Question

In: Operations Management

To what extent, and in what ways, do the functions of domestic middlemen differ from their...

To what extent, and in what ways, do the functions of domestic middlemen differ from their foreign counterparts? What strategy might be employed to distribute goods effectively in the dichotomous small/large middlemen pattern which characterizes merchant middlemen in most countries? Discuss the economic implications of charging termination penalties or restricting the termination of middlemen. Do you foresee such restrictions in the United States?

Solutions

Expert Solution

To what extent, and in what ways, do the functions of domestic middlemen differ from their foreign counterparts?

  • Domestic middlemen usually takes possession of the goods,foreign counterparts do not
  • Domestic agents has the authority to set the price but Foreign agent does not have.
  • Domestic middlemen arrange the shipping for the goods whereas foreign agent does not.
  • Domestic agents does some promotion and selling, where as foreign agents does not
  • Domestic agents occasionally extends the credit, whereas the foreign agent does not involve in such activities.

What strategy might be employed to distribute goods effectively in the dichotomous small/large middlemen pattern which characterizes merchant middlemen in most countries?

The strategy which employed to distribute goods effectively in the dichotomous small/large middlemen pattern is similar to the it would be in the united states , the selection of the wholesaler middlemen is based on the at least 2 factors such as- to whom the wholesaler sells or distributes the goods. i.e. select a wholesaler in order to reach the particular target in the market and the efficiency of the specific wholesaler middleman. In many of the countries in the world in order to achieve the complete sell or distribution of the goods, both small and the large middlemen need to be utilized in order to effectively reach all segments of the market. The smaller middlemen may be in efficient to increase the cost of distribution, hence maximize the cost of the goods to the point that is no longer priced competitively.

Discuss the economic implications of charging termination penalties or restricting the termination of middlemen. Do you foresee such restrictions in the United States?

For the many countries having middlemen is the only way to conduct the business with the companies which are out side of their country. The charging termination penalties or restricting the termination of middlemen  restricts the freedom of the marketer to adjust for the changing needs of the market and hence it will minimize the efficiency of the market. Such restrictions will stultify the organization's growth and block their flexibility. Experimentation and risk taking are reduced due to the market has difficult time in terminating the experimental channel that fail.

There are few legal precedents and indicators restricting the manufacturer middlemen termination in the US, but the growth of these restrictions are slow and cautious.


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