Which of the following is NOT an element of 'Trade-relations mix' in International Business?

Correct option is A

The Trade-relations mix refers to the set of policies, responsibilities, rights, and practices that govern the interactions between the manufacturer/exporter and the intermediaries such as distributors, agents, or channel partners in foreign markets. It encompasses factors that maintain smooth channel relationships and foster mutual growth. The main components typically include:

• Price Policy – terms regarding pricing, discounts, credit terms, and margins.

• Mutual Services and Responsibilities – obligations like promotional efforts, after-sale services, inventory handling, etc.

• Distributor’s Territorial Rights – defining the geographical boundaries within which a distributor can operate exclusively or non-exclusively.

On the other hand, Product variety falls under the product mix, not trade-relations mix. It refers to the range or assortment of products offered by the firm and relates to product strategy, not the relational contracts with trade partners.

Information Booster:

• Product variety refers to the different types, features, sizes, or versions of a product offered to cater to diverse customer needs.

• It is an element of the product mix, not the trade-relations mix.

• In international business, product variety is adjusted based on consumer preferences, local regulations, and market segmentation, not trade partner agreements.

• Trade-relations mix is more about the management of relationships with foreign distributors and not product decisions.

Additional Knowledge:

(b) Price Policy

• A key component of the trade-relations mix.

• Defines the pricing structure, discounts, commissions, margins, and credit terms provided to intermediaries.

• Helps in avoiding channel conflicts and ensuring profitability for all involved parties.

(c) Mutual Service and Responsibilities

• Another essential component of trade-relations mix.

• Specifies who will handle promotional activities, customer service, logistics, warranties, etc.

• Ensures accountability and smooth coordination between the manufacturer and distributor.

(d) Distributor’s Territorial Rights

• A fundamental clause in trade-relations agreements.

• Determines where a distributor can sell the product and whether they hold exclusive or non-exclusive rights to a region.

• Helps in preventing intra-brand competition and protecting distributor interests.