p_tapsell_0290197_disssertation

Copyright 2006 Tapsell

All rights reserved.

The University of Manchester Manchester Business School

Philip C Tapsell

Key Determinants of Success in Selection and Management of

Overseas Agents and Distributors.

This project is submitted in partial fulfilment of the requirements for the degree of Master of Business Administration.

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Statements and Declarations

Declaration This work has not previously been accepted in substance for any degree and

is not being concurrently submitted in candidature for any degree.

Signed……………………………………………….(Candidate)

Date………………………………………………….

Statement 1 This dissertation is being submitted in partial fulfilment of the requirements for

the degree of Master of Business Administration.

Signed……………………………………………….(Candidate)

Date………………………………………………….

Statement 2 This dissertation is the result of my own independent work and investigation,

except where otherwise stated. Other sources are acknowledged by explicit

references. A bibliography is appended.

Signed………………………………………………..(Candidate)

Date…………………………………………………...

Statement 3 I hereby give my consent for my dissertation, if accepted, to be available for

photocopying, inter-library loans and for electronic access, and for the title and

summary to be made available to outside organisations.

Signed………………………………………………..(Candidate)

Date…………………………………………………..

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Abstract.

By identifying key success factors, this work develops a useful and practical

framework for small to medium sized enterprises (SME’s) in the selection and

management of overseas Agents and Distributors.

This is a most important and difficult decision taken by SME’s. It remains a

major source of costly managerial problems.

For UK SME’s these relationships are a common means of developing

international markets. They are a source of significant competitive advantage

and a major source of attractive profits. They secure and maintain market

leadership, and are a foundation for overall business success.

However, relying on a mediocre agent will place the SME manufacturer at a

serious competitive disadvantage at best. At worse, it could ruin an entire

business development strategy.

A logical and structured process of selection is a strategic imperative and a

precursor to a successful relationship. The role of the boundary-spanning

alliance manager and other key success factors in high performing

partnerships are also determined.

Two powerful and practical frameworks are presented:

• Agent Screening and Selection

• Relationship Health Check

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Acknowledgements.

First and foremost, I wish to thank my family and friends for their help and

support during my studies.

My thanks are also extended to the exceptional business people who I have

had the privilege of working with, and who helped with my research. In

particular, the late Duncan Philp, Ken Libby (USA), Bent Andreassen

(Denmark), Ola Schjei (Norway), Phil Graham (Australia), Alan O’Connor

(UK), Geert Jan van Hoogen and Roel De Borst (Holland), Bill Froggat and

Dennis Hicks (Canada), Scott Russell, Heath Jarrett and Steve Lamar (USA),

Bob Vermuelen (Holland), Tony Rumbold (New Zealand).

These gentlemen epitomize the meaning of trust, respect and partnership

through the manner in which they conduct their businesses day to day.

I would also like to thank my colleagues at Spectral Fusion Technologies,

Birmingham. In particular, Richard Farleigh, Jeff Archer and Kamran Munir.

Balancing study with work was difficult. But as a result of their support and

understanding, I believe that SFT has seen, and will continue to see, the

benefits of this undertaking.

Dr. Lynn Parkinson was a great source of help, advice and support as Project

Supervisor.

Lastly, to all my fellow students. In no particular order, people I had great fun

studying with, whose company I enjoyed and am proud to have been

associated with; Steve, John, Anurag, Darcy, Nakul, Trenley, Eric, Adrianne,

Mac, Patrik, Neil, Anvar and JD.

Phil Tapsell

Saturday, 21 October 2006.

Table of Contents Statements and Declarations…………………………………………………….

Abstract………………………………………………………………………..……

Acknowledgements………………………………………………………………. 1. Introduction, Aims, Background and Problem Discussion……..……

1.1. Aim of this work………………………………………………………………. 1.2. Background……………………………………………………………………

1.2.1. Definitions 1.2.2. Core Principles - Agency Theory 1.2.3. The Internationalisation Process 1.2.4. Overseas Market Entry Mode Selection

1.3. Problem Discussion………………….……………………………………….1.4. General Methodology………………………………………………………...1.5. Structure of Dissertation…………………………………………………….. 1.6. Limitations and Delimitations………………………………………………..

2. Selection and Management – A Review of Literature…………………

2.1. Selection Process……………………………………………………………. 2.2. Management and Performance of Relationships………………………… 2.3. Conceptualisation and Emerged Frame of Reference……………………

3. Research Methodology and Data Collection……………………..……..

3.1. Research Philosophy 3.2. Research Purpose 3.3. Research Approach 3.4. Research Strategy 3.5. Background Study - Literature Search and Review 3.6. Primary Data Collection - Questionnaires 3.7. Determinants of Data Quality - Validity and Reliability 3.8. Critique of Methodology

4. Data Analysis………………………………………………………………… Support of hypothesis

4.1. Weighted Response Analysis 4.2. Agent Selection 4.3. High Performing Alliances 4.4. Alliance Managers

Research Survey Response 4.5. Agent Selection 4.6. High Performing Alliances 4.7. Alliance Managers

5. Conclusions, Implications and Recommendations..……………….....

5.1. Agent Selection 5.2. Development of High Performing Alliances 5.3. Alliance Manager Capabilities

References and Bibliography………………………………………………...

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iv 1 3 4

12 13 14 15

16 16 20 26

31 31 32 33 34 34 35 38 38

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40 41 44 48

52 57 62

67 68 70 72

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Appendices Appendix I - Research Questionnaire.

Appendix II - Sample of Research Target Companies.

Appendix III - Agent / Distributor Selection Framework.

Appendix IV - Relationship Health Check Framework.

Appendix V - Literature Search Methodology.

List of Tables Table 1.1 Classification of Motives for Internationalisation.

Table 1.2 Advantages and Disadvantages of Market Entry Modes.

Table 2.1 Agent Selection Criteria.

Table 2.2 Characteristics of High Performing Relationships

Table 2.3. Conceptualisation of Key Managerial Issues.

Table 4.1. Expected response to survey questions.

Table A3.1 Potential information sources during agent search process.

Table A3.2 Criteria for Agent Selection Framework.

Table A4.1 Characteristics of High Performing Relationships.

List of Figures Figure 1.1 Principal – Agency Model of Managerial Behaviour.

Figure 1.2 Market Entry and Development Strategy Selection.

Figure 2.1 Linking Resources, Capabilities and Competitive Advantage.

Figure 2.2 Revised Commitment Model.

Figure 2.3 Framework for High Performing Overseas Alliances.

Figure 3.1 Research Methodology and Data Collection Schematic.

Figure 4.1. Survey Questions: Weighted Scores.

Figure 4.2. Question 6 Survey Response.

Figure 4.3 Best Practice Survey Response: Agent Selection.

Figure 4.4 Question 8 & 12 Survey Response.

Figure 4.5 Best Practice Survey Response: Alliance Development.

Figure 4.6 Question 8 & 9 Survey Response.

Figure 4.7 Best Practice Survey Response: Alliance Manager.

List of Figures (cont.) Figure 4.8 Overall Survey Response: Agent Selection Process.

Figure 4.9 Question 1 Survey Response.





Figure 4.14 Overall Survey Response: Alliance Development.







Figure 4.21 Overall Survey Response: Alliance Manager.







Figure A3.2 Agent Search, Screening and Selection Model

Figure A4.1 Relationship Health Check Best Practice Profile

Introduction, aims, background and problem discussion

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1. Introduction, aims, background and problem discussion. In the UK, small and medium sized businesses have a key role to play in our

economy, not least because they are more likely to develop radical and

disruptive innovations than larger businesses and they act as a seedbed of

product innovation. More and more, it is the smaller companies showing the

larger companies how to do it: they are the innovators, the entrepreneurs, the

creators of new jobs, of economic growth and wealth (Wynn Griffith 2005).

They should be formidable forces in international business. However, despite

these apparent advantages, British SME’s fail to fully develop and secure the

potential benefits of international trade. Many even refrain from exporting all

together.

This should not surprise us. The UK Government’s Department of Trade and

Industry, Small Business Service and Chambers’ of Commerce, appear to

offer little in practical terms to assist them in securing profitable new business

and competitive advantage overseas. Yet these organisations describe SME’s

as the “powerhouse of the UK economy”.

The majority of export sales are conducted through agents. Rosson (1986)

explains this preferred method of international market development as being

particularly important for companies who (1) are SME’s, (2) lack international

market experience, and (3) sell industrial goods.

Such alliances with overseas representatives are strategic in nature. They can

create new and significant value, but they require astute and careful

management. Problems arise from weak, inexperienced and incapable

‘Alliance Managers’.

In the Harvard Business Review, Rosabeth Moss Kanter (1994) referred to

Collaborative Advantage, ‘A well-developed ability to create and then sustain

fruitful collaborations that gives companies a significant competitive

advantage’.


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Overseas agents should be a key source of significant competitive advantage.

Key to business growth, when the relationships are high performing, they are

a major source of attractive profits, secure and maintain market leadership,

and are a foundation for overall business success.

The successful selection and management of these overseas representatives

is therefore a most important, influential and difficult area for SME’s. It remains

a major source of managerial problems.

As a result of poor selection, management, or both, relying on a mediocre

agent places the manufacturer at a competitive disadvantage at best. At

worse, it could ruin the entire business development strategy.


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1.1. Aim of this work This work examines the key determinants of successful selection and

management in high performing alliances with overseas agents. This is

considered in the context of the overall process of internationalisation and

choice of market entry mode. The literature review focuses on the subsequent

selection, motivation and management of agents by SME’s.

This section is sub-divided as follows:

1.1 Aim of the study.

1.2 Background

1.2.1 Definitions.

1.2.2 Agency Theory.

1.2.3 Process of Internationalisation.

1.2.4 Market Entry Mode Selection.

1.3 Problem Discussion

1.4 General Methodology

1.5 Structure of this dissertation.

1.6 Limitations and delimitations.


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1.2. Background In this section we provide important definitions and discuss core principles,

before putting our study in context through a review of the process of

internationalisation and market entry mode selection.

1.2.1. Definitions Agent, distributor and principal are defined, compared and contrasted.

Thereafter, the terms agent and principal will be used.

1.2.1.1. Agent: a person or organisation working in the home market or

overseas on the principal’s behalf to find potential buyers for its products. The

agent acts as an intermediary between the principal and the buyer, working to

an agreed commission rate (Donaldson 1998; McKay 2006). 1.2.1.2. Distributor: a person or organisation situated in the territory,

allocated distribution rights (either exclusive or non exclusive). The distributor

will buy for own account at a discounted rate, gaining income from the resale

of the principals’ product at a market price (Donaldson 1998; McKay 2006). 1.2.1.3. Principal: Throughout this work, reference will be made to term

‘principal’. This is a company or organisation exporting the product or service

through the Agent or Distributor. 1.2.1.4. Alliance, partnership, collaborations and agreements. These terms are used and described variously by authors within the body of

literature studied. For example, Hill (2005) defines strategic alliances as those

existing between competitors or potential competitors. We consider that all

alliances, partnerships or collaborations with overseas agents are strategic in

nature, in that they are formed as part of a long-term plan or aim to achieve a

specific purpose. Therefore, unless otherwise specified, for the purpose of this

work the term alliance is used to refer to the strategic collaboration that exists

between Principal and Agent.


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1.2.2. Core Principles - Agency Theory. Manufacturer – distributor relationships embody the principal – agent model.

Two parties are interdependent and cooperative, yet may pursue different,

contradictory or conflicting goals (Lassar and Kerr 1996). Agency theory

places the selection and management of agents in context. However a review

of relevant literature reveals that few of the authors take this into

consideration.

Problems arise from information asymmetry, conflicting goals and risk

preferences of the two parties when one, the principal, delegates work and

authority to another, the agent (Jensen and Meckling 1976). The agent will be

more familiar with the specific tasks and details associated with the business,

and may have motive to maximise his own utility at the expense of the

principal. In addition, it is typical for overseas representatives to be agents for

a number of principal organisations (manufacturers), and in poor performing

relationships to transfer allegiance to a competitor. Typically, the principal

takes steps to reduce the likelihood of this happening. Monitoring and control,

motivations and incentives are structured in an attempt to align the agent’s

goals and objectives with his own (Ryan 2001). See Fig. 1.1.

Fig 1.1. The Principal – Agency Model of Managerial Behaviour. Source: Ryan. (2001)

Agent’s Compensation

Function

Principal

Agent

• Performance Criteria • Reward • Incentives / Perks

• Agreed services • Decision and control • Information

Principal’s Service

Function


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However, many of the controlling efforts and contractual style of agreements

can result in misuse of power within the relationship, damaging trust, loyalty,

commitment and motivation. We shall show these factors to be the

foundations of success.

On this topic, Little (1970) states:

‘Because firms (comprising the marketing channel) are loosely arranged,

the advantages of central direction are missing. The absence of single

ownership, or close contractual agreements, means that the benefits of a

formal (superior – subordinate) base are not realised. The reward and

penalty system is not precise, and less easily affected. Similarly, overall

planning for the entire system is uncoordinated and the perspective

necessary to maximise total system effort is diffused. Less recognition of

common goals by member firms, as compared to formally structured

organisation is also probable’.

Clearly the challenge is to overcome these issues by closely aligning the aims

and objectives of agent and principal, through the process of selection and

management.


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1.2.3. Internationalisation Process Rosenbloom (1978a) recognises that prior to successful selection and

management of an agent, the principal must first define the reasons and

objectives of internationalisation and choice of entry mode.

Originally proposed by Douglas and Craig (1989), Czinkota and Ronkainen

(1995), and Hollensen (1998) also adopt the concept of internal and external

triggers to the process of internationalisation. Stewart and McAuly (1999)

extend this and classify triggers as proactive and reactive. Campbell (1996)

has also taken the internal / external – proactive / reactive perspective. See

Table 1.1.

Once the commitment to expand into overseas markets has been taken, the

next key decisions involve selection of which market to enter and how this

should be achieved. Macro and micro environmental issues influencing this

decision process include areas such as market attractiveness, competitive

positioning of firm and product and the resources and capabilities of the

exporting firm. Control, resources and risk will have been especially influential

in the decision to adopt a direct entry method through agents / distributors.

Albaum et al. (2005) although following these same generic lines, introduce

the concept of a principal having a unique and sought after product as being a

major trigger. This results from the principal receiving overseas enquiries from

customers and (potential) agents. In response to another’s request for the

product / service, and contrary to a strategic approach, market entry occurs in

an opportunistic and reactive fashion without prior planning and forethought.

Grant (2002) defines the decision to internationalise as a strategic one. Once

taken it must form part of a strategic business plan. The method of entry and

entry strategy will logically follow. Understanding why this method of entry was

chosen, the desired objectives and expectations, are crucial considerations at

the selection phase and throughout the period of representation.


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Internal External

Proactive

• Managerial Urge / Perception

• Unique product / competence

• Marketing advantage

• Economies of scale

• Over production

• Higher profit opportunity

• Foreign Market Opportunity

• Product life cycle

Reactive • Competitor activity.

• Risk Diversification

• Extended seasonal sales

• Enquiry from customer

• Enquiry from agent

• Reduction in domestic market

• Government incentives

Table 1.1 Classification of Triggers for Internationalisation. Author’s Construct. Adapted from Albaum et al. (2005), Campbell (1996), Czinkota and Ronkainen (1995),

Douglas and Craig (1989), Hollensen (1998), Stewart and McAuly (1999).

