Export Management

Spring $2024$

Written Assignment # $2$

Due: April $10$

You are the new export manager for a mid$-$size manufacturer of sports socks in Tuscaloosa. The company,

Decathlon, makes socks in a variety of styles and sizes in cotton blends under its own label. It also does private

label business for major sports labels like Nike and Adidas. Decathlon sells nationwide and has just started an

export department to find overseas customers.

You received an email inquiry from a potential distributor in Innsbruck, Austria. The company owner met

you at a sporting goods trade show in Las Vegas, NV last month. In the email, the owner wants to be your

exclusive distributor for Central & Eastern Europe and asked for a CIP quote on a $40$ foot container to

Venice, Italy, the cheapest & closest port to its warehouse facility in Innsbruck. He would prefer $180$ day

payment terms, but since this is your first inquiry from the Austrian company, and given the current economic

situation, you must decide if more conservative or secure payment terms are warranted.

Through your shipping department and freight forwarder you have received the following information.

A $40$ foot container holds $40,000$ dozen pair and ocean freight will be $$2,000.$ The unit price at your

factory is $$15\mathrm{.}00$ per dozen pair. $($Think of a "dozen pair" as a "bag of socks"; unit price $=$ one bag.$)$

Inland freight to the U$.$S$.$ port of Mobile, AL is $$500.$

Insurance is calculated at $$0\mathrm{.}10$ for every $$100$ of the total Cost $+$ Freight $($CPT$).$

The import tariff is assessed at $3\mathrm{.}4\%$ of the CIP value of your product.

There is a VAT tax of $10\%$ assessed on the total "CIP value plus tariff" amount.

It will cost $$400\mathrm{.}95$ to get the container loaded on a train and sent from Venice Italy to the

distributor's warehouse in Innsbruck, Austria.

Your assignment:

Prepare a worksheet $($not a pro forma invoice$)$ titled "Logistics Cost Analysis." This is identical to the

Export Quotation Exercise that was completed in class, and is posted on Blackboard. $(35pts)$

What is the price per dozen pair at the following four points in the transit of the goods:

a$)$ FCA Tuscaloosa, b$)$ FCA Mobile, c$)$ CIP Venice, & d$)$ Distributor's Innsbruck warehouse. Note: Not

looking for the 'per individual sock' price. They're sold by the dozen pair, so divide by $40,000.$

A$)$ At the bottom of the cost analysis page, do some basic math: Calculate the percent increase.

How much higher in price on a percentage basis is a dozen pair FCA Tuscaloosa versus the price for a dozen

pair delivered to the Innsbruck warehouse? $(5)$

B$)$ If they wanted an all$-$inclusive quote to Innsbuck which Incoterm would you use? $(5)$

Prepare a complete pro$-$forma invoice on a separate page. Show the charges so that the distributor can see

the FCA Tuscaloosa, FCA Mobile, CPT Venice, and CIP Venice price terms. Do not include any charges

beyond CIP Venice. Refer to the examples provided in class; make sure that your pro forma includes all of

the required fields. Your CIP Venice Numbers should match what you calculated in $1C$ above. $(35$pts$)$

Prepare a response letter from Decathlon's export manager to the prospective distributor. $(20$ points$)$

He wants to be an exclusive distributor for Central & Eastern Europe with $180$ day payment terms. Are you,

the seller ok with these conditions? In your response can you suggest payment terms and a territory that fit

your company and that market? Would you consider different terms in the future? Feel free to make up the

Austrian company's name. There is no template for this letter, but you won't receive credit for "Dear Ahnold

Here's your quote." They specifically want to see a CIP Venice quote in your letter. Note: this is NOT

the same as the cost to get the product all the way to Innsbruck; the price in your letter and on the pro$-$forma

should match. $$ Read that again. Do not include any charges beyond Venice in your letter.

Reminder: Do NOT use the standard invoice that comes with Excel $-$ it will NOT work for this exercise.

this is all one question