Improving the selection of international distribution partners by using quality management methods

The importance of international markets has increased in the past years and will further increase in the future. This offers potential for being competitive, but especially for small- and medium-sized enterprises (SMEs) is going along with a variety of risks, e.g. the competition in the domestic market intensifies. Nevertheless, in most cases, SMEs with foreign operations are more successful than SME operating solely in the domestic markets. Nevertheless, the internationalization activities of SME are often unsystematic and emotional, especially when looking for distribution partners. The research project “Empirical based development of an instrument for identifying and making decisions about the choice of market entry and the selection of distribution partners of SME of the tool and cutlery industry when developing foreign markets” deals with this topic. In this paper the results of a literature review and an expert discussion regarding market development and especially the process of finding distribution partners for foreign markets are presented. Also, further steps in the project dealing with aspects of realizing the detected success factors by using quality management methods are explained.

The first step comprises a literature review and an expert discussion with leading managers of SME, with the aim to receive information about market entry decisions and selection of distribution partners. Therefore, a literature review and an expert discussion with leading managers of SME are carried out. The discussions are evaluated with MAXQDA©, a software for qualitative data analysis. Next, a questionnaire is designed for a quantitative analysis of the topic and will be evaluated by using SMART-PLS. Then, the results will be used as input variable for a quality function deployment for identifying appropriate measures for implementing the prior identified success factors. Thereby, also quality management methods and techniques will be used for finding the “right” measures. In this context, also a method for selecting distribution partners will be developed which is based on the logic of supplier evaluation. Finally, an Excel-based tool will be developed which includes the results of the project and allows companies easily applying them.

A literature review and an expert discussion within the tool and cutlery industry have been carried out and analysed. Thereby, the need for action regarding the selection of distribution partners has been revealed as essential step for success in foreign markets. Literature mostly deals with aspects like choosing appropriate countries for market entry and market entry strategy but not with distribution partners. Expert discussion also has shown that choosing distribution partners is often managed with gut feel. It lacks a criteria-based approach for optimizing this step during the internalization process.

Finding adequate distribution partners for a successful entry into foreign markets has not been investigated thoroughly yet. The project offers insights into determining factors for the selection process and improves the distribution partner selection by using quality management methods, for instance, by adapting the fundamental procedure of supplier assessment for distribution partner assessment.