eller agrees to deliver the goods to buyer under the term of ddp at thewarehouse of the buyer in tokyo japan the goods were transported andunloaded at the port and kept at customs shed for inspection and payment ofduties

- “Discuss the major differences between DAP at buyer’s warehouse in Tokyo and DDP at buyer’s warehouse in Tokyo.” Answer “DAP at buyer’s warehouse” “DDP at buyer’s warehouse” Import

MINISTRY OF EDUCATION AND TRAINING

UEH UNIVERSITY — COLLEGE OF BUSINESS SCHOOL OF INTERNATIONAL BUSINESS & MARKETING

lẽ]

UEH

UNIVERSITY

FINAL EXAM SUBJECT: EXPORT — IMPORT MANAGEMENT

Student: Lé Anh Hoang

Student IDr: 31191023326

Class: IBC05 - K45

Hồ Chí Minh, 24 tháng 4 năm 2022

“Q1 Seller agrees to deliver the goods to buyer under the term of DDP at the warehouse of the buyer in Tokyo, Japan The goods were transported and unloaded at the port and kept at customs shed for inspection and payment of duties The buyer was notified of the arrival of the merchandise and its location Before the buyer picked up the goods, the customs shed (including the merchandise in it) was destroyed by fire The buyer claims refund of the purchase price, stating that buyer did not receive the goods.”

- “Ts the seller responsible? Why?”

- “Discuss the major differences between DAP at buyer’s warehouse in Tokyo and DDP at buyer’s warehouse in Tokyo.”

Answer

- “Is the seller responsible? Why?”

Yes The risk is transferred under DDP terms when the goods are cleared and duty paid (but not unloaded) and delivered to the agreed-upon location The products have been unloaded at the port and have not been delivered to the buyer's warehouse in Tokyo, Japan, therefore the seller retains responsibility for the goods

However, in this case to reduce liability and costs, there are two ways that the seller must do:

1 Previously purchased insurance

Under the rules of DDP, the seller has the option to purchase insurance to protect their rights, decrease risks, and prevent damage to the seller's shipment of goods before the risk is transferred to the buyer If the seller has previously agreed with the insurer, the seller may be repaid an amount equivalent to the value of the cargo or a portion of the shipment

2 Case of force majeure

If the buyer and seller agreed in the previous sale contract to a force majeure situation

In this instance, the seller's expenditures can be minimized or avoided entirely, depending on the contract's agreement between the seller and the buyer

- “Discuss the major differences between DAP at buyer’s warehouse in Tokyo and DDP at buyer’s warehouse in Tokyo.”

Answer

“DAP at buyer’s warehouse” “DDP at buyer’s warehouse”

Import clearance & duties Buyer must bear import duties,

import clearance documents and necessary costs for import clearance

seller must bear import duties, import clearance documents and necessary costs for import clearance

TRANSFER OF RISKS

“When the goods are placed at

the buyer's disposal at the

destination

unloaded and not cleared).” “When the goods cleared and

duty paid (not unloaded) are

Is a pricing technique that

involves setting a product's

price at or slightly above its

variable production cost When

prices are set for a specific

length of time, this technique is

often employed When a

company has a limited amount

of unused production capacity

IS a pricing strategy that grounds

a product's cost of creation, manufacture, and delivery on the cost of producing, making, and delivering it A product's pricing

is dertved by adding a percentage

of the manufacturing cost to the selling price in order to generate a profit

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that it either wants to use

can't sell for a better price,

Customers that are exceedingly

price sensitive will exist

Unless a corporation was

willing to engage in marginal

cost pricing, this group would

not buy from it If this is the

case, a corporation may be able

to benefit from these clients on

a part-time basis

Gain Entry to Markets

Marginal cost pricing can be

used to gain entrance into a

market if a firm is ready to

forfeit earnings in the short

term However, by doing so, it

is more likely to attract

price-sensitive clients, who are

more likely to quit if price

points rise

Increase Sales of Accessories

If customers are willing to pay

a high price for product

accessories or services, using

marginal cost pricing to sell a

product on a regular basis and

Easy to Calculate Cost-based pricing systems, such

as cost-plus and break-even, are preferred by businesses because they are simple Simply add a

manufacturing cost, or establish a price simply based on the manufacturing cost Regardless of whatever option you choose, production and administrative costs will be covered

