Assessment of Factors Influencing Choice of Distribution Channels in Multinational Enterprises in Tanzania

Decisions concerning distribution channel are among the most critical decisions that face the management of multinational enterprises as they operate in more than one country. This study aimed at assessing factors influencing choice of distribution channels in multinational enterprises in Tanzania. This study sought to identify the distribution channels that are used by the multinational enterprises, the internal factors influencing the choice of distribution channels, external factors influencing the choice of distribution channels, as well as the roles played by these distribution channels chosen by the firms on the performance of the respective multinational enterprise. Descriptive research design was adopted. SPSS 16 software was used to run the collected data and the content tests were used to process the data in running the analysis. Various tools of analysis were used including the percentages of frequencies, modes, regression analysis as well as non parametric tests using the Pearson Chi-square. The study found that all the distribution channels ranging from direct to indirect are used by multinational enterprises operating in Tanzania. This study reveals that the choice of distribution channels used by multinational enterprises is influenced both internal and external factors such as state of the economy of the country, time when consumers buy the product, type/nature of product produced by the firm, purchasing power of consumers, time taken for the product to perish, human capability of the firm, financial capability of the firm, and predictability of legal framework in a country. This study reveals that the annual sales revenue earned by the company does not differ significantly on the basis of distribution channel used by the company. Distribution channels play a significant role on performance of multinational enterprises regardless of whether the firm uses direct or indirect channels of distribution. Finally, the study recommends the management of multinational enterprises to conduct a thorough environmental analysis before choosing the distribution channel. It also recommends the management of multinational enterprises to select effective and efficient distribution channels of their products that are suitable to both internal and external factors they face. This selection should be in each country of their operation. Moreover, the study recommends the government, which is also the policy maker, to formulate policies that are favorable to the firm's investment since the sector has a significant contribution to the economic growth of the country.