Much of the literature does not consider the influence of the

internationalisation process, as a whole, on subsequent relationships and their

outcome. Whilst most authors do not make the distinction between market

entry considerations, and subsequent distribution issues, Joseph et al. (1995)

do. They emphasize putting the relationship in context by understanding why

the principal has chosen to internationalise, why agents have been chosen as

the preferred mode of entry, and what is expected of the whole process. The

principal’s expectations prior to forming the alliance will significantly influence

the eventual outcome. The same distinction is made by Doole and Lowe

(2004).

We propose that these triggers, the nature of the process, reactive or

proactive, understanding why the move has been made, and objectives,

should be considered during entry method and agent selection. Not

understanding why the firm is expanding overseas and not having clearly

defined requirements and objectives will lead to confusion on the part of the

agent in understanding what he is required to do.


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1.2.4. Overseas Market Entry Mode Selection. We have shown that the triggers for internationalisation significantly influence

choice of entry mode and the selection of a particular agent.

Root (1987,1994) is extensively referenced by others for his studies and texts

on international trade and market entry strategies. He states that although a

mode of entry strategy may appear to be only for large organisations, the

critical nature of this choice is something SME’s can ill-afford not to do. The

chosen entry mode must be part of a systematic selection process.

Doyle (1994) reflects the overall consensus of the reviewed literature. Entry

mode selection is a long-term strategic one, and not easily reversed. Studies

have shown the length of such relationships to be between nine and thirteen

years (Bello and Lothia 1995).

Rosson and Ford (1982) conclude that when a principal chooses to use an

agent, the role of the agent is crucial. The principal’s market development

policy is operationalized by the overseas partner. Such a decision is complex

and strategic in nature (Young et al.1989). According to the authors, this

choice should have arisen from an in depth evaluation. However they

recognise that many in depth, complex and academic approaches are typically

beyond the use of practitioners at SME’s, and many adopt an ad hoc selection

process. Recognising the limited resource and capability of such firms, the

authors present a more pragmatic approach that accounts for multiple (often

differing and conflicting) objectives, and the likely lack of resources. Fig 1.2.

Burca et al. (2004) establish an important link between company

characteristics and the chosen mode of entry. These are highlighted as key

selection criteria, and explain the preference for SME’s to use the agent route.

Agent organisations display many similar characteristics and cultures to those

of SME’s, and these are often seen as major advantages and influential

success factors. There is more likelihood of a ‘strategic fit’ between the

organisations (Grant 2002).


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All Entry Modes

External Factors

Internal Factors

Rejected Entry Modes

All Feasible Entry Modes

Entry Mode Selection

Profit Contribution Analysis

Risk Analysis

Non Profit Objectives

Ranking

Right Mode

Target Country

Fig 1.2. Selecting Market Entry and Development Strategy Source: Young et al. (1989)

The approach used to select a method of overseas market entry will strongly

influence the choice of agent, defining many of the economic, commercial and

strategic selection criteria. Recognising these (often) conflicting multiple entry

objectives, Young et al. (1989) present a simple entry and development

selection framework. See Fig. 1.2. It incorporates consideration of all entry /

development objectives, the relative effectiveness and attractiveness of

alternate strategies in achieving those objectives, and an overall ranking of

modes prior to selection.

However, each mode of entry has advantages and disadvantages. Table 1.2.


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Entry Mode Advantages Disadvantages

Indirect Exporting (Export buying

agents, broker,

export management

company)

Less resource / investment required.

High degree of market diversification.

Access to internationalization

experience.

Minimal risk

No experience required.

Location / experience curve economies.

Transport costs.

Trade barriers.

Problems with local marketing.

Lack of control in overseas market

Lack of market contact.

Limited market knowledge.

Limited product experience.

Potential lower profits.

Direct Exporting (Agents &

Distributors)

Lower levels of overhead

Fast market penetration &

representation

Experienced, successful sales force

Access to local market experience

Shorter distribution chain

Market knowledge acquired

More control over marketing

Local sales and after sales support

Costs more closely related to sales

Reduced control over market

Lack of direct control

Investment in managerial roles

Cultural differences.

Communications issues.

Asymmetry of information

Representing multiple principals

Termination difficulties and costs

Conflicting objectives & goals

Turnkey Projects Ability to earn returns from process

technology skills in countries where FDI

is restricted.

Creating efficient competitors

Lack of long term market presence

Licensing Low development costs and risks

Control over technology

No location and experience

economies

No global strategy coordination

Franchising Low development costs and risks

Quality control


economies


Joint Ventures Access to local partner’s knowledge

Sharing development costs and risks

Politically acceptable

Control over technology


economies


Wholly owned subsidiaries

Protection of technology

Opportunity for global strategy

Location and experience economies

High costs and risks

Table 1.2 Advantages and Disadvantages of Market Entry Modes. Author’s Construct. Adapted from Donaldson (1998), Hill (2005), Hollensen (1998), Jobber

(2001), Rosenbloom (1978b), Rosson and Ford (1982), Shipley (1984), Shipley et al. (1989),

Stern and El-Ansary (1982), Walvoord (1983), Webster (1976).


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1.3. Problem discussion. For SME’s, with limited resources, agents are a common means of developing

international markets. They are a source of significant competitive advantage

– both home and abroad, and represent a major barrier to entry. Key to

business growth, when the relationships are high performing they are a major

source of attractive profits, secure and maintain market leadership, and are a

foundation for overall business success.

This is therefore one of the most important choices a principal will make. A

systematic approach to selection is a strategic imperative. (Cavusgil et al.

1995).

Having made such a selection, whether or not the relationship is high

performing and successful will depend not just on the agent, but also the way

the relationship is managed, and by whom.

These critical factors define the basis and reason for our work: How to ensure

selection of an agent most likely to succeed, and management of the

relationship to deliver high performance.


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1.4. General Methodology. Full details of the methodology employed, including tools used, the rationale

behind their choice and resource limitations, is provided in Chapter 3.

We conducted a desktop review of relevant literature before undertaking

fieldwork, as a means of collecting data to determine whether or not

practitioners supported our hypothesis.

We limited the empirical study to overseas representatives of UK SME’s,

manufacturing industrial, capital equipment. These SME’s utilise the agent

method as their preferred and most common form of overseas market entry

and development.

The target group of agents was geographically located around the world, in

Europe, North America and Australia.


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1.5. Structure of this dissertation The structure of our work reflects the sequential process of our research,

analysis, evaluation and findings.

Chapter 2. Literature Review. A detailed and critical analysis of previously

published works in similar or related fields. We have shown the relationship

between these works and our own, demonstrating the appropriate contextual,

theoretical and background information to our own work.

Chapter 3. Research Methodology and Data Collection. This chapter

discusses, evaluates and justifies the detailed research methodology

employed. The selection of an appropriate methodology and choice of

techniques significantly influences the outcome of the project. This chapter

describes how the process was selected and undertaken to guarantee highest

quality data.

Chapter 4. Data Analysis. This chapter is a factual presentation of the results

obtained from our research. It includes a full analysis and interpretation of the

data.

Chapter 5. Conclusions, Implications and Recommendations. Emerging from the data analysis, we summarise the findings, discuss the

implications for SME management and recommend a course of action as a

practical solution to what is a significant and widespread problem.


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1.6. Limitations and Delimitations. Limits have been placed on the work undertaken by a number of factors. In

particular, it was necessary to consider completion within the time available

and the cost of undertaking research across national boundaries. The use of

questionnaires and structured telephone interviews overcame many of the

issues relating to geographic location of the agents. However, it was still

necessary to place a closing date on the submission of completed surveys in

order to allow sufficient time for data analysis and writing up of the final work.

The demands of full time employment, family commitments and word count

restrictions significantly influenced the scope and scale of the finished work.

Literature Review

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2. Selection and Management of Agents - Literature Review. Chapter 1 established that the selection and management of overseas agents

should not be considered in isolation, but in context as part of the wider,

strategic process of internationalisation.

In this section we provide a detailed and critical analysis of key literature on

the selection, motivation and management of overseas agents by SME’s. We

begin with the process of agent selection, before looking at aspects of

management and development of the relationships. A summary is provided as

part of the identification of key managerial issues, and the conceptualisation

and emerged frame of reference which close the chapter.

2.1. Selection Process. The importance of a sagacious selection process gains unanimous support

throughout. There is consensus amongst authors’ works spanning thirty years,

and across national and cultural boundaries. (Abratt and Pitt 1989, Clasen

1991, Damon 1984, Mackay 2006, Majaro 1982, Moore 1987, Shipley 1984,

Shipley et al. 1989, Terpstra 1983, Webster 1976).

Shipley (1984) highlights the critical nature of the process of selecting

representatives. Such a relationship will be the basis of a manufacturer’s

competitive advantage and successful implementation of international

business strategy. He emphasises the two key areas of selection and

motivation. As a direct result of the limited control of such relationships, and

the potential for mismatch of objectives, the tendency of representatives in

their boundary-spanning role, is to favour the customers’ interests.

Arnold (2000) makes an obvious, but often overlooked point, that the principal

should select the agent – and not the other way around. However, many

opportunistic entries into overseas markets are as a result of a direct

approach from an agent, who then effectively selects himself.

Literature Review

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2.1.1. Agent Selection Criteria. A logical, structured process of selection against pre-determined criteria is

therefore essential. A summation of these criteria is provided in Table 2.1.

This is one of the most important choices a principal will make. The agent will

implement the overseas market strategy, and a systematic approach to

selection is a strategic imperative. (Cavusgil et al. 1995).

Agent Selection Criteria Harder / Tangible

• Market knowledge & coverage.

• Product & applications knowledge.

• Track record and reputation.

• Full time product champion.

• Business development plan for principal.

• Experience with similar products.

• Enthusiasm for contract.

• No competing product lines.

• Fit with, and number of, other Principals.

• Location and facilities.

• Frequency and standard of sales calls.

• Financial control- cash flow, credit, etc.

• Technical and service support function.

• Communicate in local language.

Softer / Intangible

• Personal feel and strategic fit.

• Character and integrity.

• Trust, loyalty, commitment, motivation.

• Ethical considerations.

• Hunger to succeed; growth minded.

• Capability and quality of key personnel.

• National and cultural differences.

• Business development credentials.

• Planning, coordination, communication.

• Organisational / operational ability

• Quality of sales force.

• Experience with target customers

• Problem solver – solutions provider

Table 2.1 Agent Selection Criteria. Author’s Construct. Source: Abratt and Pitt (1989), Clasen (1991), Damon (1984), Majaro (1982) and Terpstra

(1983) in Shipley (1984), Moore (1987), Shipley (1984), Shipley et al. (1989), Webster (1976).

Within the reviewed literature many of these essential criteria are not defined

or discussed in terms of a qualitative, subjective or objective nature. There is,

in general, no detailed review of an agent’s initial ability or capability with

respect to each of these criteria, and whether or not the principal would be

able to (or want to) develop such capabilities. This links to the resources and

capabilities of both firms (Grant 2002), and the objectives and timescales of

the overseas market entry. Arnold (2000) makes a similar observation with

respect to the resources and capabilities of the agent. Those required for the

initial market entry and development will be different to the longer term.

Literature Review

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Although the point is made about agent suitability changing over time, there is

no discussion in terms of an agent not being the ‘best’ choice at time of

selection, but one that could develop resources and capabilities and become

better than the ‘current best’, and a superior strategic fit, over time. This

emphasises that the agent selection process is significantly more complex and

requiring of knowledge and expertise. For many SME’s who face these issues,

they may not have the necessary market entry or agent selection /

management experience. It goes to the heart of both the principal and the

agents’ developing resources and capabilities over time.

Most of the authors whose work has been reviewed offer simple frameworks

and flow charts that, although helping to bring structure to the process, offer

little in terms of advice in practical and successful application. One example is

agent profiling, first mentioned by Damon (1984). Albaum et al. (2005) also

propose this concept. Having generated the profile of the most suitable agent,

evaluation of candidates can be undertaken in a structured and objective

manner. This is a useful and practical tool for screening of candidates, but

needs to be developed to incorporate additional key, qualitative dimensions

and the agent’s ability to develop resources and capabilities over time, in line

with strategic objectives.

Good examples of this are trust and loyalty, and their being the basis for

commitment and motivation. These feature heavily in the conclusions and

recommendations of the reviewed literature. It would seem logical therefore

that agent selection be based primarily on whether or not these critical

components within a relationship are likely to be forthcoming. But few authors

consider or discuss these key determinants as part of the selection process.

Other key components such as experience of similar products &

organisations, capabilities of boundary spanning managers, track record with

market and other principals are also neglected. These are critical success

factors, yet typically absent from the reviewed literature. In addition, many of

the authors do not distinguish between key selection criteria and

characteristics present in high performing and successful relationships.

Literature Review

19

A good example is Rosson & Ford (1982). Their list of critical selection criteria

is more akin to key characteristics in high performing relationships.

2.1.2. Agent Selection: Resources and capabilities. Recognising these criteria and characteristics, and how they need to be

developed, determines how the relationship should be managed, and by

whom. Grant (2002) links the resources and capabilities of a business to

competitive advantage.

The principal will have determined the industry / market key success factors

as part of the market entry strategy. Implementation of this strategy secures

competitive advantage. It is the resources of the agent, working together to

create organisational capability that implement the strategy and establishes

competitive advantage. In recognising what these resources need to be in

order to successfully implement the strategy, the principal is able to create a

profile of the most suitable agent. See Fig. 2.1.

Resources

Tangible • Financial

• Physical

Intangible • Reputation

• Culture

Human • Skills

• Know how

• Capacity for

communication and

collaboration

• Motivation

Competitive Advantage Strategy Market Key

Success Factors

OrganizationalCapabilities

Fig. 2.1. Resources, Capabilities and Competitive Advantage – Links. Source: Grant 2002.

Literature Review

20

In a more recent article, Narus and Andersen (1996) add to their extensive

studies of this topic with an article that considers relationships as strategic

alliances. Forward thinking managers view their agents as extensions to their

own resources and capabilities.

The prevalence and growing trend towards strategic alliances and

partnerships has resulted in the exploration and discovery of new modes of

operation. In a similar vein to that of Grant (2002) the potential benefits can be

best secured, they suggest, through leveraging the combined resources and

capabilities of both firms.

Literature Review

21

2.2. Management and Performance of Relationships. We have established the link between agent selection, the resources and

capabilities of the firm and managerial expertise. This will determine the initial

fit between partners and also the ability to develop a successful, high-

performing partnership as the relationship matures.

There is a general consensus that such high performing relationships exhibit

similar characteristics. See Table 2.2.

2.2.1. Boundary Spanning Alliance Managers. Agent agreements can be strong strategic alliances. Although they offer a

quick, and potentially powerful method of new market entry, according to

Spekman et al. (1996) 60% of them fail.

The authors state that this is due to leadership and management. The authors

go on to explore the unusual circumstances that surround these relationships,

and the need for unusual leadership. They describe managers of these

alliances as a ‘horse of a different colour’, and suggest that necessary

strengths are:

• Ability to create an environment of trust.

