Question

ANSWER THREE QUESTIONS OF YOUR CHOICE

1. A COPPER EXPORT TRADING FIRM HAS REGULAR SHIPMENTS FROM MOZAMBIQUE TO KUWAIT. GOODS ARE LOADED AT TERMINAL ONTO BULK CARRIERS AT THE PORT OF BEIRA, MOZAMBIQUE. ANSWER THE FOLLOWING QUESTIONS 1) TERMS OF SALE; 2) MODE OF TRANSPORT; 3) INSURANCE OBIGATIONS 4) EXPORT/ IMPORT COUNTRY OBLIGATIONS; 5) SELLER'S RISK/COSTS.

2. ONCE YOU DECIDE TO GET INVOLVED IN EXPORT/IMPORT BUSINESS, YOU WOULD LIKE SOME ADVICE ON THE FOLLOWING:
   a) SHOULD I SET UP THE BUSINESS AS AN AGENT OR DISTRIBUTOR ?
   b) SHOULD I USE FOB OR CIF AS PRICE QUOTATION WHEN I EXPORT OR IMPORT THE MERCHANDISE?
   c) SHOULD I SIGN A CONTRACT WITH THE BUYER/SELLER OR CONCLUDE AN ORAL AGREEMENT?
   
   PROVIDE THE BEST ADVICE TO THE FIRM BASED ON THE ABOVE INFORMATION.
   

3. PEOPLE IN POOR COUNTRIES ARE MORE ENTREPRENEURIAL THAN PEOPLE IN RICH COUNTRIES. DO YOU AGREE? COMMENT.

4. COMPARE THE ADVANTAGES AND DISADVANTAGES OF USING A BRANCH OFFICE TO SELL GOODS OVERSEAS COMPARED TO THAT OF A SUBSIDIARY AS A SALES COMPANY.

5. DISCUSS TWO MAJOR RISKS IN FOREIGN TRADE AND HOW TO MANAGE THEM.

6. WHEN DOES RISK AND TITLE PASS FROM SELLER TO BUYER IN A) FOB CONTRACTS, B) CIF CONTRACTS   C) FAS CONTRACTS.

Answer 1

1.Terms of Sale:-

Credit sales for a month period,with transfer of risk obligations to the purchaser after the shipment made from Mozambique.

Amount should be paid in Currency of Mozambique for not giving chance to exchange fluctuation volatility.

2. Mode of Transport : Sea transport as it was cheap and efficient.

3.insurance obligations :- General Insurance and loss of business Insurance should be taken on behalf of Purchaser as the Risk Obligations are transferred prior to Purchaser so the same insurance Obligation to be born by Purchaser for the Goods which were successfully completed Loading in the Port authorities.

5. Seller risk/Cost :- Transport Costs up to the port base and the respective risks in loading and shipment of goods lies on Seller.

a. As the business is of regular basis to regular customer its better to be a agent in the initial days .and depending upon the turnover ,availability of copper resources , profitability, increased trusted purchasers then its better to turn as a distributor .

b.Use FOB as Price Quotation as the Insurance and Freight (unloading part ) obligations lies on the purchaser ,so its better if the same is not mentioned in the Quotation so as to reflect the true business from your side as seller.

c.Sign the contract with the Buyer , as entering into a well written contract always helps in Business Risks and uncertainties.

Opinion :-

I am Not in agreement with the Above statement , when majority people are in hunger for food and in search for basic survival ,its irrelevant to think about entrepreneurial opportunities or looting money from other people through establishing new business ventures. For a well established entrepreneurial atmosphere its not all about sellers but also about well equipped/competent Buyers and related support systems . purchasing power of Buyers and support systems in turn creates wide variety of business possibilities rather than mere forces from few single/monarch/capitalist sellers