You are the manager for international operations of a manufacturer of steel in the United States. You
Question:
You are the manager for international operations of a manufacturer of steel in the United States. You have received an offer to purchase at a very attractive price 5,000 metric tons of wire rods (used to draw wires for the manufacture of nails) from a large nail manufacturer located in a developing country X. What would you deem to be the most appropriate choice of export terms of payment and terms of shipment, given the following information (include any precautions that you would take to ensure the successful execution of the order):
a. The prospective importer has its account at a local bank. Local government rules stipulate making payments only through this bank.
b. The local bank does not have any international operations/branches.
c. The currency of country X has been extremely unstable, with its value having depreciated by more than 20 percent recently.
d. The interest rates are extremely high in this country.
e. The legal system in this country is weak, but the firm that is willing to place the order has a good reputation based on past experience with other international manufacturers.
f. Rain and summer heat can cause the product to deteriorate if kept unused for a time longer than necessary.
g. This country exports a larger amount by the sea route than it imports. Hence, many ships have to go empty to get cargo from this country to the United States.
Step by Step Answer:
Global Marketing Management
ISBN: 978-1119398332
7th edition
Authors: Masaaki Kotabe, Kristiaan Helsen