffre (1997) brings us the example of Carrefour in Brazil. Since, Carrefour is the first distributor in Brazil, this market represents 8% turnover of the group and 16% of its result. Its strategy of internationalisation conducts to two markets:
- Markets that have reached a certain maturity with practically no risk but a very developed competition and a certain amount of profitability.
- Recent markets concerned by political and economic change risk potentials but important profitability due to a weak presence of the competition.
In this sense, Carrefour has turned to Spain which is considered a country with a mature market and Brazil a new market in order to distribute risks.
Benoun, Alhavède and Assid (1996) made taken out some obstacles prevented certain retailers to internationalise:
- The mentality of leaders of certain firms preferring to have a ""visual control" of what happens, internationalisation means remoteness.
- Reducing the size of firms does not detain the necessary financial capacities in order to approach internationalisation.
- The insufficiency of available information on structures of distribution and the potential foreign market environment.
- The lack of strength formed ready to expatriate itself.
- The priority granted to the diversification and the penetration of the national market where the productivity could be improved again by a concentration of purchases.
The movement of internationalisation today doesn’t have today to do with past experiences. At present, internationalisation is a mass phenomenon. Carrefour and Promodes achieve more than 40% of their gain abroad. With the probable fusion of theses two retailers, their strength will be raised abroad (second position after Wal Mart in the world).
The retailers themselves spread worldwide as much as the ways of working. Thus, the Dutch Ahold was reorganised in 1996 in four distinct poles:
-Netherlands
-The rest of Europe
-North America
-Asia
The narrowness of the initial market drove the Belgian Delhaize and the Dutch Makro to look abroad very early for new relays of growth. Since 1970, Makro constructed patiently a network of stores to constitute a niche at world scale: "the cash and carry". The Belgian Delhaize is one of the more internationalised groups (76% of its gain come from United States, Greece, France). Even the Americans (as Kroger, Target, Kmart, Walmart) until now occupied in fighting between themselves on their own territory are obliged to leave their borders.
Distributing companies spread in the world in order to secure their positions. Firms think about the internationalisation for three raisons:
- It becomes an obligation. In the United States, for example, the industry is saturated and the surface of malls since 1987 is saturated too. The productivity by square foot is more that half of what it was ten years ago.
In France, on a legal plan (Royer act), the opening of new stores, is limited, which therefore obliges retailers to open points of sales beyond the hexagonal borders.
-The second raison of the growing interest in internationalisation is that several firms detain concepts that has reached maturity and are therefore ready to be exported.
Retailers have need of customers and many live beyond the original borders of the firm. In the case of the American retailers, for example, there are strong interests in the fact that 95% of the world population live outside of the United States.
Firms are ready for internationalisation because they have reached a far more sufficient size, they are powerful enough, more sophisticated and competent on the technological plan to drive firms beyond borders.
Some distributive firms already have an international dimension, they have purchasers and offices abroad and have the experience of treating increasing business on the international plan.
The global resource level and the technological advancement also facilitate the progress toward the international.
The international markets have changed their aspect, making them more attractive and acceptable. Some countries increased their infrastructure and the level of available incomes increased in many places.
Some retailers brought new concepts, changing the face of the industry. Important companies like Tea Home Deposit and Toys"r"us transformed attitudes throughout the world in terms of store size. Retailers like Carrefour also exported their own concept as the French hypermarket.
The service, which was not during long time finality in several countries, became an essential element of the distribution strategy and even a competitive weapon.
Marks and Spencer, the British retailer instituted a new standard for the service.
The price can be a dominant element of the merchandising, but today, in different parts of the world, consumers are increasingly demanding and looking as much for the best price as the quality and the value.
As recognised by the experienced retailers, the world wide scale success depends on a concentrated presence and a strong brand identity. The best-known foreign brand names such as Coca-Cola for example, developed their presence which latest decades in the most important markets throughout the world during decades.
A global brand has three advantages:
1- it has the critical mass of sales to support the advertisement that is essential to attract consumers toward the brand.
2- it can support an efficient, large-scale supply and distribution operation, what preserve some low costs and permits to give a price to the value.
3- besides, it establishes a necessary positive image to attract consumers.
The global brands have succeeded in obtaining the position which enables them to take competitors from disorganised markets from underdeveloped and developed countries.
