Ferro Industries is managing challenges with limited resources and capital for a large overseas order. The document discusses various strategies for building customer relationships, maintaining relationships, and ensuring prompt payment for export deals. Payment on sight is recommended as the most fair option that allows payment when requirements are met, but a letter of credit from importers would be the most secure method to ensure prompt payment.
Ferro Industries is managing challenges with limited resources and capital for a large overseas order. The document discusses various strategies for building customer relationships, maintaining relationships, and ensuring prompt payment for export deals. Payment on sight is recommended as the most fair option that allows payment when requirements are met, but a letter of credit from importers would be the most secure method to ensure prompt payment.
Ferro Industries is managing challenges with limited resources and capital for a large overseas order. The document discusses various strategies for building customer relationships, maintaining relationships, and ensuring prompt payment for export deals. Payment on sight is recommended as the most fair option that allows payment when requirements are met, but a letter of credit from importers would be the most secure method to ensure prompt payment.
Ferro Industries is managing challenges with limited resources and capital for a large overseas order. The document discusses various strategies for building customer relationships, maintaining relationships, and ensuring prompt payment for export deals. Payment on sight is recommended as the most fair option that allows payment when requirements are met, but a letter of credit from importers would be the most secure method to ensure prompt payment.
1. As Yatendra Sharma, how would you manage the challenges of having limited available resources and limited access to capital while completing a large overseas order? Since the company itself was carrying out an expansion program and was unable to invest more of their capital into completing a large order, it would prove difficult to recognize what you would do. I think in his position, I would first determine and assess which tasks were necessary to complete first and prioritize their completion. In this case, I would prioritize finishing the order because it is more important for the company’s long term success and there could be a potential for more capital to be earned and utilized for company growth. I would also not rule out potentially getting a loan from the bank to help fund overseas orders and consider getting investors involved for future large orders, both domestic and overseas.
2. Assess Garima Sharma’s strategy for building and maintaining marketing and customer relationships. Could there be any better strategy? I think in the long run, offering personalized treatment would create a bond of trust between customer and seller that would last a long time. This, I would say, is an important factor in establishing a well built relationship for new clients to come in and trust the company. It might be wise to acknowledge that this method might not work all the time, especially if new clients are not as trustworthy as their current client (Yusuf) would be.
3. In light of Ferro’s experience, which payment strategies would you choose as an
exporter in order to ensure payment and reduce financial risk? Why? a. Full advance payment b. Payment on sight c. Usance facility to the importer I think the most plausible and fair payment method would be payment on sight, since it gives the clients the benefit of the doubt and would be fair for both parties. Payment on sight would allow the exporter to be paid on sight when all requirements have been met. It is also good for the buyer because even though payment has been made, it is released to the exporters only when all the criteria have been met as well. In hindsight, it would be much more secure to ask for a full advance payment for Ferro to reduce their financial risk in the long run, but it is unfair to the buyers, so it would only be right to use payment on sight.
4. Do you agree with Garima’s decision to release the machines to Yusuf? Why or why not? Yes, I do. I think with the established trust between Garima’s company and Yusuf as a client on that level and also at a personal level, it would be fair that they put their trust in Yusuf because he has been a long standing client. Furthermore, it is also a wise decision since Garima was also paying demurrages for the delay in off-loading the goods, which is detrimental for both parties in this situation. This, of course, would not be the case for every single transaction that the company will do in the future, so it is vital to exercise precaution. However, considering the established relationship between the two parties, it would be natural to put trust in Yusuf’s word as their customer.
5. Suggest some ways that Ferro could ensure prompt payment for future export deals. Should firms like Ferro insist on obtaining a letter of credit from importers? I think the most secure method of payment would be to ensure that payment for future exports is made as agreed upon by both parties. A letter of credit would be an excellent way to ensure prompt payment because of the nature of the method, which allows the buyers to make no payment obligations until the goods have been delivered. could also be beneficial to the exporter, in this case Ferro, since it allows them to deal with a trusted foreign bank and would guarantee payment.
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