Question 5

Saudi Aramco is the world's largest integrated oil and gas company, producing the energy and chemicals that drive global commerce and enhance the daily lives of people around the globe. The company receive a long-term contract proposal from a group of least-developed nations in Africa and South America to purchase the company's products at 45% discount as part of a Corporate Social Responsibility (CSR) contribution of the company to these countries. The contract is for 5 years and this will be about 10% of the company's current output level. The company has the capacity to increase its production to meet the above contract obligation. There will be an extra cost of logistics a transportation that is estimated to be about Rm 24,000 million per annum.

A.Should the company sign the special contract? Show the financial application?

B.What are the qualitative factors that needs to be taken into account in the decision?