Global Logistics Report: Distribution Strategy for Incheon Electric

This report provides a comprehensive analysis of a global logistics distribution strategy for Incheon Electric, a South Korean power tool manufacturer, aiming to enter the European market. It explores various aspects of the distribution strategy, including environmental analysis, cost factors such as transportation and inventory management, and service factors. The report delves into the importance of distribution strategy, channel structure strategies, and the role of intermediaries. It also examines the potential of direct distribution channels and considers relevant factors for successful market entry. The report concludes with recommendations for Incheon Electric, emphasizing the significance of logistics planning, cost management, and supply chain optimization for successful business operations in Europe. The report also analyses the impact of market dynamics, including trade wars and Brexit, and their impact on the company's strategy.

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Name of student
Name of university
Author’s note:

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Table of Contents
Introduction....................................................................................................................2
Discussion......................................................................................................................2
Environmental analysis..............................................................................................2
Cost factors.................................................................................................................3
Transportation............................................................................................................3
Inventory management...............................................................................................4
Retail..........................................................................................................................4
Service factors............................................................................................................5
Distribution strategy.......................................................................................................5
Importance of distribution strategy............................................................................5
Channel structure strategy..........................................................................................6
Intermediaries.............................................................................................................7
Conclusion......................................................................................................................8
References......................................................................................................................9

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Introduction
The importance of logistics is increasing at significant pace and majority all over the
world are shifting towards the use of proper logistics for transporting goods all over the
world. This report intends to provide to provide a distribution strategy for Incheon Electric
for allowing the company to perform business all around Europe. The cost factors of the
distribution strategy has been discussed in this report. The service factors has been briefly
stated in this report for providing the idea about the business conditions of the organisation in
Europe.Lastly this report provides the appropriate recommendation for the company and then
appropriate conclusion has been provided.
The considered company Incheon Electric is the South Korean manufacturer of the
power tools and it had been established almost three years ago when the spun-off from one of
the major conglomerate corporations of South Korea. The products of the company are
considered of significantly high quality and it has been priced competitively. The company is
immensely successful in majority of the Asian markets and it now intends to enter the market
of Europe for conducting business. A leading European marketing consultancy hired by the
company has provided the conclusion from analysis of the organisation that indicated that
there would be significant demand for the product of Incheon Electric by the final users in the
European market and it has been discovered that there is considerable interest from the
resellers.
Discussion
Environmental analysis
As the present global economy ultimately seems to be regaining significant
momentum, several companies are presently considering the broadening the horizons by
selling the products to foreign markets. The European Union is presently considered as the

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most attractive market for several shippers in the beginning of the new venture of
marketing.In the present times, there is not major company who dominate the electrical
industry in European region. Several manufacturers manufacture the goods from within the
countries and are discovered to be not popular. A bulk of the manufacturers trade the
electrical products using several brand titles that might or might not be sold on nationwide.
Solely largest manufacturers offer the goods for the National brands or even execute the
distribution of the product across the national channel in the countries. In addition to
domestic business, it has been observed that there is a significant rising world-wide request
for the electrical products of the company. The import market is significantly robust and it
carry on to grow specifically for the improved electrical products. The common element in
the electric importing in the present times is the requirement of significantly high quality
electrical products that provides sustainable electrical solutions for the common people. The
industry of electrical components are presently continuing to rise. The major impact of the
trade wars between US and China could be observed in several fronts, that includes the
commodities, currencies as well as the companies. There is significant pain inflicted on the
stocks that would be viewed as two-fold, and it significantly hurts the US companies that
sources the goods as well as the material from China. Due to the recent occurrence of Brexit,
the incomes in several countries have reduced significantly and it has led to the downfall of
several markets where the businesses were flourishing. The banks of several countries have
faced significant issues due to the lack of revenue in the countries.
Cost factors
Transportation
Appropriate transportation and logistics planning would help the organisation with
managing the cost of transportation of the goods. The cost of transportation is among the
factors that is required to be analysed and it could be observed that the cost of transportation

