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2.4 Logistics and supply chain management

1.    “Distribution Channel is the battlefield of business wherein a firm’s ultimate success or failure is determined” – Comment on the statement.

2.    Assume that you are the logistics manager of a company. You have customers all over India, your responsibility is to collect the goods from various sources and export it from the nearest port. How do you do the operation, and explain the problems you may face during the logistical operations?    

3.    Elaborate the International issues faced by logistics and supply chain management in the current business scenario.  

4.    “The selection of a superior location network can create substantial competitive advantage” – Discuss and elaborate the statement.

2.5 global strategic management

1.    “The unification of Europe has forced many businesses expand their global concerns to include neighbouring countries” – Critically evaluate this statement.

2.    A leading three star hotel plans to open a five star hotel at Paris. As a consultant design a strategic plan and also suggest the procedures to be followed for starting it.

3.    “Environmental factors play an important role in the formulation of an effective business policy” – Examine the role of developing and developed countries in this regard.

4.    “Strategies for international operations cannot be the same and uniform” – Discuss with respect to global business environment.

2.6 international trade policies and documentation

1.    “A company that to go global is in the danger of losing its domestic business to competitors with lower cost, greater experience, better products and in a nut shell, more value for the customer.” Discuss.  

2.    “It is not primarily because of the fault of exporters that India’s export performance has been very poor.” Discuss.   

3.    “IMF and world bank serve the interests of industrialized nations rather than these of the developing countries.” – Discuss.    

4.    Discuss the role of Reverse Culture shock in the repatriation process. What can companies do, to avoid these problems? What kinds of skills do managers learn from foreign assignment, and how can the company benefit from them? What is the role of repatriation in the company’s global competitor situation?

Please answer any of the two questions from each subject at the earliest.

Thanks & Regards,



I  will send  the balance  asap.

1. “Distribution Channel is the battlefield of business wherein a firm’s ultimate success or failure is determined” – Comment on the statement.  
The firm's position in the business environment is determined by the one's access to the resources and the close contact to the environment and the agents which directly affect the business. The companies invest lots of time and efforts to make profitable relationships beside their supply chain and distributors to make sure the effective supply of the products within the market. Any small delay in the distribution side can provide potential opportunity to the competitors who can take the lead and use this opportunity to make their approach in the market. Since markets and consumers are more sensitive and dynamic now-a-days, they at the double respond to any delay or any change. Any small mistake can result in loss of open market share which can be difficult to obtain back from the competitors. Effective relationships with the distribution channel help the companies to understand the buying trends or changing pattern of consumer behavior which warns the companies to bring something new in the bazaar. Effective distribution channels help the companies to be well informed just about the current trend and recent happenings in the market.

Part of the challenge of marketing is figuring out which distribution method to use for your business. As soon as you decide which business or product category to compete in, distribution decisions must be made based upon what your competition is doing.
Service businesses may or may not be subject to the same physical distribution limitations as product-based businesses. For example, financial planning services may be offered from printed material, sold at retail, sold by consultants face-to-face, or delivered electronically by computer, by phone and by correspondence — a multitude of different distribution systems.
Distribution decisions have significant implications for:
•   product margins and profits
•   marketing budgets
•   final retail pricing
•   sales management practices
Distribution channels can include one or more of these options:
•   retail — stores selling to final consumer buyers (one store, or a chain of stores)
•   wholesale — an intermediary distribution channel that usually sells to retail stores
•   direct mail — generally catalog merchants that sell directly to consumer buyers at retail prices plus shipping (e.g., Land's End, L.L. Bean) via mail
•   telemarketing — merchants selling directly to consumer buyers at retail via phones
•   cybermarketing — merchants selling directly to consumer buyers at retail prices, or business-to-business products and services at wholesale prices via computer networks
•   sales force — salaried employees of a company, or independent commissioned representatives who usually sell products for more than one company
•   TV and cable direct marketing and home shopping channels
Distribution choices for a service business follow the same lines as those for a physical product. For example, financial planning services may be offered from printed material, sold at retail by consultants, delivered electronically by computer, or relayed by phone, fax or mail.
Steps for selecting distribution and sales force representation include:
Identify how competitors' products are sold.
Analyze strengths, weaknesses, opportunities, and threats for your business.
Examine costs of channels and sales force options.
Determine which distribution options match your overall marketing strategy.
Prioritize your distribution choices.
This exercise is applicable for both large and small businesses.

