Research Paper on:
Overview of Distributorship Arrangements

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and reward. Options include franchises, whole owned subsidiaries, joint ventures, and the use of distributorship agreements. This later method is the preferred choice for many companies as it is one  that has reduced risk and also reduced costs. It is this reason that Vulcan International may choose a distributorship to enter the German market.  In general terms a distributorship is an arrangement whereby a manufacturing company sells their to a distributor. The distributor then sells them on to other customers adding their  own costs and profit margin. Unlike an agency, the distributor will have a higher level of risk. The distributor also makes their won contract and cannot make a contract between  a customer and the manufacturer (Card et al, 1998). There are different types of distributor agreement and each has advantages and disadvantages  as well as other legal considerations. An exclusive distributorship is where there is a agreement that means the distributor is seen as excusive, this will usually mean the supplier will  not appoint another distributor within the specified regions. This may be a country or a geographical area (LEstrange and Brett, 2002). The structure here is one where a distributor gaining  exclusivity will also take on the costs of promotion knowing that they are the only ones who will benefit from it (LEstrange and Brett, 2002).  A sole distributor is similar, the distributor is still the only distributor in a given area, however the distributor does not have exclusive rights. The company will retain  the right to promote the goods and sell directly to the customers so that they are in effect in competition with the sole distributor (LEstrange and Brett, 2002).