• A broad strategic vision

• Genuine empathy for others in the relationship.

• Ability to overcome a single company perspective.

• Outstanding communications skills – often across cultural boundaries.

These traits are essential in terms of successfully developing the relationship

as a whole, but especially for those softer, less tangible characteristics.

Whilst the majority of literature reviewed makes much of the various selection

criteria, and ways in which to motivate agents, predominantly from the

principal’s perspective, the importance and characteristics of the relationship

managers receives scant attention.

Literature Review

22

Donaldson (1998) highlights cultural differences. Export managers need to be

experienced in these most complicated of areas. Research on this topic, he

says, underlines the unstable nature of these relationships and that careful

selection and development of close personal relationships usually result in

high performance. This lies at the heart of the complex role of the alliance

manager. Spekman at al. (1996) add that acting in the best interests of the

alliance may not always appear to be in the best interests of the principal – the

alliance manager’s employer.

These are the fundamental issues confronting the boundary-spanning

managers (Rosson and Ford 1982). It is the successful and astute

management of these difficult areas that make for success in the

relationships. Communicating this to all parties is a key function. Acting as

diplomats and go betweens, explaining opposing views, building bridges and

reminding everyone to focus on the bigger picture. These managers create

and sustain an environment of trust. They are critical to the success of an

alliance (Kanter 1994). But such managers, displaying optimism, intelligence,

creativity, innovation, pragmatism, tenacity, vigilance and experience - are

hard to find.

Rosson and Ford (1982) also recognise the ‘boundary-spanners’ who will,

they suggest, shape the relationship itself. According to Morgan and Hunt

(1994), breakdown and termination of agreements, and performance well

below that expected at the outset, are a direct result of poor relationship

management. This results in lack of trust and commitment.

Frazier (1999) in his extensive review of works over the years suggests further

research. He identifies that much has been done in areas such as selection,

motivation, the impact of trust and commitment and also how relationships

develop.

In line with our own position, key managerial capability issues, he identifies,

have barely been touched.

Literature Review

23

Characteristics of High Performing Relationships Harder / Tangible

• Quality, reliability, suitability, saleability of product.

• Operationally effective, efficient and well-organised operations

• Rapid and decisive support when and where required.

• Exclusivity, and no blocked accounts. Agent has responsibility, authority and

confidence.

• Attractive financial reward and incentives package.

• Establish and adhere to a set of mutually agreed ground rules, guidelines, and

objectives.

• A well-defined strategic plan.

• Active, professional, structured, continuous programme of personnel training.

• Up to six principals as the optimal number for agents' representations.

Softer / Intangible

• Highly effective, professional and supportive alliance manager.

• Commitment and motivation secured through development of trust and loyalty.

• High degree of coordinated effort, joint planning and decision-making.

• Full sharing and trustworthy exchange of, sometimes sensitive, information

• Do not take advantage of partners. Share profits – and do not squeeze margins.

• View agent as valuable resource - achieves success in markets where principal alone

cannot.

• Take a holistic view of the whole partnership. Recognise and appreciate mutual

benefits.

• Understand each other’s stake and contributions.

• Gain a deep understanding of, and show genuine interest in, the agent's business.

• Work hard to sustain prosperity and profitability of both parties.

• High standards of corporate values and ethics, and agents of a similar standing.

• Expectation of, and commitment to, a long-term mutually beneficial business

relationship.

Table 2.2 Characteristics Of High Performing Relationships. Author’s Construct. Source: Albaum et al. (2005), Damon (1984), Etgar (1979), Hlavacek and McQuistion (1983),

Johnston and Lawrence (1988), Joseph et al. (1995), Narus & Anderson (1986), Reddy &

Marvin (1986), Rosenberg & Stern (1971), Rosenbloom (1978a), Sibley & Teas (1979),

Shipley (1987), Stern and El-Ansary (1982), Webster (1975 & 1976).

Literature Review

24

2.2.2. Trust, loyalty, commitment and motivation. As shown in Chapter 1, because of the nature of the principal-agent

relationship, and their mutual dependence, it is essential that manufacturer’s

build and sustain trust, loyalty, commitment and motivation with, and from,

their representatives (Morgan & Hunt 1994). However, most authors appear

unsure as to how these critical components in the relationship should be

achieved. Fewer still recognise or provide in-depth comment on the

dependence of one upon the other, and their inter-dependent nature. The vast

majority of the reviewed work promotes inter-dependence as pivotal in the

relationships. Mutual understanding, clearly defined expectations and ‘rules of

engagement’ are also shown to be key factors. Trust is at the core of most

models, along with open communications and cooperation.

In a similar, more recent work, Goodman and Dion (2001) attempted to

identify the determinants of commitment in an agent – principal relationship.

This paper differs from many published articles, having been written jointly by

an academic and a practitioner. Lester Goodman was at the time President of

Lion Controls. Winning and preserving the allegiance of industrial agents is,

they say, becoming more challenging, yet more vital. The agent is increasingly

acting like an independent business entity, with policies, procedures and goals

that seldom coincide with those of the principal.

The authors refer extensively to Morgan & Hunt (1994) for the basis and

importance of commitment. In contrasting the behavioural and marketing

determinants of commitment, they perhaps over emphasise the influence of

product factors and agent dependence on the principal, using the Morgan and

Hunt model as a basis before adding the product factors. However, in the

review of behavioural determinants, trust, power, continuity and

communications are the key variables, they posit. On the subject of marketing

determinants, dependence (of both parties), resource investment and product

saleability are considered. Saleability, they define, as having value, use, well

serviced and of good quality.

Literature Review

25

Their research concluded that trust, communication, resource investment and

product saleability are key determinants of commitment. The use of power by

the principal was shown to be a potentially significant negative influence. Their

commitment model is shown in Fig. 2.1.

In a deviation from established views on trust, they suggest a key determinant

is not trust, but its expectation and anticipation through the future actions and

recognition of long-term interests of the partnership. This is especially relevant

to our works. The frame of reference – Internationalisation Process, Market

Entry Mode Selection, Agent Route and Alliance Management - implies the

relationship is at an embryonic stage.

In these early days, it will be the ability of the alliance manager to create and

sustain the atmosphere of trust that will determine the eventual outcome

(Anderson and Weitz 1992).

Commitment

Dependence

& Power

Product Saleability

Ease of

Sale

Manufacturer’s

Strengths

Anticipation

of Trust Effective

Communication

Idiosyncratic Investments

Fig. 2.2 Revised Commitment Model. Source: Goodman and Dion (2001).

Literature Review

26

2.2.3. Exclusivity and financial reward. One potential source of weakness in this model is non-exclusivity in a territory.

This is a perennial source of tension. They conclude that product line

exclusivity is not the be all and end all it once was. This is at odds with the

general consensus, and seems to heavily favour the manufacturer’s

perspective. The wider view, of both academics and practitioners is that not

offering exclusivity implies a lack of trust in the ability of the agent to handle

the business.

Fundamentally, if the agent is not capable of handling all of the accounts in

the territory and requires the constant intervention of the principal, then you

have selected the wrong agent (Webster 1975).

Such actions will result in greater conflict, lack of motivation, poor

communications and poor performance.

There is general consensus in the literature concerning the issue of exclusivity

as a key determinant of agent commitment to the relationship. Although there

are risks inherent with this route, high performing principal agent relationships

exist when the agent has exclusivity, responsibility, and confidence in their

own authority and do not carry competing lines.

Throughout the literature, financial reward and gain is considered to be a key

component in the basis of a successful partnership. It is both predictable and

empirically proven (Bobrow 1976, Sibley and Teas 1979). However, financial

reward alone is not a guarantee for achieving the strategic objectives of the

manufacturer.

A longer term, mutually beneficial business relationship has been found to be

the most important motivator (Shipley 1984), and successful development and

anticipation of such a partnership comes directly from how it is managed and

by whom.

Conceptualisation and Emerged Frame of Reference

27

2.3. Conceptualisation and Emerged Frame of Reference. In this section we have drawn together and summarized the dominant models,

theories and concepts from our background study and literature review. The

conceptualisation of key managerial issues and the emergent frame of

reference has enabled us to better address the research questions and has

been used in determining the research methodology presented in Chapter 3.

2.3.1. Conceptualisation. The materials analysed as part of our literature review, enabled us to identify

key managerial issues as follows: Managerial

Issue Models, theories and concepts from literature review.

Agent Selection

Considered as part of wider, strategic process of internationalisation.

Sagacious selection against predetermined criteria is crucial.

Powerful influence on successful development of subsequent alliance.

Link to Research Question 2.

Authors: Abratt and Pitt 1989, Cavusgil et al. 1995, Clasen 1991, Damon

1984, Donaldson 1998, Mackay 2006, Majaro 1982, Moore 1987, Shipley

1984, Shipley et al. 1989, Terpstra 1983, Webster 1976.

Alliance Development

Not widely discussed in practical terms.

Trust leads to loyalty, commitment and motivation.

High performing alliances exhibit generic characteristics

Alliance managers build these essential prerequisites for success – Link

to Research Question 3.

Product factors, appropriate reward and incentives assumed.

Authors: Donaldson 1998, Goodman and Dion 2001, Rosson and Ford

1982, Morgan and Hunt 1994,

Managerial Capability

Not widely considered. Strong precursor to:

• Successful process of Internationalisation.

• Strategic plan for overseas market entry

• Market entry mode selection

• Agent selection process – Link to Research Question 1

• Alliance development – Link to Research Question 2

Authors: Spekman et al. 1996, Narus and Andersen 1999, Frazier 1999.

Table 2.3. Conceptualisation of Key Managerial Issues. Source: Author’s Construct.


28

For each of these managerial issues we have identified key points in order to

better focus the research, as follows:

Research Question 1 - Agent Selection. A structured and strategic selection process is pivotal, and a strong

precondition of a high performing alliance. Predetermined criteria should be

used to generate an Agent profile against which all are evaluated.

Do practitioners agree? Are potential Agents evaluated and selected in such a

manner? What are the implications for practitioners?

Research Question 2 - Development Of High Performing Alliances. A structured and strategic selection process is a powerful antecedent to a

successful and high performing alliance. These powerful, high performing

alliances exhibit many similar characteristics. A high level of coordinated

effort, joint planning, decision-making and communication will work to

establish these key characteristics.

Do practitioners agree? Do high levels of coordinated and joint activities exist?

What are the implications for practitioners?

Research Question 3 - Alliance Manager Capabilities. The building of trust, and its anticipation, will result in commitment to the

relationship, loyalty and a motivation to succeed. These characteristics are

essential prerequisites for success. They are the foundations built by alliance

managers who have a critical and difficult role to play.

Is this recognised and understood, and do current alliance managers measure

up? What are the implications for practitioners?


29

2.3.2. Emerged Frame of Reference. According to Miles and Hubermann (1994), this should clarify the main focus

of the study, graphically or in narrative form. The frame of reference that has

emerged from our conceptualisation helps determine and guide the research

methodology presented in the following chapter.

The framework for high performing overseas alliances presented in Fig 2.3.

shows:

• The selection and management of agents must be considered in context

as part of the wider, strategic process of internationalisation.

• Managerial capability is a strong influence on successful outcome across

all stages of the internationalisation and development process.

• A structured selection process is pivotal, and a strong precondition of high

performing alliances.

• Trust and loyalty are antecedents to motivation, commitment and

subsequent success.

• Powerful, high performing alliances exhibit many similar characteristics.

• Alliance manager capabilities will determine alliance outcome.

The assumptions are that a planned and strategic process of

internationalisation has been undertaken, a saleable and competitive product

exists, and the appropriate incentives and rewards package is in place for the

agent.


30

Internationalisation

Process

Managerial Capability & Commitment

Saleable / Competitive Product

Triggers to internationalisation

Strategic International Business Plan

Expectations and Objectives

Market Entry Mode Selection

Alliance Manager Capabilities

Agent Selection Alliance

Selection Criteria

Agent Profiling

Evaluation

Selection

Search

Selected Mode - Agents

Screening

Trust & Loyalty

Commitment & Motivation

Relational Success Factors

Coordinated Effort

Joint Planning & Decision Making

Communications

Figure 2.3 A Framework for High Performing Overseas Alliances. Source: Author’s Construct.

Research methodology and data collection

31

Research Methodology and Data Collection

Strategy & Implementation

Background study

Literature Review

Objectives

Questionnaires

Grounding

Research Philosophy

Research Purpose

Research Approach

Data Quality

Choice of Data Collection

Validity

Reliability

Critique Methodology

Evaluate Data

3. Research Methodology and Data Collection. This chapter discusses, evaluates and justifies the research methodology

employed. The selection of an appropriate methodology and choice of

techniques significantly influences the outcome of the project research phase.

It is essential to understand research and how it relates to business

management. Our research was undertaken in a logical, sequential,

systematic and focused manner. As a result, we believe our conclusions and

recommendations to be based on validated and reliable data and information.

Fig 3. 1. Research Methodology and Data Collection Schematic. Source: Author’s Construct.

3.1. Research Philosophy How we view knowledge development determines research philosophy. There

are three widely accepted views: positivism, interpretivist and realism

(Saunders et al. 2003). Positivism is based on observable social reality. The

use of structured methods allows replication producing law-like

generalisations. From a more subjective position, Interpretism recognises that

business situations are complex and a function of the participants. Realism

suggests there is an outside and objective reality influencing a person’s

perception and behaviour, without them realising it.


32

Any research that involves people, their relationships, interaction and

environment is complex - and not an exact science. In practice, it seldom falls

into one domain. The complex nature of business and management research

lies between interpretivist and positivist, probably more reflecting the realist

position.

3.1.1. Research Philosophy for this work. There are aspects of our work that adopt the positivist approach, through the

use of quantitative techniques and in determining the ‘harder’ aspects of agent

profiling. It is our belief and experience that businesses do benefit from

following law like ‘generalised’ practices and methods. However, this objective

viewpoint, for example generalising factors critical to the success of such

relationships, is inappropriate in researching the ‘softer’ aspects of the agent –

principal relationship. This reflects the complexity, richness and uniqueness of

business situations. The many different subjective interpretations of these

situations are more akin to the interpretivist viewpoint. Our research

recognises that ultimately agent and principal are people working together in

an environment they have created and upon which they both have influence.

This also reflects interpretivist and realist views.

3.2. Research Purpose Studies can be classified by means of purpose. Three such generally

accepted classifications are exploratory, descriptive and explanatory (Robson

2002).

Exploratory research ‘explores’ the subject, often initially from a broader

perspective before becoming increasingly focused. It is a way of gaining a

wider understanding of a topic or area of research in order to increase

knowledge and determine what is happening. Descriptive research produces a

clear and accurate representation of an event or situation. Saunders et al.

(2003) suggest it is a means to an end. Having described a situation,

evaluation, conclusion and recommendation will follow.


33

Explanatory research studies the managerial situation so as to understand

and explain relationships that exist and have influence on each other. It builds

on the foundations of recognition and previous knowledge of relationship or

managerial problem (often determined by exploratory and descriptive

research) in order to answer “reasons why”.

3.2.1. Research Purpose for this work. Having recognised and accepted this common managerial problem, and our

objective being to determine a practical solution, our perspective was initially

descriptive. The research undertaken enabled us to better describe the

situation and determine probable and “general” causes, as well as generic

characteristics of successful relationships.