A  successful Distribution Strategy is one that for a particular company, the benefits it gains are reduction of its channel inventory, increases the company’ s advocacy
and streamlines the company’s operations.

Distribution strategy is far more than logistics and transportation. It comprises the
interplay between four major strategic considerations: Company Portfolio, Company
Operations, Channel, and Customer Considerations. Only after all of these have been considered can a company truly develop a comprehensive strategy.

1.Customer Considerations . The appropriate channel strategy is heavily affected
-by customers' knowledge of the products,
-their price sensitivity in the product category,
-how they make purchase decisions,
-their logistics and
-customer service needs, and
-comfort using technology to meet their needs.

Channel Considerations. Key factors include such items as
-ability to create differential product demand,
-coverage of targeted markets,
customer service capacity,
-physical distribution systems,
-overall cost control orientation, and
-ability to use technology in both demand creation and cost control.

Company Portfolio Considerations.
-Maturity of product portfolio often dictates
-support needed from the channel and therefore is a core driver of channel
For example, launching newer products that require significant end user
education without the active support of trusted channels with long-term customer
relationships can be very difficult.

Company Operational Considerations. Core operational considerations involve
-company philosophy towards demand creation through personal selling,
-internal customer service and
-logistics capabilities, and
-company approach to the use of information technology and
These  could be --
-limiting the  distribution to only  one intermediary in the  territory.
-distribution  from as  many  outlets as  possible to  provide local
-appoint  several  but at  selected  few locations.
These could  be ---
1.competitive  positioning
2.wide range of  services
3.lower transactions  costs
4.lower  prices
5.shorter lead time
6.integrated  with systems
Identify your product's features and benefits
What makes it unique and how can it enhance the life or work of your customer? Differentiate between a feature and a benefit and look at the product from your customer's perspective.

Look at your competition
What are others in your market doing? Evaluate your competitors' strengths and weaknesses. Analyse what methods they use to sell.
-other  brands

Define your target market
Who are you selling to? The more research you put into profiling your potential customers the more effective your sales strategy will be. Put yourself in their position by asking: "What benefit is there for me?"
Distribution  channel  is  formed to  solve  3 critical
distribution problems
-functional  performance
-reduced complexity

The problem of  increasing the   efficiency of  time,place
and  delivery utilities  is the  central focus  of  channel

The  major  reasons  why  distribution  channel is  formed
is  to solve  the problem of  specialization.

As distribution  grows  more complex, cost  and inefficiency tend to  grow in  the  channels.

To overcome  this  deficiency, many  distribution  channels will  specialize  in  one  or  more elements  of  distribution.

The net effect of  specialization  is  to  increase  the  velocity goods  and  value  added  services  through  the  distribution pipeline by  reducing  cost  associated  with
-order  processing


-logistic  services.
-value  added  
-reduce  risk
-order  flow
-payment  flow
-information  servicing.


1.what is  the  corporate  objective.
2.what  is  the  corporate  strategy.

3.what  is  the marketing  objective.
4.what  is the  marketing  strategy.

5.what  is  the  sales  objective.
6.what is  the  sales strategy.

7.what  is  the  distribution objective.
8.what  is  the  distribution  strategy.

-who  are  the  buyers
-where  do  they  buy
-why  do  they buy
-where  the   market areas--geographically
-what  conveniences  do  they  require
horizontal, vertical, corporate, administered, contractual.
middleman, agent, broker, wholesaler, retailer, distributor, dealer,
reseller, franchise holder.
legal, regulatory, language, customs, government policies,
logistics, currency, costs.
intensive, selective, exclusive.
centralised, decentralised.


Distribution Strategy

What distribution strategy is optimal for  your  business model?
Who are the key channel partners with whom  you  must build or maintain key
How do  you  manage conflict with channel partners?
Distribution & Logistics Strategy

Customer Considerations .

-is it  the  customers' knowledge of the products,
-is  the  customer's  price sensitivity in the product category,
-is  it  how the  customer  make purchase decisions, their logistics and customer service
-is it  the comfort using technology to meet their needs.
***is it  the  following
-product  knowledge
-price  sensibility
-purchase  process  decision
-service  needs
-logistics needs
-technology  comforts
etc etc
Channel Considerations.