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in the European countries is immensely high. It has been analysed that for conducting
business in any external market requires significant research of the infrastructure, local
culture and the population for being significantly successful. It is required that the company
executes significant tests, provide some samples, issue several surveys and then conduct
several widespread programs within this new country. The international businesses are
significantly subjected to taxation of European countries. The government of several
countries intentionally fix low tax rate for encouraging the companies to place the shop
within the borders.
Inventory management
The inventory is main requirement for establishing any business in European
countries. It is considered that any efficient inventory would help the organisations with the
improved inventory management and manage the products that are produced and the products
that are required to be distributed to the end users. The company could implement several
inventory management tools for allowing the improvement in the inventory management.
Retail
There is significant cost included if there is a requirement of modifying the final
product for the European market. Conducting successful business in the overseas market
needs the proper exchanging of the currency of the host country to the legal tender of the
foreign country. Moreover, the currency exchange is considered as significantly risky and
costly and this rate of exchange could vary within matter of some seconds. Moreover, the
international business factors in cost of the currency exchange by the efficient drafting of any
forward contract. The contracts locks in major exchange rate in advance for providing the
proper knowledge of the value of currency. One more cost factor in doing business in the
European markets is the taxation within the businesses. The efficient management of the
present inventory of the organisation could help in managing the retail in the European

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market. The social media could be leveraged extensively for increasing the market in the
unknown market and let the people know about the functions of the business.
Service factors
The customer service is considered as the measure of the methods by which the
logistics is creating the required time as well as the place utility for the electrical product. The
meaning of the customer service significantly varies with any organisation, the product it is
the aspects of the marketing and transaction phase, it is undergoing any buyer looks for the
value for money that is being spent by the consumer, while any seller in the delivering of
superior customer service looks for tradeoff among the customer satisfaction and the cost.
The organisation is required to develop strict policy for defining the pre-defined service level
and the associated activities in the quantitative terms and the qualitative terms. The post
transaction rules is required to be implemented for providing the customers with the
appropriate information regarding the order status, the complaints of the customers, the
installation, commissioning, any technical issues or the customer education for managing the
successful business in the European market.
Distribution strategy
Importance of distribution strategy
The distribution strategy that could be implemented by the organisation for providing
the products to the end customers is the creation of supply chain in the market of the country.
The products could be produced in China and Korea in the initial phase of the establishment
of business in the foreign countries (Dizqah et al. 2016). With time, the complete supply
chain could be shifted to the foreign markets for eliminating the cost of the transportation of
the goods. With the implementation of inventory management in the supply chain in the
foreign country, the products could be preserved with extensive care and the cost of the

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storage could also be regulated. The distribution strategies are connected with channels that
are employed by any firm for making the goods and the services available to the customers.
The channels are extensively organised frameworks of the buyers as well as the sellers that
helps in bridging the gap of the space and time among the customers and the manufacturer
(Lian et al. 2015). The marketing is commonly defined as the exchange process. In the
relation to the distribution, the exchange mainly posed two problems. With respect of the
considered organisation, the goods are required to be moved to one central location from
warehouses of the producers who create the heterogeneous goods and are significantly
geographically widespread. Secondly, the issue that underlies is that the goods, which have
been accumulated from the diverse sources are required to represent the desired assortment
from main viewpoint of the customers (Calderaroet al. 2014). The process that could be
deployed by the organisation for mitigating these issues is the process of sorting that includes
the concentration as well as the dispersion.
Channel structure strategy
Channel structure strategy is the most appropriate strategy that could be deployed for
the transportation of the goods from the manufacturers to the end customers (Balabanov,
Zankinski and Barova 2016). Any company might undertake the distribution of the goods to
the customers or even the retailers deprived of concerning any intermediate individual. This
particular strategy comprises of shortest channel and might be labelled as the straight
distribution framework.Instead, the goods might pass from one or even more intermediaries
like the wholesalers or the agents. The decisions regarding the channel framework are mainly
based on variety of factors (Li et al. 2015). For being significantly extent, the channel
structure has been determined by the location where the inventories are required to be
maintained for providing the sufficient customer service, satisfy the essential processes of
sorting, and then deliver the acceptable return to the channel associates.

