Harding tool Harding tool CorporationCorporation

MATHIEU LorraineMOULINE Myriam

307

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

Overview

• Companhia International de Comercio, SA

• It is a Brazilian commodities broker

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

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

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

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

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

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

Existing situationExisting situation

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

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

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

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

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

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

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

QuestionsQuestions

 

• What do you think about countertrade?

• Do you think it is bad for business and commerce such as the critics say ?