-is it  the  reseller  ability to create  differential product demand,
-is it  the reseller  coverage of targeted markets,
-is it  the  reseller  customer service capacity,
-is it  the  reseller  physical distribution systems,
-is  it   the  overall cost control orientation, and
-is  it   the  ability to use technology in both demand creation and cost control.
***is  it   the  following
-selling skills
-market  coverage
-customer  service  capacity
-physical  distribution system
-cost  effectiveness
-technology  orientation
-e-business  strategy
etc  etc
Company Portfolio Considerations.

-is  it  the Maturity of product portfolio often dictates
support needed from the channel and therefore is a core driver of channel
strategy. For example, launching newer products that require significant end user
education without the active support of trusted channels with long-term customer
relationships can be very difficult.
*** is it  the  following
-product  maturity
-sales  volume
-unit  product  margins
-capacity utiliztion
-benefit  selling  needs
-pull  promotional  strategy
etc etc

Company Operational Considerations.

-is it  the company philosophy towards demand creation through personal selling,
-is it  the internal customer service and logistics capabilities, and
-is  it  the company approach to the use of information technology and e-commerce.
***is  it  the  following
-product  maturity
-sales  volume
-unit  product  margins
-capacity utiliztion
-benefit  selling  needs
-pull  promotional  strategy
etc etc

-cycle  time  for  filling  orders.
-effectiveness  of  the order  fulfillment
-the risk  factor in  operation
-facility  sizing
-space requirements
-storage  systems
-material  handling requirement.
-stock levels
-stock  out   frequency.
-stock  handling  cost.


Physical distribution is the set of activities concerned with efficient movement of finished goods from the end of the production operation to the consumer. Physical distribution takes place within numerous wholesaling and retailing distribution channels, and includes such important decision areas as customer service, inventory control, materials handling, protective packaging, order procession, transportation, warehouse site selection, and warehousing. Physical distribution is part of a larger process called "distribution," which includes wholesale and retail marketing, as well the physical movement of products.

Physical distribution can be viewed as a system of components linked together for the efficient movement of products. Small business owners can ask the following questions in addressing these components:
•   Customer service—What level of customer service should be provided?
•   Transportation—How will the products be shipped?
•   Warehousing—Where will the goods be located? How many warehouses should be utilized?
•   Order processing—How should the orders be handled?
•   Inventory control—How much inventory should be maintained at each location?
•   Protective packaging and materials handling—How can efficient methods be developed for handling goods in the factory, warehouse, and transport terminals?
These components are interrelated: decisions made in one area affect the relative efficiency of others. For example, a small business that provides customized personal computers may transport finished products by air rather than by truck, as faster delivery times may allow lower inventory costs, which would more than offset the higher cost of air transport. Viewing physical distribution from a systems perspective can be the key to providing a defined level of customer service at the lowest possible cost.
Customer service is a precisely-defined standard of customer satisfaction which a small business owner intends to provide for its customers. For example, a customer service standard for the above-mentioned provider of customized computers might be that 60 percent of all PCS reach the customer within 48 hours of ordering. It might further set a standard of delivering 90 percent of all of its units within 72 hours, and all 100 percent of its units within 96 hours. A physical distribution system is then set up to reach this goal at the lowest possible cost. In today's fast-paced, technologically advanced business environment, such systems often involve the use of specialized software that allows the owner to track inventory while simultaneously analyzing all the routes and transportation modes available to determine the fastest, most cost-effective way to delivery goods on time.

