How do car producers choose their distributors? How does this relate to globalization?

The process of selecting and appointing distributors for
cars by the manufactures differs from company to company. However, there are likely to
be some common considerations for all the
manufacturers.

The first consideration is the size of the
market in different geographical location and the ability of existing dealership network
to serve the current and potential market. Based on this the car manufactures decides on
the number and location of additional dealerships to be awarded. This decision also
includes some clarification on nature of dealership in terms of stock of cars to be
maintained and services to provided.

The next step is to
identify people and firms interested in taking up the dealership in each of the
identified location. It should be noted that in most of the cases a person is interested
in taking dealership in some specific geographical location only. As a matter of fact
one of the advantages of appointing dealers is that it gives the company he benefit of
the strengths and advantages enjoyed by dealers in their respective geographical
location.

The next step is to assess and compare the
suitability of prospective parties that have come forward with offer to set up
dealership at each of the location. This is the core of the the decision on choice of
the dealer. It involves assessing the suitability of applicants for dealership on
factors such as, financial capability, technical and marketing capability, managerial
and administrative capability, past experience in the same or related businesses,
willingness to invest sufficient money in facilities and stock of cars, and willingness
to devote personal time and attention to the dealership work. Many a times possession of
a  land or premises at an advantageous location for the dealership outlet is also an
important consideration.

Once a dealer is identified as
most suitable on the basis of evacuation and comparison as above the car manufactures
then, generally, enter into negotiation with the prospective dealer about details of the
dealership arrangement such as agreed location, investment in premises and equipments,
services to be provided and range of products to be sold, and a schedule for
establishment of the dealership.

Choice of dealership has
no direct influence on globalization. However is is quite obvious that a company that
sells is products abroad will have to factor in the considerations of international
business for appointment of dealers for such markets.