What is the difference between home country middlemen and foreign country middlemen ?)?
An intermediary in a distribution or transaction chain who facilitates interaction between the involved parties Show
Who is a Middleman?A middleman plays the role of an intermediary in a distribution or transaction chain who facilitates interaction between the involved parties. Middlemen specialize in performing crucial activities involved in the purchase and sale of goods in their flow from producers to the ultimate buyers. They typically do not produce anything but possess extensive knowledge of the market, thereby charging a commission or a fee for their services. For example, a real estate agent with an established network of colleagues for contacting potential home buyers, in addition to a broad range of market information and advertising outlets. Wholesalers include the middlemen between manufacturers, producers, and retailers. The retailers themselves are the middlemen between wholesalers and the end customers. Summary
Types of MiddlemenMiddlemen can be classified into two categories, namely merchants and agents. 1. MerchantsMerchants, such as wholesalers and retailers, buy and re-sell their goods. They take ownership of inventory and bear the expense of storing and distributing the product. They make money by selling the goods at a higher price than its cost to them. The difference is called the “markup.” Merchant middlemen range from a shopkeeper to a large multinational corporation with international operations. Larger middlemen may focus on a core competency, such as delivery, advertising, warehousing, or a particular market segment. 2. AgentsAgents, such as brokers or real estate agents, specialize in negotiations involved in transactions. They do not take ownership of what they are selling. Instead, they make money by charging a commission or a fee for facilitating a transaction. For example, brokers act as intermediaries between investors and the securities exchange. They provide trading services, investment advice, and solutions to their clients and charge a brokerage fee in return. Functions of MiddlemenMiddlemen perform the following functions in a marketplace:
Importance of MiddlemenIntermediaries are important players in every market. Both consumers and producers stand to benefit from their services. In addition to constantly matching the supply and demand in the market, middlemen provide valuable feedback to the producers about their market offering. By specializing in functions such as banking, warehousing, transportation, underwriting, etc., they bring the economic benefits of specialization and division of labor to the market. Buyers gain access to the right quantities of goods and services close to their homes through the intermediary channels. They benefit from other services of middlemen, such as advertising and delivery. Disadvantages of MiddlemenDespite the many advantages that middlemen can offer, some people believe that middlemen do more harm than good and should be eliminated. As goods exchange hands from one middleman to the other, their prices inflate. A higher price is charged at each junction to cover the cost of warehousing, insurance, transportation, advertising, etc. When a profit margin for each middleman is also factored in, consumers ultimately must bear the price of having intermediaries in the channel. Additional ResourcesThank you for reading CFI’s guide to Middleman. To keep advancing your career, the additional CFI resources below will be useful:
What is the difference between home country middlemen and foreign country middlemen?Answer and Explanation: The difference from domestic versus foreign middlemen is that foreign ones often also have an interpreter-type role, as they have to be knowledgeable about two or more different countries.
What is foreign country middlemen?Foreign middlemen may be agents or merchants, they may be associated with the parent company to varying degrees, or they may be hired temporarily for special purposes. Some of the more important foreign country middlemen are manufacturer's representatives and foreign distributors. Manufacturer s' representatives.
Who are known as home country middlemen?Home country middlemen or domestic middlemen located in the producing firm's country provide marketing services from a domestic base. By selecting domestic middlemen as intermediaries in the distribution processes, companies relegate foreign market distribution to others.
What are the difference in the functions of domestic middlemen and their foreign counterpart?First, the domestic agent usually takes possession of the goods, whereas the foreign agent does not. In the area of setting prices, the domestic agent has the authority to do so, while his foreign counterpart does not. Both types of domestic middlemen arrange for the shipping of goods, but the foreign middlemen do not.
|