Free Online Course in International Business

Knowledge Statement

Knowledge of Terms and Conditions of Purchase or Sale

Activity

Select a variety of foreign countries and the same number of products and/or services.

1.                     Divide the class into groups of 4 or other even numbers and assign a country and product or service to each group.

2.                     Have each group research their country and identify the country risks.

3.                     Divide each group in half with one- half representing buyers (importers) and the other half sellers (exporters).

4.                     Assign specific characteristics to each company:

a.      large or small – (sales and staff)

b.      time in business – (2 years or 10 years)

c.       profitability and cash flow – (strong or weak)

d.      international experience – (little or a lot)

5.                     Have each group identify the business relationship they would want to establish.  Include:

a.      method of payment

b.      contract components

6.                     Bring the buyers and sellers back together to negotiate their positions and come to agreement.

7.                     Have the buyers and sellers create a document outlining the key points of their relationship.

8.                     Discuss as a class the issues that were raised in the negotiations and the way they were resolved.

a.      product/service

b.      country

c.       company

Assessment

1.                     As part of the terms and conditions of the sale, an international manager must consider 

a.      whether the buyer or seller is writing the contract.

b.      the advantages and disadvantages of the methods of payments.

c.       only when the products will be shipped and the price.

d.      the creditworthiness of the buyer and the political risk of the country.

2.                     Laws governing international contracts known as jurisdiction

a.      are executed in the buyer’s country

b.      are executed in the seller’s country

c.       should be an neutral country.

d.      should be identified in the contract.

3.                     The type of distribution agreement established between the buyer and seller will

a.      include the same components whether it is a joint venture or agent agreement.

b.      include only the minimum points in order to make the transactions easier.

c.       include specific components as they relate to type of relationship.

d.      include only the minimum points to avoid huge legal fees.

4.                     The Incoterms help define

a.      most of the responsibilities and costs of the buyer and seller.

b.      who is responsible for the marketing costs for the goods.

c.       who is responsible for the product warranties.

d.      who is responsible for legal costs in case of a dispute.

(Correct answers: 1=b, 2=d, 3=c, 4=a)