Business Studies

How do the 'Company -related factor' affect the choice of distribution? Explain.


SOLUTION
a. A company's financial strength: A company that is financially strong and has spare funds to spend would opt for a snorter channel of distribution. I his is because the shorter channels of distribution generally require a greater amount of funds for activities like hiring more salesman or opening higher number of retail outlets. This is likely to increase the cost of the firm and thus only those companies that have a strong financial base can opt for direct channels. In contrast to this, the companies that have a weaker financial base will opt for longer or indirect channels as these channels do not involve such costs. 
b. The degree of control that the company wishes to hold on the intermediaries. A company that wishes to have a greater control over the intermediaries should also opt for shorter channels of distribution. The reason behind this lies in the fact that the direct or the shorter channels involve minimum numbers of intermediaries and thus are easily controllable. On the other hand, companies that exercise lesser control over the intermediaries can opt for longer channels of distribution. 
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