Ensures Profit Cost-based pricing might aid in maintaining a _ steady profit margin This is one of the few pricing strategies that guarantees

a profit If you price your goods and services in relation to their production costs, you will generate money regardless of the state of the industry

Simple for Customers t0 Understand

On occasion, you may need to boost the pricing of your goods

then profiting from future sales

may make sense

and services A price increase would irritate most customers, but if you blame it on growing production costs, it will be much easier to defend the increase without getting mired down in industry jargon

While cost-based pricing systems offer certain advantages, they also have some disadvantages Let's take a closer look at them down below

Long-Term Pricing Isn't

Possible

The approach is unsuitable for

long-term price setting since it

produces prices that do not

reflect a company's fixed

expenses

market price

Pricing is set at the bare

minimum using marginal cost

pricing Any firm that uses this

system to decide its pricing on

a regular basis may be

squandering a significant

amount of profit that could

have been collected if prices

Not Competition-Aware and Demand-Aware

Cost-based pricing does not take demand or competition into consideration Companies must

be aware of all costs related with

a product's sale Competitors will make more money if they create the same product for less money and sell it for the same price To

be competitive, you'd either have

to keep costs low or demand a higher price

Results in Different Prices Compared to the Market Cost-based pricing frequently yields prices that differ

Disadvantage

were set at or near market rate

Encourages Customers from

the Periphery

If a firm uses marginal cost

pricing frequently and then

tries to raise its prices, it may

discover that it is selling to

people who are particularly

price sensitive and will desert it

immediately

Costs are the main focus

A firm that uses this pricing

approach on a regular basis

will discover that it needs to

keep prices low in order to

make a profit, which is

ineffective if the company

wants to move into a

it at a lower price and buyers are willing to pay the higher price If you price much more than the competitors, on the other hand, you will almost likely lose customers You will lose money

in either situation Because no company sells its product in a vacuum, it's almost always vital

to consider what your competitors are doing

Could Result in Manufacturing Inefficiencies

Cost-based pricing can also result

in inefficient manufacturing and production Because the cost is passed on to the — client, expense-based pricing minimizes the need for a company to scrutinize the manufacturing process This means that, rather than optimizing manufacturing procedures, organizations implementing a cost-based

strategy may unintentionally inflate their processes Streamlining supplier and production costs is an important

way for a company to save costs

and increase revenues

Could Result in Unethical Practices

On the other side, cost-based pricing may lead to unethical production practices If you're trying to maximize profits based

on production costs, you can find yourself cutting corners while keeping the markup the same That's why cost-based providers, like Everlane in the cost-based pricing example below, must maintain openness

Example

Hoang is the owner of Hoang

Motorbikes, a private company

In his first year in operation, he

produced and sold ten bikes for

$100,000, despite the fact that

they cost $50,000 to produce

He proceeded to make and sell

15 motorbikes for $150,000 in

the second year, with a Hoang Lee is the owner of a

smartphone manufacturing company The whole cost of making a smartphone for him is

$1,000 Hoang Lee calculated the selling price by adding 10% of the cost to get at $1,100, which is the amount at which consumers

may purchase it ($1,000 + 10% *

manufacturing cost of $75,000 | $1,000)

First, we figure out how much

the entire cost has changed

That increased from $50,000 to

$75,000 in this example, a

difference in increment

numbers from 10 to 15 1s then

calculated and multiplied by 5

The difference in total price

($25,000) is then divided by

the change in quantity (5),

yielding a marginal cost of

$5,000 per motorbike

Q3 “Discuss the procedure of L/C at sight Compare the role and responsibility

of banks in documentary collections and letters of credit.”

