D. Prepare a report on the case. Use the instructions below

C. Say how countertrade differs from the traditional method of trading products between countries. Give reasons why countries engage in countertrade.

B. Describe a countertrade exchange between two countries. Explain the possible problems associated with countertrade.

1.7.2

Critical Thinking Tasks

Develop the following ideas.

Case Analysis

Case 1

“Coburn Tool Corporation, an American manufacturer of large and small machine tools and parts, gears, valves, and bearings, was a major supplier to industries and companies world-wide. Because of the rise of the U.S. dollar on exchange markets and serious financial crises in many of the countries in which Coburn did business, sales, particularly to Latin America, began to decline.

A major market for Coburn’s products had until recently been Brazil. For instance, in 1980 sales to that country’s industries were $640,000; but by 1983 sales had declined to just $183,000.

This serious problem seemed to have little solution because of Brazil’s chronic credit problems and lack of foreign exchange.

In the fall of 1984, however, a unique proposition was received at Coburn’s head office near Cleveland, Ohio, from a Brazilian commodities broker, Companhia Internacional de Comercio, S.A. (CIC). CIC’s offer was essentially this: in exchange for US $ 400,000 in assorted gears, Coburn would receive the equivalent in Brazilian shoes, which it could sell in the American market.”

1. The lack of foreign exchange is causing problems for Third World countries.

(a recent phenomenon in international trade, chronic shortage of foreign exchange in developing countries, the lack of understanding how desperate many developing countries are)

2. The solution to the problem is countertrade.

(countertrade / barter (the exchange of goods for goods); a worldwide phenomenon; to be concentrated between Western manufacturing countries and developing countries; to send highly specialized items - cars, computers, cameras; a middleman representing a developing country)

3. Coburn has to decide whether to take the risk. John McEnroe’s first reaction - finding the proposal ludicrous - changes on further consideration.

(to be worthwhile to accept something. in order to increase sales; risks involved on both sides; to find itself with merchandise it cannot sell; to find a way to sell something.; to ensure a return on the sale)

A. Search the Internet for keywords countertrade,barter, offset, buyback, switch trading, counter purchase. Use the obtained information in your case analysis.

Дата добавления: 2014-12-23