Good management of foreign partners, whether they are agents, distributors or importers, is a key factor to guarantee the success of your company in an international environment. A very careful selection of partners, good managing of the negotiation process, ongoing training and support, proactive actions and appropriate controls are some of the key factors that ensure a fruitful relationship. We are all well aware of the theory. However, following these key steps is often far more complicated due to the geographic, psychological, cultural, logistic and economical barriers that exist on a daily business relationship.
What are some of the most common mistakes that we make when managing our international partner?
1. We choose the wrong market entry strategy. What is better for us, a sales representative or a distributor? Do we want to sell directly or indirectly to our customers? Market entry in each foreign market is different: for instance, our sales model for France will not work for Algeria.
2. In the selection process we are not thorough and careful enough. When engaging in foreign market entry, companies often sign contracts with the first candidate that shows interest, without looking further in the market and knowing what other chances they have. However, sometimes it is better to search further and look for other candidates that might be more suitable. When recruiting international partners, it is essential, amongst others, to carefully check the references of each candidate.
3. We sign international agreements too hastily. Do you have all the information about the products and brands that the agent or the distributor represents? Does the contract with the foreign partner contain any clause that forbids unfair competition? Have fixed sales-targets been agreed upon? Have you ever thought about designing an international agreement model that contains your company’s sales policy to have a homogeneous international sales approach?
4. We sign contracts with foreign partners that we have not visited personally. If the sales agent or distributor is not trained immediately after the contract is signed, its dedication to your company might decrease over time and it might not sell your company properly. Therefore, it is essential to accompany the sales agent or the distributor during its first customer visits.
5. We are slow when it comes to breaking business relationships. If you have chosen the right partner, and have personally visited it, trained it etc., and this partner still does not forward any requests, orders, questions, etc, it means it is not devoting time to promote your company. Thus, the relationship has to end. You should not have exclusive relationships with partners that do not manage properly the sales of your product. This does not only affect your sales negatively but also slows down the market entry process and sooner or later might even jeopardise your business reputation.