The review of literature, and discovery of a wealth of research previously

undertaken, was exploratory. This helped identify key issues for later

development. Some of the research into grounded theory has been

explanatory.

The use of all three generally accepted methods is to better understand and

describe the managerial problem that exists based on previously published

research and theory. On that basis it can de described, determined and

explained. The conclusions drawn and implications / recommendations for

management are then more likely to offer a practical solution to this problem

that is built on solid, reliable research.

3.3. Research Approach Authors discuss inductive and deductive approaches, and how these relate

generally to research typologies. Saunders et al. (2003) suggest that such

descriptions are potentially misleading and that issues and data should be

questioned in as many ways as possible. This creates both an openness and

awareness in the research.


34

3.3.1. Research approach for this work. As a result of exploratory research (literature review and experiences) we

have deduced that the problem exists, described it and determined that a

solution to that problem exists in the form of a practical framework. Our

research strategy will test this deduction. There is much evidence and

literature to support our hypothesis, but an open minded and inductive

perspective must be kept in order to ensure the validity and reliability of our

interpretations, conclusions and recommendations.

3.4. Research Strategy. A research strategy, through clear objectives, seeks to answer the research

questions. It should also specify the sources from which data will be drawn.

3.4.1. Research strategy for this work. Our objective was to identify determinants of successful selection and

management of overseas agents. To achieve those objectives, guarantee

validity and reliability, conclude and recommend, we undertook a detailed

study of existing works and drew on the experiences of practitioners. For this

reason, of the eight research strategies available (Saunders et al. 2003, Yin

2003) we chose surveys, in the form of questionnaires. The rationale behind

this choice is provided in Section 3.6.2.

3.5. Background Study - Literature Search & Review As part of our exploratory research, an extensive review of literature was

undertaken. This enabled us to position this work with previously published

works. The aim was to put the work in context and identify theoretical

frameworks involved. Taken initially from the wider perspective of agents as a

means of overseas market entry for SME’s, the general problems and lack of

success experienced, the work then concentrated on what emerged as two

key determinants of the success or failure of such relationships: the selection

process and management.


35

3.6. Primary Data Collection – Questionnaires. The dominant models, theories and concepts from our background study and

literature review, combined with our own experiences of international

business, were used in developing the study questionnaire. Piloting was done

in the form of structured interviews with experienced practitioners. This section

is sub divided to discuss key areas, as follows: Confidentiality; Choice of data

collection method – questionnaire; Questionnaire design; Piloting - Structured

interviews; Sample Information – target, numbers, profiles; Survey Period;

Techniques employed to maximise response rates.

Each of these areas will now be examined.

3.6.1. Confidentiality of data. It was emphasised that all responses would be treated confidentially. We were

permitted to use company names as part of the sample information sub

section. However, specific details relating to how each person / company

responded would be kept confidential, and only used to determine who had

responded. Responses would be aggregated and not attributed to a specific

individual. This was explained in all verbal communications with respondents,

in the covering letter and also in the email used to distribute the

questionnaires.

3.6.2. Choice of data collection method – questionnaire. The rationale behind the choice of collection method was based on practical

and logical reasons. We considered and evaluated alternative methodological

tools and their respective advantages and limitations (Saunders et al. 2003,

White 2000, Neville 2005). Case Study and Interview were two options

seriously considered. However, the following key considerations influenced

the final choice of questionnaire:

• Sample Size – wanted to target agents and distributors worldwide.

• Sample Locations – international spread.

• Resource constraints – time, money.

• Willingness of sample to agree to alternative research methods.


36

3.6.3. Questionnaire design. We were aware that the design of the questionnaire would affect response

rates, reliability and validity of data. We had used questionnaires successfully

as the main data collection tool in a previous MBA Project (Dougherty et al.

2006). In order to ensure the design of this document would maximise

response, validity and reliability, we focused on:

• Design and construction of individual questions;

• Document Format and Layout;

• Purpose of the work clearly explained in the covering letter;

• Pilot Testing;

• Planning and implementation.

Design was simple, the aim being quick and easy to completion. Sections

were unlabeled and uninterrupted by page breaks. There were 18 questions,

each of similar word length. To quantify responses and compare perceptions

and experiences, and a Likert Scale of 1 (Never) to 7 (Always) was used.

In this way we established a coding scheme prior to collecting the data and

incorporated it as part of the questionnaire.

Overall, the document was very much in line with the recommendations of

Saunders et al (2003) and Morrel-Samuels (2002). We believe that the

questions addressed the specific challenges and issues that emerged from

the background study of related literature, and based on our research

questions were critical for the study. It was well received by respondents, and

the questionnaire is shown in Appendix I.

3.6.4. Survey Period The pilot study by way of structured interviews took place between 24th and

31st July 2006. The questionnaire was then distributed by email over a period

of five days, 2nd to 6th August 2006. Respondents were requested to complete

and return by 18th August 2006. Although not communicated to respondents,

project planning allowed for delays in receiving an adequate % of returns. As

such, the cut off date was actually 31st August 2006.


37

3.6.5. Piloting the Questionnaire - Structured Interviews. Due to the personal relationship of the author with experienced practitioners,

the opportunity to pilot the questionnaire in the form of three structured

interviews did present itself. In addition to the piloting itself, this offered

significant additional benefits:

1. The chance to include interviews as part of our research, and gain more in

depth understanding and knowledge of the practitioners’ perspective and

thought process in answering the questions posed.

2. This pilot sample also allowed for a ‘Test re-test’. The questionnaire was

administered to them a second time, after editing. This allowed us to

correlate data collected from them under similar conditions, as

recommended by Mitchell (1996).

3.6.6. Sample Information – target, numbers, profiles. In order to ensure reliability and consistency, honesty of response and

sufficient data from which analysis could accurately draw conclusion, we

selected a sample of organisations acting as overseas agents for UK SME’s.

The sample consisted of companies from USA, Canada, Australia, New

Zealand, Denmark, Norway, Holland, Belgium, Italy, Austria, Germany, Israel

and Brazil. A number of these companies were also manufacturers of

equipment and exporters in their own right. Details of these companies are

given in Appendix II.

3.6.7. Response Rate. The questionnaire was designed to maximise response (see Section 3.6.3)

and respondents were chased proactively by use of email and, in some cases,

direct phone calls. Respondents were initially requested to complete and

return by 18th August 2006. Follow up emails reminding respondents of the

closing date were sent on 15th August. Subsequent to this follow up emails

were also sent on 21st and 28th August.

120 questionnaires were distributed and respondents asked to return them by

email. A 34% response rate was achieved and 41 completed questionnaires

returned.


38

3.7. Determinants of Data Quality – Validity and Reliability. These are vital concepts built into our research. Validity ensures that design

addresses the research questions and objectives. Reliability relates to

consistency. Interpretation and conclusions are subjective, and although

another researcher would possibly interpret our results differently, they would

be able to adopt the methodology and obtain similar findings. Throughout, we

remained wary of threats to reliability and validity (Robson 2002, in Saunders

et al. 2003).

3.8. Critique of methodology. We believe that the conclusions drawn are reliable and valid. This is based on

an extensive review of literature, the experiences of the author and the

consistency of response from a wide group of experienced, senior,

international business executives. This critique was included to review our

research methodology. Has it proved successful, reliable and valid? If

resources permitted, would we undertake the research in the same manner in

order to establish determinants and answer the research questions?

Data Analysis

39

4. Data Analysis. In this Chapter we present an analysis and interpretation of the survey data

collected, which then provides the basis for the conclusions, implications and

recommendations that follow in Chapter 5. The analysis is conducted in

relation to the three research questions and the emerged frame of reference

(Fig 2.3.) that form the basis for the study.

Our analysis followed a logical and structured process. One hundred and

twenty surveys were distributed. A 34% response rate was achieved. We had

forty one sets of pre-coded answers to eighteen questions. In addition, five

‘best practice’ surveys were also submitted.

This chapter is structured in the following manner:

Our initial analysis calculates and compares the weighted responses to each

question to what we could expect if the hypothesis is generally supported.

We then extend this in more detail through analysis and interpretation of

responses to certain questions, and “Best Practice” Surveys completed by five

specifically targeted individuals.

These two initial areas of analysis will confirm whether or not there is support

for our hypothesis, as defined in the research questions.

Having established this position, we then identify and analyse survey

responses to specific questions and reveal if general business practice is in

accordance with what has been previously determined as key to the

successful selection and management of overseas agents.

Data Analysis

40

4.1. Weighted response. To assess general support for our hypothesis, the following weighting has

been used, and applied to each of the survey questions: 1 = -3; 2 = -2; 3 = -1;

4 = 0; 5 = 1; 6 = 2; 7 = 3. The weighted scores for each question are as

shown in Fig 4.1.

-60

-40

-20

0

20

40

60

80

100

8 6 12 9 17 14 2 15 13 10 5 11 16 3 1 7 4 18

Question no.

Scor

e

Fig 4.1. Survey Questions: Weighted Scores.

Table 4.1 details expected and actual responses to survey questions. This

initial analysis of the results demonstrates support for our hypothesis, with

strong positives relating to key survey questions 6, 8, 9 and 12. Question Expected

Response Actual

Response Question Expected

Response Actual

Response

1 - ve - 16 10 - ve - 6 2 + ve + 9 11 - ve - 10 3 - ve - 13 12 + ve + 71 4 - ve - 24 13 - ve - 5 5 - ve - 7 14 Neutral + 12 6 + ve + 77 15 Neutral - 4 7 - ve - 20 16 - ve - 12 8 + ve + 82 17 - ve + 30 9 + ve + 53 18 - ve - 36

Table 4.1. Expected response to survey questions.

Data Analysis

41

4.2. Agent Selection Hypothesis. A structured and strategic selection process is pivotal, and a strong


used to generate an Agent profile against which all candidates are evaluated.

4.2.1. Agent Selection – Analysis of research data. The results from the research survey show that the hypothesis presented in

research question one is supported by practitioners. The response to survey

question 6 shows a very strong positive response. All results are either 4

(neutral) or higher. The median and mode are both 6. One in four answered

“always”, and 95% scored five and above.

Standard error, deviation and variation highlight the overall consensus that the

agent selection process is pivotal, and a strong precondition of a high

performing alliance.

This stance is reflected in the response to our ‘Best Practice’ profile questions,

submitted to five specific agents.

These agents were chosen based on their relative experience, standing in

their respective markets and geographical spread.

Best Practice Profiler - Agent 1: USA. 20 years.

Best Practice Profiler - Agent 2: Canada. 42 years.

Best Practice Profiler - Agent 3: Australia. 16 years.

Best Practice Profiler - Agent 4: Denmark. 7 years.

Best Practice Profiler - Agent 5: Israel. 13 years.

They were each asked to score the same survey based on what would be the

best case scenario. The results show strong support to our hypothesis with all

respondents scoring six or higher and 70% scoring “always”.

The response to survey questions relating to the selection process is now

presented.

Data Analysis

42

4.2.2. Response to Agent Selection Survey Question 6. ‘A logical and structured process of selection will significantly improve the

likelihood of a successful and high performing relationship’. The response to

this question is summarised in tabular and graphical format in Fig 4.2 below.

Fig 4.2.Survey Question 6 Response Profile.

Score No. of

Responses % of

response

Mean 5.88 1 0 0% Standard Error 0.13 2 0 0% Median 6 3 0 0% Mode 6 4 2 5% Standard Deviation 0.84 5 11 27% Sample Variance 0.71 6 18 44% Range 3 7 10 24% Minimum 4

Total 41 100% Maximum 7

0%

0%

0%

5%

27%

44%

24%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7

Data Analysis

43

4.2.3. Best Profile Survey Response – Questions 1, 3, 4, 5, 6, 7. Q1.An agent is chosen following professional and structured selection

process.

Q3.Predetermined criteria are used in agent evaluation.

Q4.A profile of the ‘most suitable agent’ is generated and used to aid

selection.

Q5.Manufacturer controls the selection process, in a structured and

knowledgeable manner.

Q7.Agents are evaluated and selected by manufacturers using a logical and

structured selection process.

The response to these questions is summarised in Fig 4.3 below.

Score No. of

Responses % of

response 1 0 0% 2 0 0% 3 0 0% 4 0 0% 5 0 0% 6 9 30% 7 21 70%

Total 30 100%

Fig 4.3 Best Profile Survey Questions 1,3,4,5,7 Response.

0%

0%

0%

0%

0%

30%

70%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7

Data Analysis

44

4.3. High Performing Alliances Hypothesis. A structured and strategic selection process is a powerful antecedent to a

successful and high performing alliance. These powerful, high performing

alliances exhibit many similar characteristics. A high level of coordinated


establish these key characteristics.

4.3.1. High Performing Alliance – Analysis of research data. The research results show that the hypothesis in research question two is

supported by practitioners. The response to survey questions 8 and 12 shows

a strong positive response. All results are either 4 or higher. The median and

mode are both 6.

One in three respondents answered “always”, and 93% scored five and

above. The overall consensus is then that high performing alliances do

exhibit similar characteristics. Coordinated effort, planning, decision-making

and excellent communications should be in place to create an environment

in which these key success characteristics can be established.

This is reflected in Best Practice’ profile question response, with results

showing strong support for our hypothesis. 43% scored “always” and nine out

of ten, six or higher. The second phase of our analysis will determine if this is

reflected in the way in which business operations are conducted.

The response to survey questions relating to the development of alliances is

now presented.

Data Analysis

45

4.3.2. Response to Alliance Development Survey Questions 8 and 12. Q8: ‘Mutual trust and loyalty are essential prerequisites for commitment,

motivation and development of high performing partnerships’.

Q12: ‘Powerful, high performing partnerships exhibit many similar

characteristics’.

The response to these questions is summarised below in Fig 4.4.

4.3.3. Best Profile Survey response to Question’s 8, 12, 13, 16, 17, 18. Question 8.Mutual trust and loyalty are essential prerequisites for

commitment, motivation and development of high performing partnerships Question 12.Powerful, high performing partnerships exhibit many similar

characteristics Question 13.High level of coordinated effort, joint planning, decision-making

and communication exists between partners.

Question 16.Manufacturer knows, understands and recognises the

importance of characteristics in high performing relationships

Question 17.Agent knows, understands and recognises the importance of

characteristics in high performing relationships

Question 18.Regular “relationship audits” are undertaken together to improve

overall performance and conditions for success.

The response to these questions is summarised below in Fig 4.5.

Data Analysis

46

Q8 Q12

Mean 6 Mean 5.7Standard Error 0.14 Standard Error 0.13Median 6 Median 6Mode 6 Mode 6Standard Deviation 0.89 Standard Deviation 0.84Sample Variance 0.80 Sample Variance 0.70Minimum 4 Minimum 4Maximum 7 Maximum 7Count 41 Count 41

Question 8 & 12 Response Data.

Q8 Surv ey Response.

Q12 Survey Response.

Fig 4.4 Survey Question 8 & 12 Response Profile.

0%

0%

0%

5%

24%

37%

34%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7

0%

0%

0%

7%

29%

46%

17%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7

Data Analysis

47

Score No. of

Responses % of

response 1 0 0% 2 0 0% 3 0 0% 4 0 0% 5 3 10% 6 14 47% 7 13 43%

Total 30 100%

Fig 4.5 Best Profile Response: Questions 8, 12, 13, 16, 17, 18.

