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Assignment a4

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Introduction

Introduction In this assignment you will have to answer questions for two different exporting companies named company A and company B, that are both situated in The Netherlands. The questions concern transport documents, packaging, insurance, cost of freight, customs regulations and the rate of exchange. Assignment information Company A, situated in Rotterdam, exports 1000 mountain bikes to Oslo, Norway. This is the first time that Company A sells these goods to a client in Norway and there probably will be no other transaction in the near future. The goods are being transported to Norway by ship. The delivery term is C.I.F Oslo. Each bike weights 5 kg, is 1.60 m. long, 1m. high and has a width of 0.30 m. The invoice value is EURO 900.000,-. According to the payment terms of the sales contract, the payment can take place in the currency of the importing country. Company B, situated also in Rotterdam, also exports 1000 mountain bikes to St. Sebastian, Spain. This is the first time that Company B sells these goods to a client in Spain and there probably will be no other transaction in the near future. The goods are being transported to Spain by ship. The delivery term is C.I.F. St. Sebastian. Each bike weights 5 kg, is 1.60 m. long, 1m. high and has a width of 0.30 m. The invoice value is EURO 900.000,-. According to the payment terms of the sales contract, the payment can take place in the currency of the country where the buyer is situated. Introduction This assignment "A4" is an assignment where I need to investigate certain things about the documents, packaging insurance costs, rate of exchange, customs and the monetary systems. The first thing needed to be investigated where the documents that are needed for the transport, how they work and what they were. I'm also going to investigate what the packaging factors where and what the insurance of the transportation are. ...read more.

Middle

- It gives place for complementary information about the goods, often in the form of symbols. - It forms sometimes a physiological safety barrier against theft. b) Describe the packaging that will be used by companies A and B to pack their bikes. Thinking of space it is important to pack the bikes as economically as possible. I think that a good concealed box would be the most important part. If all the bikes are separate from each other without protective boxes (like the picture below) and foam, it could happen that the bikes clash into each other and you will end up with damage on the bikes. And as I said, I think that foam inside the boxes is the best way to keep the bikes from any harm that could happen to them. The bikes will then be transported using a container on a container vessel to the locations in Norway and Spain. But also in a 40 ft container, as the picture below. Also, the packaging of the goods is very important thinking about conditions in which they are transported. The goods to Oslo for instance could be on their way for couple of weeks, and probably not in the best weather conditions. And it helps protecting it against theft, if the seal of the package is broken, the companies will know something is stolen and are sure that the seller has not forgotten anything. Remember that (export) packaging is always the responsibility of the seller, whichever Incoterm is used, and that an insurer, when damage has been reported and claimed, will first check if the damage was not due to insufficient packaging. When such is the case the insurer will not pay out. 3. In order to insure the goods during transport there are some different transport insurances that can be used by the companies involved. There is a choice between Specific voyage policies and various Contract policies, like the (in Dutch called): - Declaratiepolis - Pauschalpolis - Aflaadpolis Discuss the insurance options that the companies involved can consider. ...read more.

Conclusion

There's only a risk attached and that is that it remains over the difference between the two different amounts in currency. - Leading and lagging This is a technique where you held up the payments when you expect that there is a depreciation in the exchange rates and when you expect the appreciation in the exchange rate, you can better pay as fast as possible. - Exchange rate risk insurance Options and forward exchange contracts are having a limited duration of 12 to 24 months. This could lead to a problem, when you as an exporting company have a longer period of delivery. In that case will the NCM insure the risk of currency depreciation. If the rate drops the NCM will pay out the loss, but of the rate increases the profit will go to the NCM. 13. Suppose company A receives a cheque in Norwegian crowns. What will this amount be? Show the calculation and mention the source of the information you needed to use. First you check which rate you can use, this will be the buying rate. So the calculation will be 900.000,- EUR * 9,53 NOK = 8.577.000,- NOK. So company A would receive a check of 8.577.000,- NOK for the goods that they have ordered. The currency comes from the ABN AMRO Bank. http://www.abnamro.nl/nl/zakelijk/valutacentrum/bankpapierencalculator.html Conclusion In this assignment I found out that the European Union with the two monetary systems has a great advantage for the business in the EU. I also learned the all the important transport documents, what the transportation methods are and how they work. But that's not all, I also found out how to find the exchange rates of companies, what the meaning is of that exchange rate and that the bank hands in some of the money to convert currencies. I know the package that is used for transporting bikes to another country and what they look for when transporting products. And I have learned what the trade barriers are, what has changed about them by the EMU and EMS and where they are for. ...read more.

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