MDR started exporting one year ago serving requests from Portugal Then they

Mdr started exporting one year ago serving requests

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CEO’s decision to go into foreign markets. MDR started exporting one year ago serving requests from Portugal. Then they received orders from Italy where their products are highly appreciated. By the end of April, this year, they received a request from ITALMARBLE POCAI for USD.30,000 FOB. The negotiation ended in the following sales terms: 50% against documents and the balance at 60 days from shipment date. MDR estimates that at the beginning at least 25% of the total amount would be useful to start production which would take around 55 days. They also consider that after the first shipment they would require at least 30% of the P/O to cover expenses, besides the necessary to liquidate the first loan. As of the guarantees required by the Bank, they are evaluating to get a Line with one of the coverages offered by the Government. Finally, the last report requested to Dun & Bradstreet about their buyer shows that they are clean in respect of payments to their suppliers. It is for that reason that they have decided to close the deal using a Documentary Collection as a Mean of Payment. According to the facts above: - Specify the conditions of the Lines of Credit to be requested by MDR. Use the chart provided as guidance. Type of Line Destination / Use Term (days) Amount (Thousands of USD) Conditions for disbursement: Document or Mean of Payment Required Guarantees a. b. REDACUICOLA S.A. Case Prepared by Prof. Daniel Casiano CATBE IMPORTACION Y EXPORTACION S.L. located in Madrid, Spain has closed a purchase with his Peruvian supplier REDACUICOLA S.A. The import of hydro biological products from the above mentioned country, especially of filet and points of frozen giant squid, has increased due to high demand of the product. Nevertheless, the conditions of purchase rarely are in advance or against documents. Usually, buyers request terms of payment on credit that can go from 90 and up to 180 days from the date of loading. REDACUICOLA S.A. in this case has offered his client 180 days from B/L. However, they estimate that they will have gaps in their Cash flow that need to be covered with funds to be able to serve other orders. Banco Amigo has offered an operation that will let them count on funds instantly. In exchange the company will have to pay a preferential TEA (Annual Effective Rate) of 12% flat plus a commission of USD 45. On the other hand, their alternative bank, Banco Socio has offered a Post Shipment Advance Account for the same period and at the same rate. As per the text above answer the following questions: 1. ¿What service or product is being offered by Banco Amigo and how is that it works? 2. ¿What is the total amount that REDACUICOLA will have to pay for the operation proposed by Banco Amigo? 3. ¿What are the advantages or disadvantages (if any) between the offers of the 2 banks? Compendium of Cases III – Page 5 of 13
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