0%

0%

0%

0%

10%

47%

43%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7

Data Analysis

48

4.4. Alliance Manager Hypothesis. The building of trust, and its anticipation, will result in commitment to the



managers who have a critical and difficult role to play.

4.4.1. Alliance Manager – Analysis of research data. We believe the survey questions chosen have enabled us to determine

alliance manager capabilities. We establish from this if practitioners agree with

the hypothesis relating to mutual trust, loyalty and the key role of the alliance

manage. Phase two analysis of the response to these questions will show

whether or not the alliance manager demonstrates the required capabilities in

practice.

The overall survey results show that the hypothesis presented in research

question three is strongly supported. The response to survey questions 8

and 9 show a high positive response. One in five scored the questions

“always”, and nine out of ten scored five or higher.

This is reflected in Best Practice’ profile question response, with results also

showing strong support for our hypothesis. Over half of those surveyed

answered with the highest rating of seven (always), and all responses were

five or higher.

The slightly lower scores and wider spread of response to question 9 is

understandable. Agents agree that the alliance manager is a key role and that

trust, and its anticipation, will result in commitment to the relationship, loyalty

and a motivation to succeed. However, they also believe that these essential

prerequisites are not just built by the alliance managers but also by the

agents. The response to survey questions relating to the alliance manager is now

presented.

Data Analysis

49

4.4.2. Response to Alliance Manager Survey Questions 8 and 9. Q8: ‘Mutual trust and loyalty are essential prerequisites for commitment,

motivation and development of high performing partnerships’.

Q9: ‘Trust and loyalty should be created by the alliance managers’.

The response to these questions is summarised below in Fig 4.6

4.4.3. Best Profile Response – Q5, 7, 8, 9, 10, 11. Question 5. Manufacturer controls the selection process, in a structured and


Question 7. Agents are evaluated and selected by manufacturers using a

logical and structured selection process.

Question 8. Mutual trust and loyalty are essential prerequisites for

commitment, motivation and development of high performing partnerships.

Question 9. Trust and loyalty should be created by the alliance managers.

Question 10. Alliance managers are effective, professional, supportive and

capable.

Question 11. Manufacturer recognises critical role of alliance manager, key

requirements of position and appoints person accordingly.

The response to these questions is summarised below in Fig 4.7

Data Analysis

50

Q8 Q9

Mean 6.00 Mean 5.29 Standard Error 0.14 Standard Error 0.15 Median 6.00 Median 5.00 Mode 6.00 Mode 5.00 Standard Deviation 0.89 Standard Deviation 0.98 Sample Variance 0.80 Sample Variance 0.96 Minimum 4 Minimum 3 Maximum 7 Maximum 7 Count 41 Count 41

Question 8 & 9 Response Data. Q8 Survey Response

Q9 Survey Response

Fig 4.6 Questions 8 & 9 Response Profile.

0%

0%

0%

5%

24%

37%

34%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7

0%

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5%

12%

41%

32%

10%

0% 20% 40% 60% 80% 100%

1

2

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6

7

Data Analysis

51

Score No. of

Responses % of

response 1 0 0%2 0 0%3 0 0%4 0 0%5 4 13%6 10 33%7 16 53%

Total 30 100%

Fig 4.7 Best Profile Response: Questions 5, 7, 8, 9, 10, 11.

0%

0%

0%

0%

13%

33%

53%

0% 20% 40% 60% 80% 100%

1

2

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6

7

Data Analysis

52

4.5. Research Question 1 – Agent Selection. We have determined above, with some degree of confidence, that

practitioners agree with the hypothesis outlined in Research Question 1. In

this second phase of our analysis we will determine from the analysis of our

survey results if this accepted best practice is reflected in the way in which

business is conducted.

4.5.1. Agent selection - Research data analysis. The survey questions analysed in this section are direct and specific to the

issue of the agent selection process. The shift in response from the positive

best practice responses, to the negative ‘how it is’, is immediately apparent.

There is a good distribution of response but all means, medians and modes

are 4 or less. Only one in five gave a positive response to any of the selection

process questions. Eight out of ten responses were four or less.

Only one in ten gave a strong positive response to very clear and direct

questions. There is no ambiguity in what each survey question was asking

and addressing.

It is very apparent from these results, that even though practitioners are aware

of how and why the process should be undertaken this is not reflected in the

manner in which relationships are established and managed in practice.

The response to survey questions relating to the agent selection process is

now presented.

Data Analysis

53

4.5.2. Survey Response – Questions 1, 3, 4, 5, 7. The response to these questions, both overall and individually, is presented in

tabular and graphical format in Fig 4.8 to 4.13 below.

Score No. of

Responses % of

response Overall

Response No. of

Responses % of

response

1 5 2% 5 or higher 44 21% 2 34 17% 4 or less 161 79% 3 66 32% 4 56 27% 5 23 11% 6 17 8% 7 4 2%

Total 205 100%

Fig 4.8 Overall Survey Response. Questions 1, 3, 4, 5, 7. – Agent Selection Process.

2%

17%

32%

27%

11%

8%

2%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7

Data Analysis

54

Question1. An agent is chosen following professional and structured

selection process.

0%

22%

29%

27%

12%

7%

2%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7

Fig 4.9 Question 1 Survey Response.

Question3. Predetermined criteria are used in agent evaluation.

2%

20%

34%

17%

7%

17%

2%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7


Data Analysis

55

Question4. A profile of the ‘most suitable agent’ is generated and used to aid

selection.

7%15

%34

%27

%10

%5%

2%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7


Question5. Manufacturer controls the selection process, in a structured and


0%12

%29

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%7%

2%

0% 20% 40% 60% 80% 100%

1

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Data Analysis

56

Question7. Agents are evaluated and selected by manufacturers using a

logical and structured selection process.

2%

15%

34%

32%

12%

5%

0%

0% 20% 40% 60% 80% 100%

1

2

3

4

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7


Data Analysis

57

4.6. Research Question 2 – Development of High Performing Alliances. We determined above, with some degree of confidence, that practitioners

agree with the hypothesis outlined in Research Question 2. In this second

phase of our analysis we will determine from the analysis of our survey results

if this accepted best practice is reflected in the way in which business is

conducted.

4.6.1. Alliance development - Research data analysis. Although the shift to the negative is again apparent, the spread of results with

some individual positive’s, is an indication that agents believe they recognise

the critical issues within the development of these alliances more than the

principals do. For example, the response to questions 14 and 17 generated

an overall positive spread of results, with overall one in two giving a five or

higher response.

However, from the response to question 15, we can see that agents do not

proactively address the issues that they are aware of. 70% scored four or less

to in response to whether or not they selected their own in house product

champion accordingly.

There is a good spread of response and distribution. Means, medians and

modes are less than 4 in all but two questions, where the figure still achieves

a score of less than 5.

Overall, 68% of the response showed a neutral or negative response to the

alliance development questions. In line with the survey results to research

question one, these results suggest that although practitioners are generally

aware of what makes strong and successful alliances, common practice does

not reflect this.

Fewer than one in six gave a strong positive response to any of the questions

relating to how these alliances should be developed in practice.

Data Analysis

58

4.6.2. Survey Response – Q13, 14, 15, 16, 17, 18. The response to these questions, both overall and individually, is presented in


Score No. of

Responses % of

response Overall

Response No. of

Responses % of

response1 5 2% 5 or higher 79 32% 2 30 12% 4 or less 167 68% 3 63 26% 4 69 28% 5 44 18% 6 26 11% 7 9 4%

Total 246 100%

Fig 4.14 Overall Response: Questions 13, 14, 15, 16, 17, 18 – Alliance Development.

2%

12%

26%28

%18

%11

%4%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7

Data Analysis

59

Q13.High level of coordinated effort, joint planning, decision-making and

communication exists between partners.

2%10

%32

%29

%12

%10

%5%

0% 20% 40% 60% 80% 100%

1

2

3

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5

6

7


Q14.Agent appoints in house product champion to coordinate business

activities with manufacturer.

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%5%

10%

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1

2

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Data Analysis

60

Q15.Agent’s Product champion is actually selected based on capability.

0%15

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%10

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1

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Q16.Manufacturer knows, understands and recognises the importance of

characteristics in high performing relationships.

0%10

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Data Analysis

61

Q17. Agent knows, understands and recognises the importance of


0%

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%24

%5%

0% 20% 40% 60% 80% 100%

1

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Q18. Regular “relationship audits” are undertaken together to improve overall

performance and conditions for success.

10%

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5%2%

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1

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Data Analysis

62

4.7. Research Question 3 – Alliance Manager Capabilities. From an analysis of key survey questions, we were able to determine with

some degree of confidence, that practitioners agree with the hypothesis

outlined in Research Question 3. In this second phase of our analysis we will

determine from the analysis of our survey results if this accepted best practice

is reflected in the way in which business is conducted.

4.7.1. Alliance Manager - Research data analysis. The survey questions selected for analysis enabled us to determine the

agents' perception of alliance manager capabilities with some certainty. The

contrast between the response given in the best practice profiling and these

results indicates with some degree of certainty the gap that exists between

the required and the actual level of alliance manager capability.

There is a good spread of response and distribution. Nevertheless, all means,

medians and modes are 4 or less, and fewer than one in ten gave a strong

positive response to any of the questions. Only 20% of scores were positive.

Overall, 79% of the response showed a neutral or negative response to the

agent selection questions. Individual questions showed neutral or negative

responses varying from 73% to 85%, along with minimal error, variance and

deviation.

The initial phase of our analysis determined that practitioners did agree with

the hypothesis relating to mutual trust, loyalty and the key role of the alliance

manage in establishing that trust, and in managing a strong and successful

partnership.

However, from these results it is clear that, for whatever reason, alliance

managers are not of a level of competency expected or required in managing

the development of string and successful overseas alliances.

Data Analysis

63

4.7.2. Survey Response – Q5, 7, 10, 11, 13, 18. The response to these questions, both overall and individually, is presented in


Score No. of

Responses % of

response Overall

Response No. of

Responses % of

response1 6 2% 5 or higher 52 21% 2 31 13% 4 or less 194 79% 3 81 33% 4 76 31% 5 31 13% 6 17 7% 7 4 2%

Total 246 100%

Fig 4.21 Overall Response: Questions 5, 7, 10, 11, 13, 18 – Alliance Manager.

Q5.Manufacturer controls the selection process, in a structured and


2%

13%

33%

31%

13%

7%

2%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7

Data Analysis

64

0%12

%29

%34

%15

%7%

2%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7


Q7.Agents are evaluated and selected by manufacturers using a logical and

structured selection process.

2%

15%

34%

32%

12%

5%

0%

0% 20% 40% 60% 80% 100%

1

2

3

4

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7


Data Analysis

65

Q10.Alliance managers are effective, professional, supportive and capable.

0%

10%

34%

29%

15%

12%

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0% 20% 40% 60% 80% 100%

1

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Q11.Manufacturer recognises critical role of alliance manager, key


0%

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%46

%12

%2%

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1

2

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6

7


Data Analysis

66

Q13.High level of coordinated effort, joint planning, decision-making and


2%10

%32

%29

%12

%10

%5%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7


Q18.Regular “relationship audits” are undertaken together to improve overall

performance and conditions for success.

10%

27%

32%

15%

10%

5%2%

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7


Conclusions, Implications and Recommendations

67

5. Conclusions, Implications and Recommendations. The objective of this project was to identify key success factors in the

selection, development and management of high performing overseas Agents

and Distributors and through research determine the gaps that exist between

what should be – and what is.

For UK SME’s these relationships are a common means of developing

international markets. They are a major source of significant competitive

advantage and attractive profits. They help secure and maintain market

leadership, and are a foundation for overall business success. However,

incorrect agent selection and poor relationship management (or both) places

the SME at a serious competitive disadvantage. At worse, it could ruin the

entire business development strategy.

This chapter summarises our work based upon the background study,

research findings and analysis. In each of the following sections, we draw

conclusions from the work, discuss implications for management, and

recommend a package of management actions and initiatives as a practical

solution. Directions and recommendations for further research are also

prescribed.


68

5.1. Research Question 1 - Agent Selection. A structured and strategic selection process is pivotal, and a strong


used to generate an Agent profile against which all are evaluated. Do

practitioners agree? Are potential Agents evaluated and selected in such a

way? What are the implications for practitioners?

5.1.1. Conclusions. Our background study and research results strongly support the essential

prerequisite of sagacious selection of agents and distributors. However, the

research results show that in the majority if cases this is not implemented. It

has also been identified from the research that if done at all, it is often in an

opportunistic or ad hoc fashion. In many cases the process of selection is

undertaken by inexperienced and poorly qualified managers.

In addition, our research has shown that a strategic business plan for the

development of the overseas market is missing or incomplete and there is a

general lack of understanding as to what is involved in a successful process

and what is expected of the agent.

5.1.2. Implications. The failure to implement a structured and strategic selection process, results

in the principal selecting the wrong agent, one that is incapable or ineffective

in implementing the overseas business development plan. Expectations are

not realised and objectives not achieved. As a result, performance is poor and

well below what is possible and required. Business opportunities are lost,

resulting in lost sales and substantial loss of earnings. The principal will

undoubtedly spend considerably more management time attempting to

resolve the issues. This is a scarce and valuable resource for SME’s and has

a significant knock on opportunity cost.


69

Eventually the relationship between the principal and agent will fail. This then

means that the principal will face costly and damaging termination of the

agreement.

Reputation of the principal, the product and the agent is damaged, potentially

permanently. Opportunities will likely have fallen to the competition, and lost

Customers will have started relationships with other suppliers.

5.1.3. Recommendations. Based on our study of the literature and the survey results it is our

recommendation that the principal search for, and select, Agents and

Distributors utilising a structured selection process. This should be part of a

wider framework for developing high performing overseas alliances.

We present such a framework in Appendix 3, one that incorporates such key

areas as:

• Capable alliance / business development manager.

• Profile the preferred agent against predetermined criteria.

• Profiling Canvas.

• Screening process.

A principal must remember that it is better not to appoint an agent than to

appoint one incorrectly. Legislation is complex and termination very costly.

Therefore, reacting to advances from overseas and appointing agents in an

ad hoc and reactive manner must be avoided. An open and honest appraisal

of why the overseas entry is being considered and what is expected must be

undertaken along with a review of the company’s resources and capabilities in

embarking on the market development.

If the organisational capabilities do not meet the requirements of the strategy,

then those capabilities must first be developed before the strategy is

implemented. This process of developing the resources of the firm was

discussed and shown graphically in Fig. 2.1 on Page 19.


70

5.2. Research Question 2 - High Performing Alliances. Our background study and research determined that a structured and

strategic selection process is a powerful antecedent to a successful and

high performing alliance. These powerful, high performing alliances

commonly exhibit many similar characteristics. A high level of coordinated


establish these key characteristics. Do practitioners agree? Do high levels of

coordinated and joint activities exist? What are the implications for

practitioners?

5.2.1. Conclusions. Respondent practitioners recognised and agreed with the prerequisites for

successful high performing alliances. However, the results also demonstrated

that the recognised and acknowledged ‘best practice’ is not reflected in the

way in which these key principal – agent relationships are established and

managed.