The strategy of internationalisation in the case of retailing consists in opening abroad-adapted stores to the conditions of a local market and its specificity. The aim of this type of international development strategy is the distribution of risks, the acquirement of a large-scale economy. The difficulty resides in the fact that the retailer cannot offer the same assortment in the different countries where it is present. The centralisation of purchases cannot be made at a world level or with very few exceptions which is the case of the more reduced zones in Europe. In this case, the partnership with the supplier can be made in a limited manner, country by country. When the retailer decides to export its formulas, it must preserve the strong points while adapting the marketing strategy to particularities of the targeted country. The strategy of internationalisation must be distinguished from the global strategy that is composed in the same way of an applied commercial formula in every country. We find Rather this standardisation of markets in the domain of the specialised non-food distribution whereas strategies of internationalisation concerns the food distribution (in France Carrefour, Auchan, Promodes).
The cultural factor in the channel
In an environment of growing international markets, the interest is to find answers that reduce distances and the psychological, cultural, geographical and linguistic gates (Pras and Roux 1991).
The concept of culture is in the same way the object of an interestingly big interest concerning management to the globalisation of the economy (Urban 1996). Culture provides the kind of shared comprehension among people in a society that permits them to envision and co-ordinate social activity.
Particularities of the local environment and differences of cultures play an important role. Whatever is the retained definition, the notion of culture receives increasingly attention these last years, corresponding at one time of intense globalisation of the economy (Urban 1996). The interest is to understand how the culture is and how it can affect the way to conduct a firm in a relational marketing way inside the channel.
The cultural distance increases a possible incomprehension and creates a more international complex in the future.
Standardisation versus Adaptation of the channel
While approaching the channel in an international setting, a first question concerns the strategy to adopt. For each company having an international perspective, the success depends in part on the efficient delivery of products to consumers on the foreign targeted markets, via the international channel of distribution.
How would a firm have to organise its distributive operations through the different countries?
The stages of the international corporation have been divided in domestic or national, international, multinational, global and international by increasing stages of evolution (W.J Keegan 1995). These approaches insist on the progression in the structure of management, attitudes and the climate of corporation as much that strategies of the mix marketing. More advanced stages correspond to organisations which increasingly blurred limits.
A totally global approach in international marketing and management of the channel is virtually impossible because:
- The consumer is heterogeneous through the different markets of the world.
- Differences in macroeconomic, regulatory and environmental conditions.
- The economic limit to the benefit of the internationalisation.
- Differences through markets in behaviours of partners of the channel.
The different environments through countries have increased the positioning between adaptation and standardisation. On one hand, some studies sustain that each country is a structure of the unique channel, enterprises need to adapt to conditions of the host country (Anderson and Coughlan 1987, Keegan 1984, Stern and El Ansary 1992).
On the other hand, firms should repeat their owns model distribution of the country of origin to their experience and that can become an important strategic arm. In many cases, global firms seek to develop their own system of distribution and use the same channels of distribution from a market to a market.
Although the channels represent some economic institutions, psychological and behavioural measurements of these commercial relations, it takes an important aspect in the international management of channels of distribution (Stern and Dream 1980).
The global reality facing firms today, behavioural relations in channels must also take into account the cultural differences crossing borders.
The global standardisation is a central topic. The debate is centred around the question to personalise or not the own strategies on the foreign markets. The standardisation is a more attractive strategy if markets are considered like relatively homogeneous whereas the adaptation becomes necessary if markets are rather heterogeneous.
The progress in technology, communication… provides more global influences on consumers and organisations throughout the world. Some affirm that a global strategic orientation is now necessary and the standardisation of certain elements of the market is fundamental to such a global strategy (Levitt 1983). Others think that the standardisation is not possible because it shows many factors that influence it. Production and industrial features, exchange rates, cultural differences of the market have an action on a possible standardisation. The foundation of a global strategy is to make adjustments to the global strategies according to an internal and external strength variety (Wind and Douglas 1986).
Two aspects of the standardisation, described extensively in the marketing literature, are the processes and the programs of standardisation. The process of standardisation refers to convenient managerial development marketing uniforms as processes of problem resolution, processes of decision making and procedures of the performance.
The program of standardisation refers to the development of a marketing uniform mix (Walters 1986). We can define it as the identical product offered to an identical price by means of using promotions through the use of distribution systems identical for every chosen targets country (Buzell 1968).
