The selection of a foreign distributor Case: Isojoen Konehalli Oy

Abstract

The selection of a foreign distributor is one of the most important decisions a company will make in exporting. An incompetent foreign distributor will almost certainly lead to an unsatisfactory outcome and subsequently make it difficult to re-enter and develop a strong position in that market. However, it appears that surprisingly many companies often make unsystematic and somewhat random managerial decisions on international distributor selection.

The main objective of the study was to assist in the selection of a suitable foreign distributor for the case company Isojoen Konehalli Oy in various target markets. This was achieved by applying a decision-making aid developed by Harvey & Lusch (1995). This scoring method systematically qualifies foreign candidate distributors, narrows down the pool of candidates to a manageable number and finally selects the most suitable one. The study is a synthesis of the secondary information based mostly on previous empirical studies and primary information gathered by interviewing the management of the case company. Derived from the existing previous typologies a case company specific typology of foreign distributor selection criteria was being developed. This typology was based on the tangible vs. intangible essence of the attributes. Finally, the applicable variables were placed to the decision-making aid for assessment, the end result being a total evaluative score for the foreign distributor candidate.