Harding tool case
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Transcript of Harding tool case
![Page 1: Harding tool case](https://reader035.fdocuments.in/reader035/viewer/2022081416/55931e601a28ab765c8b47b1/html5/thumbnails/1.jpg)
Harding tool Harding tool CorporationCorporation
MATHIEU LorraineMOULINE Myriam
307
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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
![Page 3: Harding tool case](https://reader035.fdocuments.in/reader035/viewer/2022081416/55931e601a28ab765c8b47b1/html5/thumbnails/3.jpg)
Overview
• Companhia International de Comercio, SA
• It is a Brazilian commodities broker
![Page 4: Harding tool case](https://reader035.fdocuments.in/reader035/viewer/2022081416/55931e601a28ab765c8b47b1/html5/thumbnails/4.jpg)
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
![Page 5: Harding tool case](https://reader035.fdocuments.in/reader035/viewer/2022081416/55931e601a28ab765c8b47b1/html5/thumbnails/5.jpg)
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
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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
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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
![Page 8: Harding tool case](https://reader035.fdocuments.in/reader035/viewer/2022081416/55931e601a28ab765c8b47b1/html5/thumbnails/8.jpg)
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
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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
![Page 10: Harding tool case](https://reader035.fdocuments.in/reader035/viewer/2022081416/55931e601a28ab765c8b47b1/html5/thumbnails/10.jpg)
Existing situationExisting situation
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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
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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
![Page 13: Harding tool case](https://reader035.fdocuments.in/reader035/viewer/2022081416/55931e601a28ab765c8b47b1/html5/thumbnails/13.jpg)
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
![Page 14: Harding tool case](https://reader035.fdocuments.in/reader035/viewer/2022081416/55931e601a28ab765c8b47b1/html5/thumbnails/14.jpg)
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
![Page 15: Harding tool case](https://reader035.fdocuments.in/reader035/viewer/2022081416/55931e601a28ab765c8b47b1/html5/thumbnails/15.jpg)
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
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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
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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
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QuestionsQuestions
• What do you think about countertrade?
• Do you think it is bad for business and commerce such as the critics say ?