Different aspects of the marketing program may be taken in consideration: conception, brand, packaging, price, advertisement, promotional campaigns, and budget of media and logistics.
These decisions when they go beyond the national boarder may taken in account a certain number of factors owing to the nationality, to the supplier culture or the local retailer. Standardised marketing programs would depend on a certain number of factors as the composition of the market, the nature of the product, the kind of market targeted and the market environment. All these elements do not receive the same attention on behalf of researchers. The majority of research is centred on the standardisation of the advertisement.
The standardisation of the product conception has frequently been taken in consideration more often than the other elements of the mix.
When the distribution standardisation is a subject of literature, more often it is to understand the capacity and the quality of distributive channels influenced by the culture and the tradition.
The generally accepted approach is to adapt channels to the environment of the host country. Most theoreticians and practitioners consider that a strategy of channels marketing standardisation on the global markets is not generally feasible. Even Levitt (1983) avoids recommending not to take in systematic manner consideration the local differences in the formulation of distribution strategy.
The channel represents the external organisation that firms use to reach its objectives of distribution.
It is difficult to understand marketing channels within a country without understanding the culture of that country.
Rather than considering the productive functions and conditions of the product in use, give more concern to the functional performances in a given targeted market. The cultural aspect of the market targets is exploited like a key factor in the development of a distribution strategy.
According to Kotler and Dubois (1988), the culture influences the underlying systems and fashions of thought.
Trough the survey led by Hofstede (1987), we identify two factors (power distance and individualism/collectivism) integrating the co-operation or non-co-operation variables in a relational marketing channel because the description of a national culture refers to the common elements within every nation without generalising to all individuals of this country.
The power distance
The first dimension to characterise the cross-cultural differences particularly relevant to the international relational marketing channel is the concept of power distance. Power distance is generally defined as «the extent to which less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally» (Hofstede 1991).
In the table 2, Sternquist (1998) applies the Hofstede (1992)'s dimension to retailing and consumer behaviour.
The power distance permits to treat the fact that it shows inequalities at individuals concerning physical strength and intellectual capacities transformed in inequalities of power and wealth. This difference at the individual level can be translated by the way an organisational level of an international channel of distribution
In certain cultures, some relative differences appear on the notion of power either accepted or tolerated among members.
In a culture with an elevated power distance, there is an acceptance that the least powerful parts will be dependent of the most powerful parts. The power distance concept has its roots in the domestic structure.
In high power distance culture, organisations are centralised, and they include large differences in authority, salary and privileges between those at the top and those at the bottom.
Although the national culture creates a predisposition to a low or a high power distance, there is a considerable variation in the power distance through organisations and individuals of the same country. In an organisation, the power distance degree is bound to the degree of centralisation of the authority and the degree of autocracy of the direction.
We can suppose that a less high power distance would be susceptible to drive a co-operative relation in the channel because it legitimises a certain equity in reports with relational factors.
Individualism or collectivism
This dimension circles the dichotomy between individualism and collectivism. Table 3 summarises the essential elements of this dimension.
Individualism is characterised by a predominant personal goal interest in relation to goals of the group.
Collectivism encourages goals of the group to individual goals. Nations and regions can be described according to an orientation on individualism-collectivism dimension.
Individualism is a cultural model that we find the most often in the United States, Canada and Western Europe.
Collectivism is common in Asia, South America or Eastern Europe.
Although, this approach is centred on the cultural model of a nation, it can have a difference within a nation. The generally accepted vision is that the national cultures predispose members of this culture toward a collectivist or individualistic orientation.
In the collectivist cultures, the self is an affair for a part of the group. A member of the group (family, university and organisation) is an important foundation of the identity and the success. The success is defined in term of success of the group.
Collectivists have a very positive attitude of the harmony in the group, avoiding conflict and confrontation.
Bearing this in mind, we can suppose that collectivism prepares a better situation of partnership in the channel in term of internationalisation.
We can estimate that these two cultural dimensions can help in the understanding of an international relational marketing channel (figure 3).