Transportation costs are largely based on the rates charged by carriers. There are two basic types of transportation rates: class and commodity. The class rate, which is the higher of the two rates, is the standard rate for every commodity moving between any two destinations. The commodity rate is sometimes called a special rate, since it is given by carriers to shippers as a reward for either regular use or large-quantity shipments. Unfortunately, many small business owners do not have the volume of shipping needed to take advantage of commodity rates. However, small businesses are increasingly utilizing a third type of rate that has emerged in recent years. This rate is known as a negotiated or contract rate. Popularized in the 1980s following transportation deregulation, contract rates allow a shipper and carrier to negotiate a rate for a particular service, with the terms of the rate, service, and other variables finalized in a contract between the two parties. Transportation costs vary by mode of shipping, as discussed below.
3.TRUCKING—FLEXIBLE AND GROWING The shipping method most favored by small business (and many large enterprises as well) is trucking. Carrying primarily manufactured products (as opposed to bulk materials), trucks offer fast, frequent, and economic delivery to more destinations in the country than any other mode. Trucks are particularly useful for short-distance shipments, and they offer relatively fast, consistent service for both large and small shipments.
4.AIR FREIGHT—FAST BUT EXPENSIVE Because of the relatively high cost of air transport, small businesses typically use air only for the movement of valuable or highly-perishable products. However, goods that qualify for this treatment do represent a significant share of the small business market. Owners can sometimes offset the high cost of air transportation with reduced inventory-holding costs and the increased business that may accompany faster customer service.
There are two basic types of water carriers: inland or barge lines, and oceangoing deep-water ships. Barge lines are efficient transporters of bulky, low-unit-value commodities such as grain, gravel, lumber, sand, and steel. Barge lines typically do not serve small businesses. Oceangoing ships, on the other hand, operate in the Great Lakes, transporting goods among port cities, and in international commerce. Sea shipments are an important part of foreign trade, and thus are of vital importance to small businesses seeking an international market share.
6.RAILROADS—LONG DISTANCE SHIPPING Railroads continue to present an efficient mode for the movement of bulky commodities over long distances. These commodities include coal, chemicals, grain, non-metallic minerals, and lumber and wood products.
Pipelines are utilized to efficiently transport natural gas and oil products from mining sites to refineries and other destinations. In addition, so-called slurry pipelines transport products such as coal, which is ground to a powder, mixed with water, and moved as a suspension through the pipes.
8.INTERMODAL SERVICES Small business owners often take advantage of multi-mode deals offered by shipping companies. Under these arrangements, business owners can utilize a given transportation mode in the section of the trip in which it is most cost efficient, and use other modes for other segments of the transport. Overall costs are often significantly lower under this arrangement than with single-mode transport.
Of vital importance to small businesses are transporters specializing in small shipments. These include bus freight services, United Parcel Service, Federal Express, DHL International, the United States Postal Service, and others. Since small businesses can be virtually paralyzed by transportation strikes or other disruptions in small shipment service, many owners choose to diversify to include numerous shippers, thus maintaining an established relationship with an alternate shipper should disruptions occur. Additionally, small businesses often rely on freight forwarders who act as transportation intermediaries: these firms consolidate shipments from numerous customers to provide lower rates than are available without consolidation. Freight forwarding not only provides cost savings to small businesses, it provides entrepreneurial opportunities for start-up businesses as well.

Small business owners who require warehousing facilities must decide whether to maintain their own strategically located depot(s), or resort to holding their goods in public warehouses. And those entrepreneurs who go with non-public warehousing must further decide between storage or distribution facilities. A storage warehouse holds products for moderate to long-term periods in an attempt to balance supply and demand for producers and purchasers. They are most often used by small businesses whose products' supply and demand are seasonal. On the other hand, a distribution warehouse assembles and redistributes products quickly, keeping them on the move as much as possible. Many distribution warehouses physically store goods for fewer than 24 hours before shipping them on to customers.
In contrast to the older, multi-story structures that dot cities around the country, modern warehouses are long, one-story buildings located in suburban and semi-rural settings where land costs are substantially less. These facilities are often located so that their users have easy access to major highways or other transportation options. Single-story construction eliminates the need for installing and maintaining freight elevators, and for accommodating floor load limits. Furthermore, the internal flow of stock runs a straight course rather than up and down multiple levels. The efficient movement of goods involves entry on one side of the building, central storage, and departure out the other end.
Computer technology for automating warehouses is dropping in price, and thus is increasingly available for small business applications. Sophisticated software translates orders into bar codes and determines the most efficient inventory picking sequence. Order information is keyboarded only once, while labels, bills, and shipping documents are generated automatically. Information reaches hand-held scanners, which warehouse staff members use to fill orders. The advantages of automation include low inventory error rates and high processing speeds.

Inventory control can be a major component of a small business physical distribution system. Costs include funds invested in inventory, depreciation, and possible obsolescence of the goods. Experts agree that small business inventory costs have dropped dramatically due to deregulation of the transportation industry.
Inventory control analysts have developed a number of techniques which can help small businesses control inventory effectively. The most basic is the Economic Order Quantity (EOQ) model. This involves a trade-off between the two fundamental components of an inventory control cost: inventory-carrying cost (which increases with the addition of more inventory), and order-processing cost (which decreases as the quantity ordered increases). These two cost items are traded off in determining the optimal warehouse inventory quantity to maintain for each product. The EOQ point is the one at which total cost is minimized. By maintaining product inventories as close to the EOQ point as possible, small business owners can minimize their inventory costs.


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Leo Lingham


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