Case Study 1 - Documentary Credit M/S Auto India

1) Global Bank, Pune was incorrect in its interpretation of UCP 600 article 14. The credit clearly stated that it expired at the counters of the negotiating bank and that the documents were to be sent to the head office of Global Bank. The credit did not contain any indication that presentation at the counters of Global Bank’s head office was for administrative purposes only, and that effective presentation to the issuing bank would only be considered when the issuing bank had received the required documents. UCP 600 article 6 states that presentation of documents must be made to issuing bank, or the confirming bank, if any, or any other nominated bank. The beneficiary presented the documents to the nominated negotiating bank and American Bank, New York presented the documents to the issuing bank as instructed. Therefore, Global bank’s Pune Branch had a duty to determine the number of days remaining in the five banking day period after presentation of the documents at their head office in order to comply with article 14 of UCP 600. 2) Yes, the stand taken by American Bank, New York, as the negotiating bank, is correct. As per the terms and conditions of the credit, they have negotiated the documents and forwarded the same to Global Bank’s head office. The American bank, New York should have received the notice of rejection of the documents within five banking days following the day of receipt of the documents at the counters of the head office of the Global bank. The stand of The American Bank, New York is in concurrence with the article 14 of UCP 600.

Paris. The person handling the export document can find out the discrepancy (the clause of coacceptance by the French bank on the bill of exchange) and inform the exporter either to amend it or call for the underlying agreement. 3) The Bank’s trade finance desk should be manned by qualified and trained personnel. Mumbai 1) All the export documentary collection bills are governed by uniform rules for collection ICC (International chamber of commerce) publication No. the remitting bank had failed to undertake proper scrutiny of the collection documents received by them. As per article 4a (1) of URC ICC 522. ‘All documents sent for collection must be accompanied by a collection instruction indicating that the collection is subject to URC 522 and giving complete and precise instructions. 2) The exporter should not invent and provide any unilateral directions without the underlying agreement and concurrence of the importer and his bank. The exporter should have taken ECGC’s (Export Credit Guarantee Corporation of India) buyer wise credit limit. There were no express instructions by the exporter to the bank regarding the co –acceptance by the importer’s bank in France. and in accordance with these rules’. which would have come to his help in the case of default due to bankruptcies of the buyer. ‘Banks will not examine documents in order to obtain instructions’. viz Credit Lyonnais. On the forgoing. Banks are permitted to act upon the instructions given in such collection instruction. there was no express undertaking by the French bank to co-accept the documents. monetary loss and mental agony suffered by the exporter and the bank officials. In this case. The International Bank of India (remitting bank) need not take into account the instructions contained in the body of the documents. 522. Also. the clause of coacceptance on the bill of exchange is not binding on the remitting bank as well as collecting bank. . which contained no instructions regarding the co acceptance of the documents by the collecting bank (French Bank). We cannot find fault with the French bank since they have acted according to the instruction contained in the covering letter of the remitting bank. 4) As per article 4a (2) of URC ICC 522.Foreign Trade M/S Taneja Exports. Hence. This simple step would have saved the reputation. The coacceptance of the documents was not agreed upon by the importer and his banker. deficiency of service cannot be charged against the bank.

The reasons being mainly due to high pricing of the vehicle with which it entered the market in China as Toyota followed the price skimming strategy while entering China. though it succeed in India? Ans. In addition. the new product of Toyota-FAW. Toyota failed to get a strong hold in the Chinese market due to poor understanding of the market. and Hyundai had priced their vehicles keeping in mind the price sensitive customers in China. The existing car companies like Volkswagen. But Chinese market. That’s why. The existing car companies had a sound knowledge of the market and lived up to the expectation of the Chinese customers. At the end of 2001.utility segment as it provided a new Avatar for the Indian customers and was priced appropriately and offered quality then the competitors. The late mover also proved to be a failure for Toyota as the markets were filled with competitors.Case-3 (Marks -16) LATE MOVER ADVANTAGE? Q1. To conclude the in Indian markets the late mover proved to be an advantage to Toyota as the multiutility segment had no existing players. Besides. the late entrant in India succeeded. the Vios failed to sustain in market due to its unremarkable design and excessive. however. It has large space with maximum seating capacity and good quality that its competitor Sumo. diverse country. While entering China Toyota assumed the markets to be similar to the Japanese markets.e. China is a large. Qualis had sold over 25. as TATA sumo was a mini-truck converted into a rugged allpurpose van. i. A standardized ad campaign will not do.000 units and by 2010. . resembled the American market in terms of the sales representatives sold cars on commission bases but in Japan the sales reps would get salary for the job done. in China there were huge competitions to race. Toyota had an upper hand in this multi. in India there were no competitors except Telco’s Sumo. The Toyota-Qualis in India had no competition. Honda.: The main reasons of fail in China and success in India of Toyota are. in reality. Why has the ‘late corner’s strategy’ of Toyota failed in China. it wants to build and sell one million vehicles per year. Toyota entered into a joint venture with First Auto Works Group In Japanies market sold only single brand of cars while on the other hand the Chinese markets sold multiple brand of other car companies also. three times extra other cars sold in China.

In the other case. they all are salaried. In addition. As. however it be similar to the American market. .Q2.: The reasons of Toyota’s falling to capture the Chinese market are very clear. where it was impossible to capture or make a harmonized marketing with everyone. there is no salary system. proved by delivering first-class results to their proprietors. who commits to pay high commissions. people are not dedicated to a single product. Why has Toyota failed to capture the Chinese market? Why is it trailing behind its rivals? Ans. Japanese marketers are dedicated to a single product. Chinese sales people are totally commission oriented. The dealers or sales personnel can be motivated by any proprietor. Japanese are well-knitted with a homogenous consideration. China is a large country with miscellaneous thoughts and ideas. Toyota thought the Chinese market would be similar to Japanese market.

Sign up to vote on this title
UsefulNot useful