THE STATE OF RELATIONSHIPS IN THE INTERNATIONAL CHANNEL
The alliance term is almost new in the literature of distribution, applied on independent organisations, these are partnerships and coalitions based on mutual needs in order to increase the competitiveness. While there exists an important discussion in literature on the manner which unfolds alliances through the different analysis cases, there are few works on the development of a general definition on what constitutes an alliance in distribution. However, the horizontal co-operation existence between distributors is not recent and has been present within a co-operative movement, since many years with the voluntary chain development. What is new, is the acceleration of such horizontal co-operation provoked by the internationalisation in order to overcome administrative and political barriers.
Currently, we can claim that co-operative relationships have a incremental importance for firms so research is done to increase their competitive advantage. Co-operative relationships would have to take a variety of forms and would have to operate at different levels of the organisation chain of value.
An international or national co-operation links two or several organisations on specific aspects of their work. In the centre, the bond is a partnership of trade (it does not concern vertical integration) between the different actors of the channel making emerge the performance, the efficiency of competitive firm strategies participating by providing mutual advantages on the circulation of the product in direction of the consumer.
A co-operation can take a variety of forms of contracts in normal conditions of the competition to joint venture.
According to Yoshino, Rangan (1995), strategic alliances possess three necessary and sufficient characteristics:
- Two or several firms that unite to continue a totality of goals accept to remain independent after the training of the alliance.
- Partner firms share benefits from the alliance and the control on the appointed task performance can be the most distinct characteristic of alliances which renders them if difficult for managing.
- Partner firms that contribute on a continuous basis in one or several strategic zone keys: our case, circulation of the product of the uphill to the endorsement.
In 1972, Richardson has suggested that a system of relationships with others firms is sine qua non to the success on the competitive market.
Inter firm relationships are not a new thing, in a context of international economic instability, firms have had to restructure their activities in the face of the new challenges.
In the framework of organisational restructuring firms, several main strategic orientations have been observed:
- Fusion, acquisition
- Strategic alliances distinguish the co-operation to the level of the judicial form and objectives. The partnership represents an alternative for a long time by many firms in the framework of their development abroad. According to Perlmutter and Heenan (1986), co-operative strategies are the wave of the future, the essence of the task of managerial alliances is to work to harmonious relationships and to make visible the value of a co-operative activity.
An alliance researched by a firm in the channel has to take into account two managerial dimensions: co-operation and competition or more generally co-operation and conflict.
The succeeded alliance management drives to management of interactions between the co-operation and the conflict taking for priority strategic objective keys of the firm.
The interest of a partnership in the channel is for a firm to find more value in its co-operative activity rather than in working alone. A first strategic goal is to add the value to the activity. A second goal is to increase its strategic competencies by learning its partner.
The international co-operation in the channel
In the logic of internationalisation, it is necessary to determine the structure of the market so as to specify the nature of their interactions in order to understand the nature of their interactions.
The agreement of co-operation constitutes a particular form of organisation that situates in the framework of the theory of the firm.
In the channel, agreements are vertical type where buyer /salesmen agreements constitute a traditional form of alliance. Such operations are frequently realised to reduce costs of transaction associated to market operations. (Heide and John 1990)
In 1999, Promodès invited 72 suppliers on the Spanish market with the possibility to export beside its subsidiary company Continente, after Turkey and Japan.
Most of these suppliers produce the private label "Reflet de France". Other enterprises benefited from the endorsement of Promodès in the framework of "Partenariat De France", an association grouping fifty great groups with Carrefour and Auchan facilitating the accompaniment of enterprises desiring to implant abroad. This type of operation permits to valorise the image of retailing to the initiative of the campaign. Moreover, in this example, the Spanish subsidiary directly bought for more than half a billion Francs worth of French products in order to provide a unity 10000 references under their own brands of Continente.(L.S.A n°1619 of 21/2/99).
The internationalisation of the French distribution drags the internationalisation of a certain industrial tissue.
Promodès is a very large French goods exporter. In moving its offer abroad, the distributor limits the risk by preserving the reliability of suppliers coming from the hexagonal market.
The situation of non co-operation
It concerns alternative situations with confrontation and conflict. There is no explicit collaboration.
Concerning vertical partnership, when Carrefour decides to install a foreign market does not systematically privilege the partnership without research for the conflict. Thus in Mexico, the co-operation has not succeeded and has therefore continued its development alone in South Korea and in Poland.
