1. Why does Vellus export through local distributors rather than set up its own
ID: 1181711 • Letter: 1
Question
1. Why does Vellus export through local distributors rather than set up its own sales force in country? What are the risks associated with using local distributors? How can these risks be reduced?
2. Vellus
Why does Vellus export through local distributors rather than set up its own sales force in country? What are the risks associated with using local distributors? How can these risks be reduced? Vellus's original entry into exporting was both reactive and serendipitous. Do you think this is the exception or the rule for small businesses? What might be done to make small firms more proactive with regard to exporting? What lessons about successful exporting can be derived from the Vellus case? How important has government assistance been to Vellus Products? Do you think helping firms such as Vellus represents good use of taxpayer money?Explanation / Answer
1. The local distributors offer Vellus Products two advantages. They know the local market and have the connections necessary to get Vellus' products to market. By using local distributors allows Vellus to avoid the cost of establishing its own distribution system. Some of the risks are Vellus has to be careful that its distributors represent the company and its products well. The distributor will act as the face of Vellus in foreign markets and could damage the company's reputation if it fails to act in an appropriate manner costing the company business in the future.
2. Vellus Products chose Taiwan as its export destination in reaction to a request from a Taiwanese businessman for $25,000 of dog shampoo. Vellus products strategy was typical of many new exporters that begin their international expansion as part of a reactive strategy rather than proactive strategy. Since the initial order Vellus products have taken a more focused approach to expanding export and capitalized on assistance from the Department of Commerce. I would agree that it is not uncommon for small businesses to become international accidentally, but the Internet for small companies to identify opportunities in foreign markets.
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