Ferro Case Study Answer

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S w 9B11M115 Abstract for promotional use only. Full version available at www.iesep.com FERRO INDUSTRIES — EXPORTING CHALLENGE IN A SMALL FIRM Dr. Justin Paul, Dr. Parul Gupta and Dr. Shruti Gupta wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request…show more content…
Yusuf had placed a large order for roll-forming machines from Ferro in March 2010, but he had been unwilling to pay for the consignment in advance. Ferro exported the machines from its New Delhi office. The machines were sent from the Ferro factory to the shipping line on May 6, 2010. The container took one month to reach the port of Riyadh, Saudi Arabia. Yusuf had agreed to pay before he collected the machines from Riyadh, but even after Yusuf received the bill of lading (B/L) from Ferro, the company still did not have the desired payment. Consequently, the Sharmas sent instructions to their carrier, World Shipping Company, not to release the machines until the promised amount was paid. The situation was complicated by the fact that Yusuf was actually a middleman for a third party in Saudi Arabia (the real buyer of the machines) and was therefore dependant on this party for payment. Further, holding back the consignment meant increased demurrages (charges for delays of cargo ships) for Ferro. Thus, in order to minimize financial loss and to avoid offending and losing a significant, regular client, Garima Sharma had decided to release the machines to Yusuf before receiving payment — but now she worried that she should not have done so. BACKGROUND OF THE COMPANY Ferro Industries entered the steel industry in 1995 as a small firm and developed into a highly successful company in many

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