Harding tool case
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Harding Tool Corporation, an American manufacturer of machine tools, has received a proposition from Companhia International de Comercio, a Brazilian commodities broker, to exchange $400,000 worth of gears for $400,000 worth of shoes to sell in the American market, as Harding's sales have decreased in Brazil; however, Harding has no expertise in selling shoes and must consider options such as refusing the deal, accepting with conditions, finding a new broker, hiring an agent, or setting up operations in Brazil to handle the exchange.
Harding tool case
- 1. Harding toolHarding tool CorporationCorporation MATHIEU Lorraine MOULINE Myriam 307
- 2. Overview ? Harding Tool Corporation is an American manufacturer of large and small machine tools such as parts, gears, valves and bearings ? It is a major supplier to industries and companies worldwide ? Brazil is one of its major market
- 3. Overview ? Companhia International de Comercio, SA ? It is a Brazilian commodities broker
- 4. PositionsPositions ? Loyd Wilcox is the overseas Sales Manager of Harding Tool Corporation ? F. Garret, M.Ross, C. Carmichael and P. Lamoreux are executives of Harding Tool Corporation ? Jose Cabral is the president of Companhia International de Commercio ? Julia Peters is the president of Overseas Development Corporation ? Rosemary Kaplan is a recording secretary who writes minutes from meetings
- 5. PlacesPlaces ? Harding Tool Corporation : Cleveland, OhioHarding Tool Corporation : Cleveland, Ohio ? CIC : Rio de Janerio, BrazilCIC : Rio de Janerio, Brazil ? Overseas Devlopment Corporation: New YorkOverseas Devlopment Corporation: New York
- 6. ExhibitsExhibits ? Exhibit 1?: Information from Cabral regarding shoes ? Exhibit 2?: Letter from Julia Peters, Commodities Broker to Lloyd Wilcox? ? Exhibit 3?: Harding’s Gross Sales to Latin America from 1978 to 1985 ? Exhibit 4?: Minutes from meeting of Harding Exectivs to Discuss the Brazilian Offer
- 7. Existing situationExisting situation ? After a decrease in sales in Brazil, Harding Tool receives a unique proposition of countertrade from CIC : ? 400 000 $ in assorted gears from Harding in exchange of ? 400 000 $ in shoes from CIC
- 8. Existing situation : Strengths ? They can make a better profit out of this sale instead of getting the regular money they would have been paid for ? Nowadays a lot of firms specialized in countertrade exist and can help Harding Tool selling these products ? Reboost trade with Brazil, which has been a little low these past years ? Exploring this new option may lead to an epiphany : maybe they will consider using countertrade more
- 9. Existing situation : Weaknesses ? Harding Tool is specialized in manufacturing tools not selling shoes ? The rise of the dollar and tight credit possibilities in developing countries are stopping them from trading with those countries ? They are not in a dominant position : they need this money and they can’t loose this client ? On the American market, they will be in competition with giants like Nike, Adidas, Reebok
- 11. intercultural differences ? Is the quality and prices of these shoes are the same to those in the US?? ? Do these shoes fit the American market and their needs ? ?Harding Tool has no expertise in shoes retaliation and what are American people looking for ?Maybe these shoes would perfectly fit the Latin American market but not the US market
- 12. Statement of the problem ? Companhia International de Commercio offers in exchange of 400 000 US Dollar in assorted gears, the equivalent in Brazilian shoes, which they could sell in the American market. ? Harding Tool Corporation has absolutely no use for shoes and knows nothing about selling them
- 13. Option 1 : Refuse the deal with CIC +?: ? No loss or problem with selling the shoes ? No risks ? No damage to the brand image ? Current strategy - : ?Sales still decrease in Brazil ?Loss of a good customer ?Destroying a business relationship ?Bad image in this country ?Loss of an opportunity to make a higher margin
- 14. Option 2 : Accept the deal with CIC with certain conditions like Julia Peters finds a shoe seller who can handle the articles ?+?: ? Increase the sales in Brazil ? Possibility to earn more profit ? Could lead to an expansion of their business ? May lead them to consider more often countertrade when negotiating with countries from Latin America ? Settle an investment in Brazil - : ?Loss of money and time ?Loss of credibility ?Unknown market
- 15. Option 3 : Stop dealing with CIC and find a new Brazilian commodities broker who can only buy the gears for money ? +?: ? No countertrade ? Nothing to sell after the deal ? No risks ?No loss of time and money -: ?Hard to find because of the actual crisis in Brazil ?Rise of the dollar on foreign exchange markets and tight credit ?Countertrade sounds like a really good option to maintain trade in Brazil
- 16. Option 4 : Employ an agent to sell the product in Latin America +?: ?An agent knows the market in which he sells the product ?And knows the product ?He would bring his experience ?Conserve the brand image -?: ? Cost more to employ an external agent ? Lower their profit margin on these products ? Risks he couldn’t sell
- 17. Option 5 : Settle down in Brazil +?: ? No intermediaries ? Direct income ? Could find more clients directly ? Expansion of the brand -? : ? Cost a lot of money to conduct market studies ? Even more money in settling down in a new country and building subsidiaries ? Lot of risks because of the actual situation
- 18. QuestionsQuestions ? ? What do you think about countertrade? ? Do you think it is bad for business and commerce such as the critics say ?