Question

Assume you are the owner of a very large soybean farm in Argentina, a country located in South-Eastern South America. Soybean is a commodity which is traded globally. 70% of all soybeans are used as chicken and pig feed. It has been widely recognised as a very efficient source of protein and energy. Another use for soybeans is splitting (or crushing) it up into soybean meal and soybean oil – 80% becomes the meal and 20% the oil. Much soybeans are grown in South America (~31% of world total in Brazil, ~18% in Argentina), and demandfor the soybean, soybean meal and soybean oil is growing very fast in Asia (especially China). One day, you received an unexpected and peculiar call from Zambia (a landlocked nation in Africa). The person over the line identified himself as a procurement officer of Livingstone International. He spoke fluent Spanish and asked if you can sell him two shipments of unprocessed soybeans. His request is large enough to clear out 80% of your annual harvest. The issue is you have never sold on the international front as you have always sold your harvest to the domestic merchants. What do you need to research about Zambia and Livingstone International in order to assess this new business opportunity for your soybean farm? What is your follow up action pertaining to the business offer from Livingstone International? [Hint: Please separate your research materials and your reflection/opinion in your answers in different paragraphs. You must indicate your final recommendation in the end. For this question, it is expected to be around 2 – 4 pages.].

Answer 1

Before signing any deal with Livingstone International, I’ll surely need to conduct my own assessment and research in two categories:

1. With respect to Zambia

2. With Respect to Livingstone International

Now, let’s see what we should focus upon before proceeding to finalize this business opportunity.

1. Research and Assessment about Zambia

A. Current Political Regime:

Here, I should collect information on below possible questions…

- We need to first know about the current, political regime in Zambia. How much they are open about doing business with international players?

- How much stability is there in Zambian government? Is there any ingoing political turmoil in the country?

- If current government is favoring international trade with South American countries specially Argentina?

- In possible uproar against the current government, is the main opposition party have any objections towards dealing with Argentina business players?

These are some possible assessment questions, for which we should have information in advance to have conclusion if we can do business during current political situation.

B. Zambian Trade Policies

Here we need to focus on the possible trade relaxations and trade barriers put up by Zambian Government. Let’s see what our research should focus here…

- Is Zambian Trade Policy liberal towards international trade?

- Is there any existing trade barrier which might stop us dealing with Livingstone International?

- Are there any chances where Zambian government is looking to impose any trade barrier on international import?

- Is Soybean as a trade item allowed to be imported in the Zambia?

Now, let’s focus on our future trading partner, Livingstone International.

2. Assessment With Respect to Livingstone International

A. Legitimacy of Livingstone International as Business Unit

Here are some possible areas which we should know about company before we engage in business dealing….

- Who are its founders/promoters? Are they known as people of right ethical character in Zambian business market?

- Is Livingstone International a legal registered entity in Zambia?

- Is this company involved in any illegal business or trade?

- Was this company involved in any illegal businesses in the past?

B. Financial Health and Track Record

- How is Livingstone International doing in terms of capital availability?

- Is it able to clear out its dues in time looking at its past business dealings?

- Has it defaulted any of past payment with any other company?

- How many financial disputes are they dealing with other business players?

Conclusion from above assessment/research:

Considering with answers of above possible questions from both the areas i.e. Zambia as well as about Livingstone International, if we see that all the answers are coming as positive ones or as per our expectations, then we can proceed towards finalizing deal with Livingstone International for our Soybean trade.

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