What Is a Distribution Policy?

Mary McMahon

A distribution policy determines how and where information and products are distributed both within and outside an organization. It is formulated by executives who carefully consider an organization’s needs and goals when deciding how to release materials. On the inside, data and products need to be made available to personnel who need them while managing risks like leaks to the outside. External distribution follows a number of chains to get products, information, and services to end consumers, and these chains must be carefully determined to protect the interests of the organization.

Material distributed to the public is subject to a distribution policy, such as organizations making annual reports available free of charge.
Material distributed to the public is subject to a distribution policy, such as organizations making annual reports available free of charge.

Organization officials may create a formal distribution policy for handling of information and materials within an organization. They decide who has the authority to classify material, and how it can be passed among personnel who work for the company. Some information, for example, may be restricted to upper management because it is proprietary. Other data may be made freely available because it may be useful to everyone within the organization. Distribution policies can control the risk of leaks or unauthorized access and may help companies track down the origins of a problem by limiting the number of people who see certain materials.

Distribution policy includes information on material distribution.
Distribution policy includes information on material distribution.

Material distributed to the public is also subject to a distribution policy. Organizations may make annual reports and some information available free of charge, especially if they are public agencies or service-oriented. A group promoting medical care in developing nations, for example, may want members of the public to freely access its reports on lack of access to consistent health care in the developing world. Likewise, a government agency might make maps available to the public for use in research and other activities.

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Products for sale move through a distribution chain which is also subject to a policy, spelled out in a contract between the company and the distributor. Companies want to make sure their products are delivered to the right locations and may have concerns about whether a distributor works with competitors, undercuts prices, or potentially undermines business in other ways. The nature of a distribution policy can determine how distributors handle products.

Publicly traded companies also maintain a dividend distribution policy. This dictates how and when dividends are distributed to shareholders. Information on the policy is made available so people know when to expect dividends, and can follow the company’s activities to determine if they are consistent with the policy. Companies that fail to uphold their promises to shareholders may be legally liable, or could be considered bad investments.

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