What are some of the benefits that would have compelled Raynonplus to choose distributorship agreement over an international sales agent agreement? List another possible form of international business endeavor Raynonplus could have considered as a market strategy in France. Given the details of this particular business case, would this option not have been right for Gerald?

 

What are some of the benefits that would have compelled Raynonplus to choose distributorship agreement over an international sales agent agreement?

Also known as a distributor agreement, a distribution agreement, is a contract between a company that supplies products for sale  and another company that markets and sells products. A distributor agrees to buy products from a supplier company and sell them to customers in specific geographic regions. On the other hand, the international Sales Representative contract governs the relationship between a person or company that acts as a trade agent on behalf of the exporting company, presenting its products to potential buyers in a foreign market. 

Benefits that would require Raynonplus to go for a distribution agreement over an international sales agent agreement include:  Unlike a distribution agreement, international sales agents are typically used for more specialized products that require implementation, installation or after-sales service which can time consuming and expensive for Raynonplus. Likewise, a distribution agreement or terms governing the business relationship between a principal and a foreign distributor often ensure that a significant  portion of the financial costs are borne by the distributor whereas there is no such risk to a sales agent which favors Raynonplus. For instance, distributors often buy directly and are paid in the form of price premiums and pre-determined credit and payment policies, unlike sales agents who do not buy products and work on commission.

2. List another possible form of international business endeavor Raynonplus could have considered as a market strategy in France. Given the details of this particular business case, would this option not have been right for Gerald?

Another possible form of international business endeavor Raynonplus could have considered as a market strategy in France include: 

1. Foreign direct investment (FDI)

 FDI is an investment made by a company or an individual in one country in commercial interests located in another country. Normally, FDI occurs when an investor establishes business activities abroad or acquires foreign business assets in a foreign company. Basically, many countries have regulations that restrict foreign direct investment.

 2. Partnership

 A partnership is a form of business in which two or more people share the ownership, as well as the responsibility for running the business and the income or losses it generates.

3. Joint Venture 

Joint Venture refers to a form of strategic partnership in which two or more business entities work together to create a new business entity for increased productivity and economic gains. This represents the optimism of two companies coming together to achieve market goals that may not be profitable and challenging in their own individual capacity.

For the most part, these options require sharing financial and operational responsibilities. For example, in many countries, national foreign direct investment laws require a 51% national share. Therefore, these options are not viable for Gerald, who  wants to  retain  control of a family business as well as make profit.

Step-by-step explanation

 A distribution agreement is also known as a distributor agreement is  a contract between a company that supplies products for sale and another company that markets and sells products. The terms of the distribution agreement or the rules governing the business relationship between the principal and the foreign distributor ensure that a significant portion of the financial cost is borne by the distributor, but there is no such risk to the sales agent that is why it Raynonplus prefers it. It is clear that using a distribution agreement can provide a relatively low-risk and cost-effective solution to penetrate new, expanding overseas markets and offer many strategic and logistical advantages over the international sales agent agreement.