The following key prerequisites for success, that should be competitive

strengths, are in fact significant weakness. This will have serious implications

for alliance development. As with selection, few appeared to be actually

attempting to implement them, or due to resource and capability limitations

were unable to do so.

• Selection of the correct agent

• Effective, professional, capable, supportive alliance manager.

• Creation of mutual trust and loyalty leading to commitment and

motivation to succeed.

• Regular relationship audits or health checks.

• A high level of coordinated effort, joint planning, decision-making and

two way communication.


71

5.2.2. Implications. Even with the correct agent in place, the relationship will be damaged and will

not develop as it should. There is a disconnect between what should be

happening and what needs to be done to make it happen. This will be due to

either selection of the wrong agent, the capabilities of the alliance manager or

both. Characterised by poor communications, poor planning and

implementation, the partners are not working together to develop a strong and

high performing alliance.

It is likely that they will have differing views and objectives (if any) and there

will be significant misunderstanding. Poor sales performance and lower profits

result, along with loss of first mover advantage. Competitors gain the initiative

and competitive advantage from a superior agent selection and management

programme. The reputation of the principal, the product and the agent is

damaged, potentially permanently. Opportunities will likely have fallen to the

competition, and lost Customers will have started relationships with other

suppliers.

5.2.3. Recommendations. Agent selection and management cannot be considered in isolation. It must

be taken in context, as part of the overall strategy of internationalisation and

choice of market entry mode. That requires, first and foremost, a commitment

from senior management and the necessary resources and capabilities to

implement the overseas business development strategy. With this in place,

essential prerequisites to success are:

• A capable alliance manager.

• The correct agent.

• Strategic joint business development plan.

• Coordinated effort, joint planning and decision-making.

• Regular relationship health checks.

We present a Relationship Health Check Framework at Appendix IV.


72

5.3. Research Question 3 - Alliance Manager Capabilities. The building of trust, and its anticipation, will result in commitment to the



managers who have a critical and difficult role to play. Is this recognised and

understood, and do current alliance managers measure up? What are the

implications for practitioners?

5.3.1. Conclusions. The survey questions selected for analysis enabled us to determine the

agents' perception of alliance manager capabilities with some certainty.

Practitioners did agree with the hypothesis relating to mutual trust, loyalty and

the key role of the alliance manage in establishing that trust, and in managing

a strong and successful partnership. It was also very clear that commonly

recognised and acknowledged best practice was not reflected in the

capabilities of the alliance managers.

Generally, alliance managers do not demonstrate the required capabilities,

either through a lack of competency, training and / or experience. Although

respondents did agree that the alliance manager is a key role and that trust,

and its anticipation, will result in commitment to the relationship, loyalty and a

motivation to succeed, the conclusion was that these essential prerequisites

are not just built by the alliance managers, but also by the agents themselves.

Our background study and research results show strong support for the

essential precondition of trust in the relationship, and how it commonly leads

to loyalty and commitment. These characteristics are essential prerequisites

for success, built by alliance managers, who have a critical and difficult role to

play. These complicated principal - agent relationships call for unusual

leadership and management.


73

As we noted in Chapter 2, these leaders are a rare ‘horse of a different

colour’, who should be equipped with a wide range of strengths and

experience, including:

• Experience and confidence in the international business arena.

• Ability to create an environment of trust.

• A broad strategic vision.

• Genuine empathy for others in the relationship.

• Ability to overcome a single company perspective.

• Outstanding communications skills – often across cultural boundaries.

5.3.2. Implications. This is a resource and capabilities issue. The firm must have the capabilities

to implement, and manage the implementation of, the business strategy.

The best product, strategy and agent will mean little if boundary spanning

managers are not of the required standard and capability.

What results is lack of strategic direction, poor agent selection process and

disconnect between strategy and implementation. The manager will have

difficulty in establishing trust and loyalty, both of which are essential for

developing commitment and motivation in the relationship with the agent.

Eventually the relationship between the principal and agent will fail and the

principal will be faced with those costly and damaging termination issues.

Reputation will be damaged, potentially permanently. Opportunities will have

been lost and recovering the initiative and competitive advantage

considerably harder.


74

5.3.3. Recommendations. Based on our study of the literature and the survey results it is apparent that

both principal and agent must recognised and learn to understand the

complicated nature of the alliance and boundary spanning roles. It is

necessary to provide sufficient resource to undertake a professional and

effective search, selection, recruitment and training to ensure a qualified and

capable manager is in place. The correct rewards and incentives package will

also be required to secure such managers.

This is a resource and capabilities issue. A competent and capable business

manager is required for this role. It is a senior management position. As such

they need to not only be involved in, but to determine and drive the overall

process of market entry and planning, search, evaluation and selection of the

agent.

In addition, these key alliance managers in such pivotal positions must be

given the tools and resources necessary to make overseas market entries

successful.


75

5.4. Directions and recommendations for further research SME’s play a key role in the UK economy. They are the innovators, the

entrepreneurs, the creators of new jobs, of economic growth and wealth. They

should be formidable forces in international business, but the majority fail to

fully develop and secure the potential benefits of international trade.

In consideration of this and the benefits that would accrue to businesses and

the economy, further research is recommended, with funding provided by

central and local government organisations (Department of Trade and

Industry, UK Small Business Service and Chambers' of Commerce).

Research across a wider range of businesses is required to determine the full

extent of the problem and identify existing methods of operation that are the

cause of poor performance. The research will also help to determine a best

practice profile.

Based on the research, a generic plan can be drawn up and implemented to

help improve overall performance of UK SME’S in these key areas.

This further research should lead to nationwide initiatives that tackle the

issues and offer a practical solution to SME Management, with subsequent

significant benefits to small business and the UK economy as a whole.

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76

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Appendix I

A1 -

1

Appendix I Research Questionnaire.

Appendix I

A1 -

2

Dear Colleague, Thank you very much for your time, help and support with this study. My name is Phil Tapsell and I am completing a dissertation as part of an MBA with Manchester Business School, UK. The aim of this work is to identify key determinants of successful selection and management in high performing partnerships with overseas agents and distributors. For many British manufacturers of capital equipment, this is a common method of entering and developing international markets. When these relationships are high performing, they are a major source of attractive profits, securing market leadership and business success. The study focuses on three key areas.

1. A logical and structured process of selection significantly improves the likelihood of a successful and high performing relationship.

2. These high performing relationships exhibit general key characteristics.

3. The role of the relationship manager is pivotal. Their ability and characteristics will be key to a successful outcome.

The questionnaire is quick and easy. There are only 18 questions, which should take less than 30 minutes. In addition:

• All completed questionnaires will be confidential. • The term Agent is used for all forms of overseas representation. • Alliance manager is used for the distributor / relationship manager. • A saleable / suitable / competitive product is assumed. • Attractive financial reward and incentives package is also assumed. • Examples of Agent Selection Criteria and Characteristics of high

performing relationships are provided in Tables 1 and 2. • A section is also provided for the addition of any further comments

and observations you care to make. Please return the completed questionnaires to me by whatever method is easiest; email to [email protected] or fax on +44 1675 467111. Many thanks in advance for your help and cooperation. It is much appreciated. Very best regards Phil Tapsell +44 7979 693242 [email protected]

Appendix I

A1 -

3

1. An agent is chosen following professional and structured selection process.

1

Never 2 3 4 5 6

7

Always

Don’t know

2. Manufacturer chooses agent rather than agent choosing manufacturer.

1

Never 2 3 4 5 6

7

Always

Don’t know

3. Predetermined criteria are used in agent evaluation – see examples Table 1.

1

Never 2 3 4 5 6

7

Always

Don’t know

4. A profile of the ‘most suitable agent’ is generated and used to aid selection.

1

Never 2 3 4 5 6

7

Always

Don’t know

5. Manufacturer controls the selection process, in a structured and knowledgeable manner.

1

Never 2 3 4 5 6

7

Always

Don’t know

6. A logical and structured process of selection will significantly improve the likelihood of a successful and high performing relationship.

1

Never 2 3 4 5 6

7

Always

Don’t know

Appendix I

A1 -

4

7. Agents are evaluated and selected by manufacturers using a logical and structured selection process.

1

Never 2 3 4 5 6

7

Always

Don’t know

8. Mutual trust and loyalty are essential prerequisites for commitment, motivation and development of high performing partnerships.

1

Never 2 3 4 5 6

7

Always

Don’t know

9. Trust and loyalty should be created by the alliance managers.

1

Never 2 3 4 5 6

7

Always

Don’t know

10. Alliance managers are effective, professional, supportive and capable.

1

Never 2 3 4 5 6

7

Always

Don’t know

11. Manufacturer recognises critical role of alliance manager, key requirements of position and appoints person accordingly.

1

Never 2 3 4 5 6

7

Always

Don’t know

12. Powerful, high performing partnerships exhibit many similar characteristics. See examples Table 2.

1

Never 2 3 4 5 6

7

Always

Don’t know

Appendix I

A1 -

5

13. High level of coordinated effort, joint planning, decision-making and communication exists between partners to establish these key characteristics.

1

Never 2 3 4 5 6

7

Always

Don’t know

14. Agent appoints in house product champion to coordinate business activities with manufacturer.

1

Never 2 3 4 5 6

7

Always

Don’t know

15. Agent’s Product champion is actually selected based on capability.

1

Never 2 3 4 5 6

7

Always

Don’t know

16. Manufacturer knows, understands and recognises the importance of characteristics in high performing relationships (Table 2).

1

Never 2 3 4 5 6

7

Always

Don’t know

17. Agent knows, understands and recognises the importance of characteristics in high performing relationships (Table 2).

1

Never 2 3 4 5 6

7

Always

Don’t know

18. Regular “relationship audits” are undertaken together to improve overall performance and conditions for success.

1

Never 2 3 4 5 6

7

Always

Don’t know

Appendix I

A1 -

6

Table 1. Agent Selection Criteria

• Market knowledge & coverage

• Product & applications knowledge

• Technical advice and service

• Enthusiasm, hunger to succeed, growth minded

• Separate marketing plan for principal.

• Will appoint full time product champion.

• Significant resources committed to develop principal’s business.

• Quality of the management team.

• Ability to formulate and implement longer-term marketing plans.

• Quality of sales force, experience / track record with target customers.

• Frequency of sales calls

• Personal feel, match, strategic fit.

• Character, reputation, integrity

• Market share & standing.

• Number of other principals.

• Quality & type of other representations.

• Financial control – cash flow and customer credit etc.

• Track record with other principals


• Suitably located within territory

• National and cultural differences can be overcome

• Suitable physical facilities.


• Business development credentials

• Relationships with competitors – potential competitors.

• Communicate in local language


Appendix I

A1 -

7

Table 2. Characteristics of high performing relationships

• Quality, reliability, suitability, saleability of product.


• Commitment and motivation secured through creation of trust and loyalty.



• Exclusivity, and no blocked accounts.

• Give most complete responsibility, authority and confidence to agent.


• Establish and adhere to set of agreed rules, guidelines, and objectives.



• Full sharing and trustworthy exchange of, sometimes sensitive,

information

• Active, professional, structured, continuous programme of personnel

training.

• View agent as valuable resource - success in market where principal

cannot.


• Do not take advantage of partners.

• Share profits – and do not squeeze margins.

• Take a holistic view of the whole partnership

• Recognise and appreciate mutual benefits.


• Deep understanding, and show genuine interest in, the agent's business.


• High standards of corporate values and ethics; agents of a similar

standing.

• Expectation of, and commitment to, long-term mutually beneficial

business relationship.

Appendix II

A2 -

1

Appendix II Sample of Research Target Companies.

CONFIDENTIAL

Appendix II Target Research Sample

Name Address Country RespondedI.M.S. LLC 2504 Abbey Court, USA Yes

Alpharetta,Georgia,GA30004Tel: 770 751 6009Fax: 770 772 0915

Slice Pack Australia Pty. Ltd. 18 Fairway Drive Australia YesSafety Beach Vic 3936Tel [61] [email protected]

Pemberton & Associates Inc. 3610 Nashua Drive Canada Yes Mississauga

OntarioL4V 1X9 [1] 905-678-8900[1] 905-678-8989www.pemcom.com

Meyn Food Processing Technology Noordeinde 68 Netherlands Yes1511 AE OostzaanTel: 00 31 75684 3355Web: www.meyn.nl

HJM Denmark Sylvestervej 36 Danmark YesDK - 6710Esbjerg VTel: +45 70 22 35 85

HJM AB Sweden Akerivagen 6 Sweden NoSE - 24138EslovTel: +46 413 16000

HJM Norway Makeveien 12 Norway YesN - 7650 VerdalTel: +47 74 07 14 15Fax:+47 74 07 97 17www.hjmnorge.com

Scanz Technologies Ltd PO Box 26 - 148 New Zealand YesEpsomAuckland 3Tel: 64 9 520 2544Fax:64 9 520 4023

R.A.Y. Buechler 38 Ha'Bannay Street Israel NoHolonTel: [972] 3550 8788E Mail: [email protected]


ScreenTec Inspection & Systems Bosschebaan 66 Netherlands No5384 VZ Heesch00 31 412 47 52 [email protected]

SB Impianti Milan Italy [email protected]

Havel Ges mbh Haupstrabe 4 Austria NoA-2540Bad VoslauTel: +43-2252-73581Fax: +43-2252-73583

PVBA Ergonomy SPRL Zoning Iindustriel Belgium NoAvenue Du Commerce 47850 EngheinTel: 00-32-2-395-3558Fax: 00-322-395-5859

S.G. Nieminen Box 15 Finland NoNihtisillankuja 6Fin 02631EspooTel: +358-9-502-811

Elcowa S.A. 16. Rue Jules Siegfried France NoBP 2476F-68057 Mulhouse CedexTel: 00-33-89-435458Fax: 00-33-89-428550

A.Fredslund Pedesen L.S. P.O. Box 229 Denmark YesTopstykket 7Dk-3460 BirkerodTel: 0045-45-822800Fax: 0045-45-822050

Tecno Europa Elettromeccancia S.R.L. Italy YesVia Campanini 11/A43100 ParmaTel: +39-0521-78861Fax: +39-0521-272914

Svenska Allen Box 2031, Sweden NoSE-128 21 SkarpnackBesok: Flygfaltsgatan 8 ATel: +46-8-724-01-95

ProcessTek a.s Storgaten 2 Norway NoN-3210 SandefjordTel: +47-33-45-24-37


AnyPack Packaging Machinery Inc. 3610 Bonneville Place Canada YesUnit #8Vancouver, British ColumbiaV3N 4T7Tel: (604) 421-8008Fax: (604) 421-8260

Pro Pack 2345 Wyecroft Road Canada YesUnit 2 & 3Oakville, OntarioL6L 6L8Tel: (905) 469-3337

Techno Pak 2150, Rue Bombardier Canada NoSaint-Julie, QuebecJ3E 2J9Tel: (450) 922-3122Fax: (450) 922-3422

Union Wrap Cep 05588-001 Brazil NoSao Paulo SP BrazilTel: 55-11-3735-2155Fax: 55-11-3735-2155

J L Lennard Pty Ltd 937 - 941 Victoria Road Australia YesWest RydeNSW 2114AustraliaTel: 61-2-9807-7200Fax: 61-2-9807-7300