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Intermediaries
Any fundamental factor in the determination of the channel structure policy is the
efficient utilisation of the intermediaries. Any straight channel of the distribution is processes
using which any company provides the products straight to customer without the utilisation
of any intermediaries. Several businesses might use the structures that include the middlemen
for handling distribution of the goods. Moreover any company who is accountable for the
sale, the transportation as well as the delivery of the products directly to customer is utilising
the direct channel of the distribution (You et al. 2014). In the situation of theIncheon Electric,
the company could initiate the online selling of the products to the customers of the Europe
and it would eliminate the use of any intermediary for the distribution of the products to the
customers (Jayasekara, Wolfs and Masoum 2014).
The company could setup the website where customers from all around the world
could place their orders. The website would notify whether any branch of the company is
within the region where the customer is placing orders. As soon as the orders are placed then
the company would provide the products to the customers from the inventory that has been
established in the considered markets (Alam, Muttaqi and Sutanto 2014).
The products could be consolidated in bulk amount in the inventory or the warehouses
in the foreign markets that could help in reducing the transportation costs of the products. As
the business has not established as large organisation, it would be significantly beneficial and
cost effective to utilise the direct channel of the distribution as there is minimal financial
possessions to hiring others to consider taking care of the marketing, the sales, the shipping
or the delivery requirements (Belu and Marinoiu 2014). The direct channel of the distribution
also permits the owners with maintaining significant control over the specific aspects of the
business. It could create as well as direct branding for the products and then establish the
personal relationship with the customers (Nagarajan and Ayyanar 2014). Even though the

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direct distribution strategy could be beneficial for the organisation to conduct business in the
European countries, there are some aspects that are required to be considered (Alam, Muttaqi
and Sutanto 2014). The cost of transportation of the finished products would be significantly
high for the initial period of establishment. The logistics providers with the minimal charges
is required to be considered and logistics function should be monitored and managed properly
(Byeon et al. 2015).
Conclusion
Therefore, it could be concluded that the business of Incheon Electric could grow
significantly with the introduction of the company in the European market. The products
could be produced in the host country in the initial phase of the establishment of business in
UK. The channel distribution could be utilised for transporting the goods from Korea and
China to UK. The logistics could be outsourced in the initial stages of establishing the
business in UK. After the business has been established, then it could perform their own
transportation of the goods from warehouses to UK.

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References
Alam, M.J.E., Muttaqi, K.M. and Sutanto, D., 2014. A controllable local peak-shaving
strategy for effective utilization of PEV battery capacity for distribution network
support. IEEE Transactions on Industry Applications, 51(3), pp.2030-2037.
Alam, M.J.E., Muttaqi, K.M. and Sutanto, D., 2014. A multi-mode control strategy for VAr
support by solar PV inverters in distribution networks. IEEE transactions on power
systems, 30(3), pp.1316-1326.
Balabanov, T., Zankinski, I. and Barova, M., 2016. Strategy for individuals distribution by
incident nodes participation in star topology of distributed evolutionary
algorithms. Cybernetics and Information Technologies, 16(1), pp.80-88.
Belu, M.G. and Marinoiu, A.M., 2014. A New Distribution Strategy: The Omni-channel
Strategy. The Romanian Economic Journal, 17(52), pp.117-134.
Byeon, S., Choi, G., Maeng, S. and Gourbesville, P., 2015. Sustainable water distribution
strategy with smart water grid. Sustainability, 7(4), pp.4240-4259.
Calderaro, V., Galdi, V., Lamberti, F. and Piccolo, A., 2014. A smart strategy for voltage
control ancillary service in distribution networks. IEEE Transactions on Power
Systems, 30(1), pp.494-502.
Dizqah, A.M., Lenzo, B., Sorniotti, A., Gruber, P., Fallah, S. and De Smet, J., 2016. A fast
and parametric torque distribution strategy for four-wheel-drive energy-efficient electric
vehicles. IEEE Transactions on Industrial Electronics, 63(7), pp.4367-4376.
Jayasekara, N., Wolfs, P. and Masoum, M.A., 2014. An optimal management strategy for
distributed storages in distribution networks with high penetrations of PV. Electric Power
Systems Research, 116, pp.147-157.

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Li, B., Goodarzi, A., Khajepour, A., Chen, S.K. and Litkouhi, B., 2015. An optimal torque
distribution control strategy for four-independent wheel drive electric vehicles. Vehicle
System Dynamics, 53(8), pp.1172-1189.
Lian, Y., Zhao, Y., Hu, L. and Tian, Y., 2015. Longitudinal collision avoidance control of
electric vehicles based on a new safety distance model and constrained-regenerative-braking-
strength-continuity braking force distribution strategy. IEEE Transactions on Vehicular
Technology, 65(6), pp.4079-4094.
Nagarajan, A. and Ayyanar, R., 2014. Design and strategy for the deployment of energy
storage systems in a distribution feeder with penetration of renewable resources. IEEE
Transactions on Sustainable Energy, 6(3), pp.1085-1092.
You, Y., Liu, D., Zhong, Q. and Yu, N., 2014. Research on optimal schedule strategy for
active distribution network. Automation of Electric Power Systems, 38(9), pp.177-183.