Answer

1 Definition L/C at Sight

A letter of credit (LC) at sight is one that is due immediately (within five to ten days) when the seller satisfies the letter of credit's terms For vendors who frequently ship to foreign purchasers, this sort of LC is the quickest method of payment

Procedure

“1 Buyer applies for and opens a the L/C with issuing bank

2 Issuing bank issues the L/C, forwarding it to advising bank

3 Advising bank notifies seller the L/C

4 Seller delivers goods to the buyer Once the terms of L/C have been met

5 Seller forwards documents as stipulated in L/C to advising bank

6 Advising bank will pay for the seller within 5-10 days ( The seller will sign a sight-draft (or not) to demand payment

7 Advising bank forwards documents to issuing bank for review

8 Issuing bank reviews and accepts, issuing bank pays the seller’s bank (advising bank)

9 Issuing bank forwards documents to buyer Buyer makes payment or his /her account is debited”

2 “Compare the role and responsibility of banks in documentary collections and letters of credit.”

Documentary collections - Remitting bank

- Receive documents from

seller

- forwards documents to collecting bank

- Presents documents to Buyer

- Collect money from buyer or sign time draft with buyer

- Advises remitting bank of

acceptance or remits payment

Letters of credit

- Notifies seller the L/C

- Receive documents as stipulated in L/C from seller

- Forwards documents to issuing bank for review

- Receive money from Issuing bank

- Pays seller as specified in the L/C - Issuing/ Opening bank

- Do registration procedures and open L/C for buyers

- Issues the L/C forwarding it

to advising bank

- Reviews and accepts, issuing

bank pays the seller’s bank (advising bank)

- Forwards documents to buyer and collect money from

to the goods specified

- No guaranty of payment

by any bank

- No protection against order cancellation

- The payment is not made

until after the goods are shipped

- Made when the buyer registers and opens the payment of L/C

- Receive documents and check, review whether the documents are consistent with the signed contract or

not

- Goods are guaranteed to

be delivered in accordance with the contract

- Protect the seller when

the order is canceled As payment of LC is the buyer

Is required to open and register for payment of LC The buyer and Issuing bank had to enter into a contract and agree on legal

arrangements to protect

both the seller and the buyer

- Pro Forma Invoice

- Certificate of Quality and Quantity

- Packing List - Bill of Lading marked Freight prepaid made out to order of any bank

- Certificate of Insurance two copies

- Certificate of Origin form D

6 Delivery: not later than 9 April, 2022

Port of loading: Osaka, Japan

Port of discharge: Saigon, Vietnam

Partial shipment: allowed The buyer will advise the seller the name of vessel not later than five (05) days before shipping date by fax

7 Arbitration: all disputes arising out of this contract or breach thereof which cannot

be settled amicably by the parties concerned shall be settled by the Arbitration

8 Other term: the contract will come into force from 11 April, 2022 The contract is made in two (02) copies in English.”

Answer

“The errors, the missing points in the sales contract:”

12

- Missing name of contract, contract number

- Missing contract signing date: Date: 10 April, 2022

- Missing seller’s and buyer’s company, sales representative and purchasing

representative, seller's and buyer's address, and seller's and buyer's phone and fax numbers

- Lack of consent lines of both parties when performing the contract

1 Commodity: Coffee

The missing The description is not detailed enough

located, whether it has been sent or not, whether the two parties have agreed on the sample or not, lack of information

The errors Ton symbol in the contract is MT, not T, more or less

5% but there must be a specific party to make this decision

Wrong 200 T more or less 5% at the seller’s option or buyer’s

option Right “200 MT more or less 5% at the buyer’s option.”

Packaging description is missing

4, Price: USD1,500/T

The errors, missing Ton sign in contract is MT, missing port of destination,

missing year of incoterm, missing Total Amount

Delivery terms must be set before payment

5 Delivery: not later than 9 April, 2022

Port of loading: Osaka, Japan

Port of discharge: Saigon, Vietnam

Partial shipment: allowed The buyer will advise the seller the name of vessel not later than five (05) days before shipping date by fax