KSL Packaging 47 A Kenepuru Drive New Zealand YesP.O. Box 50 595PoriruaTel: 64-4-237-9387Fax: 64-4-237-5905

Israpack Ltd. 19 Tchernikowski Str. Israel NoPO Box 9810Haifa 31097Tel: +972-4-8338306Fax: +972-4-8336136

CBS Engineering Group 48 Wharf Road New Zealand No(PO Box 45032)Te Atatu PeninsulaAuckland

Mundipak BV P.O. Box 18 Holland Yes2180 AA Hillegom00 31 252 531030


Profcon APS Osterbro 6 Denmark No5000 Odense CTel00 45 65 912013Fax00 45 66 133950

Thomeko OY Post Box 36 Finland NoAsentajankatus 5SF 00881 Helsinki00 358 9 584 200

Nicolas Prompt 120, rue Jean Jaures France Yes92300 Levallois-PerretTel00 33 147 562017

Klaus-Friedl Salein Vahrenwalder Str. 269A Germany YesD-30179 HanoverTel0049 511 9666811

Europack S.P. 351 Patission Street Greece NoGR 11141 AthensTel00 30 1 2025575

Mundipak BV P.O. Box 18 Holland No2180 AA HillegomTel00 31 252 531030

Sew Access (Far East) Ltd Unit 1226A Hong Kong No1 Trademart DriveKowloon BayKowloonTel00 852 2345 6780

Peter Miller Limited Western Parkway Business Ireland YesLower Ballymount RoadDublin 12EireTel00 353 1 456 7855

Elpack Packaging Systems Ltd 37 Haela St industrial Zone Israel YesEven Yehuda 40500Tel00 972 9 8998490


Cicrespi Spa Via Trieste 11 Italy Yes20060 [email protected] 3902 957541

CBM Co Ltd 3 29 16 Waseda Japan NoMisato CitySaitama 341Tel00 81 489 59 1561

Mundipak BV P.O. Box 18 Luxembourg No2180 AA HillegomHollandTel00 31 252 531030

Pesaje Y Control S.A. de C.V. (IPC) Carlos Septien Garcia No. 29 Mexico NoCol. Cimatario C.P. 76030Queretaro, QRO.Tel00 52 4214 1142

CBS Engineering Group 48 Wharf Road New Zealand No(PO Box 45032)Te Atatu PeninsulaAucklandTel00 632 634 2506

Dynatec AS Lovestad Industrifelt Norway No1820 SpydebergTel00 4769 8380 10

Systempack Inc Unit 1905 Philippines NoGalleria Corporate CentreEdsa CornerOrtigas AveQuezon CityTel00 64 (649) 834 7139

Food Machines Z.o.o. UL. Ustanow Poland No05-540 Zalesie GorneTel00 48 22 757 88 37


Comexpo Calc De tapada 129 Portugal NoR/C DTO1300 LisboaTel00 351 1 361 6450

JPAK PO Box 14221 South Africa YesWadeville1422Tel00 27 11 827 5703

L E Jackson S.L. Traversa De Garcia Spain Yes18-2060-2A Box 50308021 BarcelonaTel00 34 93 2003966

Witronic Sarl 24 Ch. Des Plateires Switzerland YesCase Postale 1421009 PullyTel00 41 21 7298646

Atomika Saglik Sok 19/14 Turkey NoSihhiyaAnkara

Johann Laska U. Söhne GmbH & Co Holzstraße 4 Austria NoLinz A-4021Tel: +43 (0) 732 7732 110

Loma Systems s.r.o. U Lomy 1069, 334 41 Czech RepublicNoDobranyTel: +420 377 183811

DAVI Thomas Helsteds Vej 9 Denmark Yes8660 SkanderborgDenmarkTel: +45 (0) 8652 1411Fax: +45 (0) 8652 1488Email: [email protected]: www.davi1.dk

Loma Systems 120 rue Jean Jaurès France No92300 Levallois PerretTel: +33 1 55 69 57 78

Sermatec F-50290 Coudeville France NoMancheTel: +33 (0) 2 33 91 12 00Fax: +33 (0) 2 33 51 51 84


Vahren Walder Straße 269 A Germany Yes30179 HannoverTel: +49 (0) 511 9666 811Fax: +49 (0) 511 9666 812

Geopack Ltd. 5 Irinis Ave, & Psarron Greece Yes182 33 Agios Ioannis RentisAthensTel: +30 (0) 210 341 8300Fax: +30 (0) 210 341 8301

PEAMI 47 Naxou St. Greece NoGalatsi111 46 AthensTel: +30 (0) 210 2135 690Fax: +30 (0) 210 2920 709

PM Tech NahrungsmittelindustriebedarfAustria NoVertriebs GmbH & Co KG.Schoeffelgasse 60/8Tel: +43 1 470 79 59Fax: +43 1 470 81 28

Buklin Kft. Timar u.34 Hungary NoBudapest H-1034Tel: +36 (0)1 387 6087Fax: +36 (0)1 388 1550

Victus Hungaria Elelmiszeripari Kft. Jedlik Anyos utca 24 Hungary NoDunaharaszti H-2330Tel: +36 (0)24 520 194Fax: +36 (0)24 520 191

Eltak Limited Sídumúla 13 Iceland No108 ReykjavikTel: +354 (0) 5882122Fax: +354 (0) 5889839Email: [email protected]: www.eltak.is

QPM Ltd. Robinhood Business Park Ireland NoRobinhood RoadDublin 22Tel: +353 (0) 1 450 2421

A.M.D. Electronic S.R.L. Piazzale Martesana, 10 Italy No20128 MilanoTel: +39 022 600 5314Fax: +39 022 570 6777

Ruud Gruijters Panovenweg 22 Netherlands Yes5708 HR HelmondTel: +31 (0) 492 573573Fax: +31 (0) 492 573570


Nordic Supply System AS 6260 Skodje/Aalesund Norway NoTel: +47 70 24 45 00Fax: +47 70 24 45 19

AURUM Food Processing Equipment ul. Malej Laki 1 m.8 Poland No02-793 WarsawTel: +48 22 649 06 08Fax: +48 22 649 06 08

J M Alvarinho Sociedade Unipessoal Travessa de Macau, LT4, 2oEPortugal NoMurtal2775 - 120 ParedeTel: +351 214 536 158Fax: +351 214 531 309

FILUET CIS - Engineering Division 5 Bolshoi Rezevsky Pr. Russia NoMoscow 121069Tel: 7-095-202-25-57

Varpe Control De Peso S.A. C/. Osona, 21 Spain YesPol. Can Casablancas08192 Sant Quirze Del VallesBarcelonaTel: +34 93 721 52 51Fax: + 34 93 721 66 14

AB Broderne Herrmann Tjarhovsgatan 8A Sweden YesS-11621 StockholmTel: +46 8 34 98 40Fax: +46 8 34 60 71

Bruno Gubler GmbH Industriestr 23 Switzerland NoOberentfeldenCH-5036Tel: +41 62 737 17 00Fax: +41 62 737 17 07

Tamay Dis Ticaret Ltd Sirketi Bayer Caddesi Gulbahar Turkey NoPerdemsac Plaza Kat 2KozyatagiIstanbulTel: +90 (0)216 380 3010Fax: +90 (0)216 380 0600

Appendix III

A3 -

1

Appendix III Agent Selection Framework

Appendix III

A3 -

2

Internationalisation

Process

Managerial Capability & Commitment

Saleable / Competitive Product

Triggers to internationalisation

Strategic International Business Plan

Expectations and Objectives

Market Entry Mode Selection

Alliance Manager Capabilities

Agent Selection Alliance

Selection Criteria

Agent Profiling

Evaluation

Selection

Search

Selected Mode - Agents

Screening

Trust & Loyalty

Commitment & Motivation

Relational Success Factors

Coordinated Effort

Joint Planning & Decision Making

Communications

Introduction. It is essential that the correct agent be identified and appointed.

Regardless of the size of the market, the agent or distributor will be

responsible for developing that market and in achieving the objectives set

as part of the market entry strategy.

The agent selection process is a difficult, complex and resource

consuming task. Getting it right for the organisation will pay dividends in

the future.

The whole process of selection must be considered within the context of

the wider strategic business plan and internationalisation process. See Fig

A3.1. A Framework for High Performing Overseas Alliances.

Figure A3.1 A Framework for High Performing Overseas Alliances. Source: Author’s Construct.

Appendix III

A3 -

3

Agent Search, Screening and Selection Model. The aim of the screening process is to reduce the initial listing of

companies to a shortlist of up to five with whom discussions can be

opened. The second screening would take place in the territory itself. See

Fig A3.2

Evaluation and screening of candidates must be undertaken in a

structured manner. The use of an Agent Profile is an excellent tool as part

of this process.

Search. The key to selecting the best agent for a market is having a quality list of

potential candidates. The internet now offers such a simplistic mode of

search for potential candidates that structure and logic are even more

important than before. There are numerous methods of search, and the

internet has made the process easier and harder at the same time. It is

easier to find potential candidates. Unfortunately it is now often a case of

too much information and unless a structured process is used in the

search you run the risk of being overwhelmed with numbers of candidates.

Potential information sources are listed in Table A3.1.

Agent Profiling. The agent profile will detail the outline of the “most suitable agent”. This

profile will be based on a number of key selection and strategic criteria. A

list of agent selection criteria is provided in Table A3. 2.

By creating a profile that consists of (for example) ten key points, each

potential candidate can be evaluated and compared in an objective

manner. This adds much needed structure and speed to the initial search

and screening process.

Appendix III

A3 -

4

Information sources for potential agents. Government (DTI) Sources

National and local business

organisations

European Government / business

sources

Other exporters of non competing

products

Competitor web sites - agent listings.

Exhibitions / Trade shows / Conferences

Catalogues.

Internet / WWW

Yellow Pages / Telephone Directories.

Country files from Government web sites.

Consultants

Trade Missions

Personal recommendation from

customers.

Country visits and local searches.

Trade Associations

Chambers of Commerce

Table A3.1. Potential information sources during agent search process. Source: Author’s Construct.

Agent Selection Criteria Harder / Tangible

• Market knowledge & coverage.

• Product & applications knowledge.

• Track record and reputation.

• Full time product champion.

• Business development plan for

principal.

• Experience with similar products.

• Enthusiasm for contract.


• Fit with, and number of, other

Principals.

• Location and facilities.

• Frequency and standard of sales calls.

• Financial control- cash flow, credit, etc.

• Technical and service support

function.

• Communicate in local language.

Softer / Intangible

• Personal feel and strategic fit.

• Character and integrity.

• Trust, loyalty, commitment,

motivation.

• Ethical considerations.

• Hunger to succeed; growth minded.

• Capability and quality of key

personnel.

• National and cultural differences.

• Business development credentials.

• Planning, coordination,

communication.


• Quality of sales force.

• Experience with target customers


Table A3.2 Agent Selection Criteria. Source: Author’s Construct.

Appendix III

A3 -

5

Agent Search, Screening and Selection Model

First Screening Desk Based Research

Determine best fitswith profile

Investigate Key Criteria

Candidate Short-list

Search Desk Based Research

List of candidate companies

Agent / Distributor Company

Information sources. Table 2

Predetermined Key Selection Criteria

Table 1

Evaluate candidates. Rating against criteria

Scoring system Rankings

Generate Agent Profile

Second Screening Visit to Candidates

Evaluation & Selection

Impressions Facilities

Key Personnel

Satisfy criteria? Fit Profile?

Key success factors? Table 3

References Reputation Activities

First Screening The objective of this first screening process is to generate a short list of up

to five candidates with whom discussions can be started. During this

evaluation, attention should be given to the agent profile and selection

criteria as previously determined.

At this stage the objective is more to identify agents who most closely fit

the best profile, rather than eliminating those that don’t.

Other areas worthy of consideration are:

• Financial status

• Number of principals – beware agency collectors!

• Reputation and performance with other principals’ products.

• Candidate’s current product range – any similarities with your own.

You are searching for the top five outstanding candidates.

Fig A3.2 Agent Search, Screening and Selection Model. Source: Author’s Construct.

Appendix III

A3 -

6

Second Screening This second process should take place in the territory, preferably during

visits to the candidates’ premises.

It is often useful to go back and review scoring and evaluation. Also, take

into account the key determinants of success in Table A4.1 and the impact

of trust, loyalty, etc. Now that you have met the key people and had a

chance to spend some time with them, would this relationship work? How

does it feel? What is the dynamic like?

Many of these aspects are very intangible and you may rely on feel and

“gut” to a large extent. However, the key selection criteria and ratings

against each of these can still help bring structure and objectivity to the

process.

Key aspects drawn from research data that determined success or failure

concerned:

• Trust and Loyalty – can this be created in the relationship?

• Agent’s product champion – will they have one and what is he like?

• Strategic market development plan – is this agent capable of

successfully implementing such a plan?

Other areas worth considering:

• How long have they been established.

• What are the physical facilities like – offices, warehouses.

• What is the size of staff – how many sales people.

• Do they have other British principals. What type of principals are these.

• What back up and technical services are offered.

• How do they promote the product ranges.

• Will they put together sales and marketing plan for your product.

• How do they sell products.

• What training will be required.

Appendix III

A3 -

7

• How extensive is candidates knowledge of market and customers.

• How extensive is candidate’s knowledge of competitors.

• What is their relationship with your competitors.

• What is the forecast for growth.

• Do they have ideas for product development.

Final Thoughts:

• Make an informed choice.

• Prepare for meetings.

• Avoid making a rash decision.

• Reflect and consider before making a decision.

Appendix IV

A.4 -

1

Appendix IV Relationship Health Check Framework

Appendix IV

A.4 -

2

Introduction. The health check tool can be utilised at any time to highlight areas of the

relationship that are not being managed in a manner most likely to result

in strong performance and success.

Our research survey highlighted clear gaps between the way practitioners

felt relationships should be managed, and the way in which they

commonly were managed. The simplest and most effective way to identify

the key areas that need to be addressed is through visualisation using a

profiling canvas. We propose a two stage analysis.

Phase One – Actual Relationship Profile v Best Practice. Analysis of research data identified that the response to the following

survey questions (inputs) showed a tight correlation to high performing

partnerships (output):

• Alliance managers are effective, professional, supportive and

capable.

• Manufacturer recognises critical role of alliance manager, key


• High level of coordinated effort, joint planning, decision-making and


• Agent appoints in house product champion to coordinate business

activities with manufacturer.

• Agent’s Product champion is actually selected based on capability.

• Manufacturer knows, understands and recognises the importance of


• Agent knows, understands and recognises the importance of


• Regular “relationship audits” are undertaken together to improve

overall performance and conditions for success.

Appendix IV

A.4 -

3

Using the ranking of 1 (Never) to 7 (Always), the best practice profile

generated during our research is shown in Fig A4.1. Against this the

actual scores can be compared, gaps identified and analysed, and actions

taken to close them.

This requires both partners to take a realistic and objective view of the

relationship and be prepared to recognise and address issues.

In many cases due to the close personal relationships that may have

developed, this is not an easy task to undertake and often requires the

involvement of outside observers.

1

2

3

4

5

6

7

10 11 13 14 15 16 17 18

Key Criteria

Scor

e

Best Practice Profile Actual Score Figure A4.1 Best Practice Profile Source: Author’s Construct.