The situation of conflict
According to Stern, El Ansary and Coughlan (1996), each actor has a well determined function: members of the channel tend to specialise in the production and the international and national promotion while distributors would have to specialise in the merchandising, the distribution and national or local promotions. This specialisation induces interdependence. The functional interdependence needs a minimum co-ordination level for the purpose to accomplish tasks attributed in the core of the channel. However, organisations compel to maximise their autonomy, the establishment of interdependence creates conflicts of interest. Roots of the conflict in the channel are linked to the inherent member interdependence of the channel. Each institution in the channel has a totality of goals and objectives that are very often divergent to those other institutions. These differences cause conflicts because they induce behaviours considered as incompatible by some members ascertaining completion of goals of the other members.
Angelmar and Waldman (1975) identify conflicts as a procedure being able to derive different actors objectives of a channel or methods applied by actors of the channel to reach their goal.
The main reasons of the births of a conflict in the channel are:
- The incompatibility of objectives between the different agents of the channel.
- Different perceptions (cultural for example) of the reality
- The interdependence between firms, one of the actors having more power
- The difference of performance.
Conclusion
To assess a channel in an international manner implies the same general process of analysis used for a local channel. But it is necessary to redefine or to modify strategy facing the suppliers or retailers for the foreign market or for the management of a multinational channel. The internationalisation is not only a manna of profit, it also permits to enrich the offer in stores, the improvement of purchases. It can become an element of incentive.
The internationalisation is an important factor but not indispensable. It is essential to be present is as large a market as possible in order to develop a size that permits the firm to impose itself facing competition, suppliers or retailers.
The gigantism is not the ideal solution, it is interesting for enterprises to reinforce itself on the regional and national plan while developing co-operation permitting itself to pass to the international stage. The internationalisation makes it stronger
The retailer has concerned powers on all plans including purchasing power, some perspectives can open up in the sense of a supplier/retailer co-operation for the launching and the promotion of international brands of distribution (St Mickael of Marks and Spencer).
The internationalisation of the channel is unavoidable but problems can appear as the availability of intermediaries, or the difficulty to reach these intermediaries, make a blocked access to certain markets, the importance of the promotion, the difficulty to keep control.
The internationalisation is a process of understanding of strategic advances and can be defined as an incremental process or a radical of the change by which an organisation changes its internal manner by the nature of the management of decision-making, systems of value and the cognitive frame, for a more international structure. There is a need for more centred studies on research based on studies of case in depth on relationships of firms in the channel for the purpose to add to the existing body in the knowledge in the area.
The major part of the research in this domain has concentrated on the standardisation of the product and the promotion and has neglected the area of the standardisation of marketing channels.
The existent literature on the standardisation of global channels marketing generally asserts that marketing channels can not be standardised. However, the strategic decision-making process of the channel can be standardised (Rosenbloom, Larsen, Mehta 1997). In this sense, we can speculate on the possibility of a standardisation in partnerships relations within the framework of the internationalisation the channel.
It is true that on the basis of factors that we have identified a specific adaptation to each country’s relationships is necessary a first step. Internationalisation is a various privileged logic superposition of investments by the members of the channel: financial, commercial, manufacturer, human resources and partnerships logic.
Through the internationalisation, the partnership is a tool, a mean to exploit competence of the various actors to reach the market targets in the best conditions.
This phenomenon
of co-operation is the result of the internationalisation, it is a catalyst
of the significant change in competition.
NOTES
1 For manufactures, the export alternative carries the least amount of risk when internationalizing (Sternquist 1998).
2 For retailers, who must have a presence in the market in order to internationalize, the least risky option is to franchise or license ; the downside to this strategy, however, is that they lose control of their concept
3 Sternquist (1998): adapted from Hostede,G.(1992)."Motivation, Leadership, and Organization: do American Theories Apply Abroad? In H.Lane and J.Distefano, eds., International Management Behavior, 2nd Edition.Boston: PWS-Kent, pp98-122. Reprinted from Organizational Dynamics, Summer 1980. All rights reserved, Geert Hofstede.
4 Sternquist (1998): adapted from Hostede,G.(1992)."Motivation, Leadership, and Organization: do American Theories Apply Abroad? In H.Lane and J.Distefano, eds., International Management Behavior, 2nd Edition.Boston: PWS-Kent, pp98-122. Reprinted from Organizational Dynamics, Summer 1980. All rights reserved, Geert Hofstede.
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