Appendix IV

A.4 -

4

Phase Two - Characteristics of High Performing Relationships. Table A4.1 lists key characteristics of successful partnerships between

manufacturer and overseas representatives. In analysing the relationship

against these key determinants of success, phase 2 of the process

considers the potential creators of the gaps identified during profiling

phase 1. The same profiling technique should be used to identify areas of

weaknesses in the partnership. This is best achieved by gathering all key

personnel in the relationship together, discussing each point in the table

before agreeing a prioritised action plan to address areas of weakness.

Characteristics of High Performing Relationships • Quality, reliability, suitability, saleability of product.



• Exclusivity. No blocked accounts. Agent has responsibility, authority and

confidence.


• Establish / adhere to set of mutually agreed ground rules, guidelines, and

objectives.


• Active, professional, structured, continuous programme of personnel training.



• Commitment and motivation secured through development of trust and loyalty.


• Full sharing and trustworthy exchange of, sometimes sensitive, information

• Do not take advantage of partners. Share profits – and do not squeeze margins.

• View agent as valuable resource, achieving success where principal alone cannot.

• Take a holistic view of the partnership. Recognise and appreciate mutual benefits.


• Gain a deep understanding of, and show genuine interest in, the agent's business.


• High standards of corporate values and ethics, and agents of a similar standing.

• Expectation of, and commitment to, long-term mutually beneficial relationship.

Table A4.1. Characteristics of High Performing Relationships. Source: Author’s Construct.

Appendix V

A5 -

1

Appendix V Literature Search Methodology.

Appendix V

A5 -

2

As part of our exploratory research, an extensive review of literature was

undertaken. This enabled us to position this work with previously published

works. The aim was to put the work in context and identify theoretical

frameworks involved. Taken initially from the wider perspective of agents as a

means of overseas market entry for SME’s, the general problems and lack of

success experienced, the work then concentrated on what emerged as two

key determinants of the success or failure of such relationships: the selection

process and management.

Text books covering the wider subject areas of sales, marketing, international

business, strategy, business strategy, management skills, human resource

management and implications of managing across national, international and

cultural boundaries were reviewed (Donaldson 1998,Grant 2002, Hickson and

Pugh 2001, Hill 2005, Huczynski and Buchanan 2001, Jobber 2001, Kanter

1994, Porter 1985).

Additional sources referenced within these texts were accessed using on line

and electronic student resources, such as Athens / WWW./ ABI / INFORM /

EBSCO host.

Internationally renowned business management journals were searched;

Harvard Business Review; Sloan Management Review; Journal of personal

selling and sales management; Industrial Marketing Management; Journal of

international business studies; Industrial marketing; Journal of marketing;

European journal of marketing; Quarterly review of marketing; Industrial

marketing digest. These were searched using site search engines; typically

"search within this publication".

Key words: distributor, agents, selection of, management of, overseas

representation, selection of, management of, export; internationalisation;

overseas market entry / methods; SME; distribution channel.

Appendix V

A5 -

3

The extensive listing of works was sorted by relevance, the determination of

which was based on a review of abstract, introduction and executive

summary. Many of these works contained useful and relevant references.

These were also reviewed to identify common themes and referenced

authors. The full literature listing is attached with this Appendix.

White (2000) discusses primary and secondary sources of business and

management information, as part of the literature review. We have used such

documentary secondary data sources as academic journals, textbooks,

bibliographies, government publications (DTI), theses and trade literature.

Non-book primary sources of data, in the form of people and organisations,

proved to be of significant value in this work. Kotler and Armstrong (1994)

posit that primary data is collected to answer the specific research questions.

For us this was through use of questionnaires, personal and telephone

interviews. The benefits of interviewing were extensive. Interviewees

contributed with knowledge, experience, interaction, memories, thoughts,

ideas and feelings. (Mason 1996).

Appendix V Literature Listing

Title Author Year File LinkSelection and motivation of industrial distributors: A comparative analysis Abratt & Pitt 1989 PAPERS\Abratt & Pitt.PDFLittle time for management theory London 2006 PAPERS\FT article.doc

A Model of Distributor Firm and Manufacturer Firn Working PartnershipsAnderson and

Narus 1990 PAPERS\Anderson & Narus.pdf

Internationalisation of SME'sGustavsson and

Lundgren 2006 sme internationalisation.pdfEstablishing a Foreign Distributor and Agent Network Damon 1984 PAPERS\Damon.pdfThe Internationalisation Process. SME case study Goldkuhl 2000 PAPERS\Goldkuhl.pdfAn Exporter's Guide to Selecting Foreign Sales Agents and Distributors Clasen 1991 PAPERS\Klasen.docJoint effects of factors affecting exchanges between exporters and their foreign intermediaries: An exploratory study Lee 2003 PAPERS\Lee.pdf

Rethinking Distribution: Adaptive ChannelsAnderson and

Narus 1996 PAPERS\Anderson & Narus 3.pdf

Strengthen distributor performance through channel positioningAnderson and


Distributior contributions to partnerships with manufacturers.Anderson and


Turn your industrial distributors into partnersAnderson and

Narus 1986 PAPERS\Anderson & Narus 7.PDFSeven rules of international distribution Arnold 2000 PAPERS\Arnold.pdf

Trust And Performance In Cross-Border Marketing Partnerships: A Behavioural Approach

Aulakh, Preet S. and Masaaki

Kotabe 1996 PAPERS\Aulakh, Kotabe & Sahay.pdfAgency relationships in marketing: a review of the implications and applications of agency and related theories

Bergen, Dutta and Walker 1992 PAPERS\Bergen, Dutta & Walker.pdf

Selecting foreign distributors. An expert systems approach.Carvusgil, Yeoh &

Mitri 1995 PAPERS\Cavusgil, Yeoh & Mitri.pdf

Between Trust And Control: Developing Confidence In Partner Cooperation in Alliances Das and Teng 1998 PAPERS\Das & Bing-Sheng.pdfExploring Strategies for Companies that Use Manufacturers’ Representatives As Their Sales Force Dishman 1999 PAPERS\Dishman P.pdfMaking strategic aliances succeed. The importance of trust Ellis 1996 PAPERS\Ellis.pdfMake Your Dealers Your Partners Fites 1996 PAPERS\Fites.pdfInternational distributor and the role of US top management: a requirement for export com Fram and Ajami 1994 PAPERS\Fram & Ajami.pdf


Organizing and Managing Channels of Distribution Frazier 1999 PAPERS\Frazier.pdf

The determinants of commitment in the distributor–manufacturer relationshipGoodman and

Dion 2001 PAPERS\Goodman & Dion.pdf

Industrial distridutors - when, who and how?Hlavacek & McCuistion 1983 PAPERS\Hlavacek & McCuistion.PDF

Business networks and cooperation in international business relationships.Holm, Eriksson &

Johanson 1996 PAPERS\Holm, Eriksson & Johanson.pdf

Industrial Performance Group (2004a), “Executive Summary 1

Industrial Performance

Group 2004 PAPERS\execsum1.pdf

Industrial Performance Group (2004b), “Executive Summary 2



Industrial Performance Group (2004c), “Executive Summary 3



Industrial Performance Group (2004c), “Executive Summary 4



Beyond Vertical Integration-The Rise of the Value-Adding PartnershipJohnston and

Lawrence 1998 PAPERS\Johnston & Lawrence.pdf

How industrial distributors view distributor - supplier partnership arrangements.Joseph, Gardner, Tharch & Vernon 1995

PAPERS\Joseph, Gardner, Tharch & Vernon.pdf

Distribution channel relationships in diverse cultures Kale & McIntyre 1991Collaborative advantage Kanter 1994 PAPERS\Kanter.pdfOn distributor commitment in marketing channels for industrial products: contrast between the United States and Japan Keysuk & Changho 2002 PAPERS\Kim & Oh.pdfSuccessful Export Marketing Management: Some empirical evidence. Koed Madsen 1988 PAPERS\Koed Madsen.pdfThe Power of Trust in Manufacturer-Retailer Relationships Kumar 1996 PAPERS\Kumar.pdfStrategy and control in supplier-distributor relationships: An agencyperspective. Lassar & Kerr 1996 PAPERS\Lassar & Kerr.pdfA conceptual model for building and maintaining relationships between manufacturers' representatives and their principals. McQuiston 2001 PAPERS\McQuiston.pdfThe Commitment-Trust Theory of Relationship Marketing Morgan and Hunt 1994 PAPERS\Morgan & Hunt.pdf

Sales management as an entrepreneurial activityMorris, Avila,

Teeple 1990 PAPERS\Morris, Avila, Teeple.pdf


Relationship Marketing and Distribution Channels: Exploring Fundamental Issues Nevin 1995 PAPERS\Nevin.pdfMotivating independent distribution channel members Rosenbloom 1978 PAPERS\Rosenbloom.pdfManufacturer-Overseas Distributor Relations and Export Performance Rosson & Ford 1982 PAPERS\Rosson & Ford.pdf

Selection and motivation of distribution intermediaries Shipley 1984

PAPERS\Shipley Selection and motivation of distribution intermediaries.pdf

What British distributors dislike about manufacturers Shipley 1987

PAPERS\Shipley, What British distributors dislike about manufacturers.pdf

Recruitment, motivation, training and evaluation of overseas distributors.Shipley, Cook,

Barnett PAPERS\Shipley, Cook, Barnett.pdfThe manufacturer's agent in industrial distribution Sibley & Teas 1979 PAPERS\Sibley & Teas.pdf

Drivers of superior importer performance in cross-cultural supplier–reseller relationshipsSkarmeas and

Katsikeas 2001 PAPERS\Skarmeas & Katsikeas.pdf

An analysis of the significance of trust and trust developing drivers for more effectively managing industrial distribution channels in Germany, Italy, Netherlands and the UK

Sturman & Hanmer-Lloyd 2004 PAPERS\Sturman & Hanmer-Lloyd.pdf

The Role of the Industrial Distributor Webster 1976Relationship Marketing and Distribution Channels Weitz & Jap 1995 PAPERS\Weitz & Jap.pdfManufacturer governance of foreign distributor relationships: do relational norms enhance competitiveness in the export market?

Zhang, Cavusgil & Roath 2003 PAPERS\Zhang, Cavusgil & Roath.pdf

Industrial distributor selling: The roles of outside and inside salesAnderson and

Narus 1986 PAPERS\Anderson & Narus 6.pdf‘The relational view: cooperative strategy and sources of interorganizational competitive advantages Dyer and Singh 1998 PAPERS\Dyer & Singh.pdfDeveloping a manufacturer - distributor information partnership Reddy & Marvin 1986 PAPERS\Reddy & Marvin.pdf

Foreign market entry strategies Walvoord 1983 PAPERS\Walvoord Market selection.pdfPerceptions of the industrial distributor Webster 1975 PAPERS\Webster.pdf

Business Mating; Who chooses whom and gets chosen?Wilkinson, Freytag,

Young & Chery 2003PAPERS\Wilkinson, Freytag, Young & Chery.pdf

Partnering as a focused market strategyAnderson and


The Dynamics of Long-Term Business-to-Business Exchange RelationshipsDabolkar, Johnson

& Cathay 1994PAPERS\Dabolkar, Johnson & Cathay.pdf


Collaborate with your competitors - and winHamel, Doz &

Prahalad 1989 PAPERS\Hamel, Doz & Prahalad.pdfSmall Businesses and Exporting: A literature review Miesenbock PAPERS\Miesenbock.pdf

Industrial distributors. Can they survive in the new economy?Mudambi & Aggarwal 2001 PAPERS\Mudambi & Aggarwal.pdf

The global logic of strategic alliances Ohmae 1989 PAPERS\Ohmae.pdf

A conceptual framework of relational governance in foreign distributor relationshipsRoath, Miller and

Cavusgil 2002Problems confronting British Industrial Distributors Shipley 1986 PAPERS\Shipley.pdfInternational Market entry and expansion via independent or integrated channels of distribution.

Anderson & Coughlan 1987 PAPERS\Anderson & Coughlan.pdf

The impact of export strategy on export sales performanceCooper &

Kleinschmidt 1985 PAPERS\Cooper & Kleinschmidt.pdf

An eclectic theory of the choice of international entry mode.Hill, Hwang &

Chan Kim 1990 PAPERS\Hill, Hwang & Chan Kim.pdfThe impact of level of company export development on exercised power in relationships between manufacturers and overseas distributors.

Kaleka, Piercy, Katsikeas 1997 PAPERS\Kaleka, Piercy, Katsikeas.PDF

International marketing effectiveness of technology oriented small firmsKirpalani & Macintosh 1980 PAPERS\Kirpalani & Macintosh.pdf

Key problems facing industrial distributorsNarus, Reddy,

Pinchak 1984 PAPERS\Narus, Reddy, Pinchak.pdf

Market entry modes and channels of distribution in the UK machine tool industryWheeler, Jones,

Young 1995 PAPERS\Wheeler, Jones, Young.pdfIndustrial buying in high tech markets Abratt 1986 PAPERS\Abratt.pdfAn attempted integration of the literature on the export behaviour of firms Bilkey 1976 PAPERS\Bilkey.pdfNew Selling Methods Are Changing Industrial Sales Management Cardozo & Shipp 1987 PAPERS\Cardozo & Shipp.pdfSpecialized supplier networks as a source of competitive advantage: evidence from the auto industry Dyer 1996 PAPERS\Dyer.pdfOrganizing the overseas salesforce: How Multinationals do it. Hill & Still 1990 PAPERS\Hill & Still.pdfDifferences between small and medium sized exporting and non exporting firms: Nature or nurture. Keng & Jiuan 1988 PAPERS\Keng & Jiuan.pdfSalesforce performance and behaviour-based management processes in business to business sales organizations.

Piercy, Cravens, Morgan 1996 PAPERS\Piercy, Cravens, Morgan.pdf

Industrial salesforce motivation and herzberg's dual factor theory: A UK perspective Shipley & Kiely 1986 PAPERS\Shipley & Kiely 2.pdfMotivation and dissatisfaction of industrial salespeople - how relevant is Herzberg's theory? Shipley & Kiely 1988 PAPERS\Shipley & Kiely.pdf


How to design sales territories Talley 1961 PAPERS\Talley.pdfIndustrial salespeople's views on motivation Winer & Schiff 1980 PAPERS\Winer & Schiff.pdfA empirical study of the differences between small exporting and non exporting US firms. Yaprak 1985 PAPERS\Yaprak.pdf

The adoption of export as an innovative strategyYoung-Lee &

Brasch 1978 PAPERS\Young-Lee & Brasch.pdfThe MBA Handbook. Study skills for post graduate management study Cameron 2001Sales Management Theory and Practice Donaldson 1998Contemporary Strategy Analysis Grant 2002Management Worldwide: Distinctive Styles Amid Globalization Hickson & Pugh 2001International Business: Competing in the Global Marketplace Hill 2005Principles and Practice of Marketing Jobber 2001

Research Methods for Business StudentsSaunders, Lewis &

Thornhill 2002Dissertation Skills: For Business and Management Students White 2003

p_tapsell_0290197_disssertation

Documents

business administration

candidate date

overall business success

key success factors

degree of master

exceptional business

uk smes

management of overseas