Bangladesh University of Professionals (BUP)

Faculty of Business Studies (FBS)

Trimester Final Examination –August 2021
MBA (Professional) Program
Batch: Sep 2019 (Maj SCM)
Course Title: International Supply Chain Management
Course Code: SCM8604

Time: 1 hour 30 Minutes Full Marks: 40

Instructions
• Answer any four (4) questions. Read the case studies carefully and answer the questions
appropriately.
• Answer each question from a fresh sheet. Answer all parts of each question consecutively.
• Answer should be handwritten.
• After completing the exam, please scan the scripts, convert it into a single PDF and submit it
to google classroom.
• For scanning, converting, and sending the script to the link you will get additional 10 minutes
time.
• Exam time will start at 7.00 pm and will end at 8.30 pm. After 8.40 pm no script will be
accepted.

Question No. 1 (6 + 4 = 10)

M/S Auto India is a public limited company; they manufacture SUVs (sports utility vehicle), in
technical collaboration with General Motors of USA. The company has established their
manufacturing base at Ranjangaon in Pune. They have acquired an area of 250 acres and the total
project cost is estimated at Rs 1500 crores. As per the projections, the company is slated to
achieve a 25% market share in the Indian market, within a period of two years. Out of the total
project cost, 49% is brought in by General Motors and the rest is tied up with financial
institutions, international banks and Indian banks. The working capital is financed by a
consortium of banks in which Global bank, Pune branch, is the leader. The company imports
many parts of the car engine in a CKD (completely knocked down) condition from General
Motors, Detroit, after establishing import letters of credit through its main bankers, Global Bank,
Pune Branch. M/S Auto India approached Global Bank, Pune for opening of import letter of
credit as per UCP ICC 600 for USD 100,000, on sight basis, in favour of General Motors,
Detroit.M/S Auto India approached Global Bank, Pune for opening of import letter of credit as
per UCP ICC 600 for USD 100,000, on sight basis, in favour of General Motors, Detroit. Type of
credit - Irrevocable negotiable Application - UCP ICC 600 Applicant - M/S Auto India, Pune,
India Beneficiary - M/S General Motors, Detroit, USA Issuing Bank - Global Bank, Pune, India
Advising Bank - The American Bank, New York Negotiating Bank - The American Bank, New
York Reimbursing Bank - International Bank, New York Availability - Negotiable at sight
Expiry - At the counters of The American Bank, New York Amount - USD 100,000
Merchandise - Car engine parts Quantity and price - 50 units @ USD 2000 per unit.

a. Was Global Bank, Pune Branch correct in its argument, as the credit issuing bank?
 b. Was the stand taken by The American Bank, New York correct, as the negotiating bank?

Question No. 2 (4 + 6 = 10)

Based on the information mentioned in Question No. 1, briefly answer the following questions:
a. Mention the modes of international trade payment.
b. Which mode of payment do you suggest in this case? Justify your answer.

Question No. 3 (10)

Taneja Exports argued that they had clearly mentioned in the bills of exchange that the
documents were to be released against the co-acceptance of the Facility (Amount in Lakhs) 2003
2004 2005 Fund based a) Export packing credit 5.00 7.00 10.00 b) Foreign bill
purchased/Foreign bill negotiated 5.00 7.00 10.00 Non Fund based a) Performance guarantee
2.00 5.00 7.00 Export sales 20.00 30.00 40.00 French bank only. Immediately the Indian bank
send a message to Credit Lyonnais that since the bill of exchange contained the co-acceptance
clause by the French bank, they are liable to pay even though the importer had become bankrupt.
The French bank refuted the claim of the Indian Bank and intimated that the bank’s collection
instruction did not contain any co-acceptance clause by the French bank and they had acted as
per the provisions in the uniform rules for collection in the ICC publication No 522. Since
payments were not forthcoming, Taneja Exports filed a suit with the National Consumer Forum,
New Delhi for deficiency of services by International Bank of India, Mumbai, on November 10,
2005. They put forth the argument that the bank was deficient in not mentioning about the co-
acceptance clause in their covering letter to the French bank and in case of non-acceptance by the
French bank they would have returned the documents to India and the exporter could have
arranged for an alternate buyer or reimport of the merchandise. This negligence on the part of the
bank had caused them total financial loss. After hearing the arguments of both the parties, The
National Consumer Forum gave the judgement, on February 6, 2006, that the International Bank
of India was deficient and negligent in their services and ordered them to compensate the value
of the export bill of Euro 53000.00 (approx Rs 24 lakhs) along with 15% interest, till the date of
payment. Answer the following question:

Discuss the remedial measures the bank in India should take to avoid such damaging judgments
by the consumer forums.

Question No. 4 (3 +7 = 10)

The client, one of the world's largest car manufacturers in the world, is producing major cars in
Wichita, Kansas (smack dab in the center of the country). The client has the choice of
transporting the cars either by train or by truck. The CEO wants you to advise him on which
mode of transportation the company should choose and why. Also, he wants to know how much
money in total they would spend on car transportations every year. Cars are currently shipped by
train to central distribution points. From there, they are shipped by truck to the various car
dealerships. The car manufacturer owns all the distribution points. Trains require a minimum
load of 100 cars. The cost of shipping one car by train to a distribution point is $100. Trucks
have no minimum load requirement and can transport up to 10 cars at one time. The cost of
transporting one truckload of cars to any distribution point is $1500. Trucking costs from the
distribution point to the dealerships are $200 per load of up to ten cars. The average truckload
shipped to a dealer is 6 cars. Total demand for the cars is 1 million vehicles per year. 50% of car
buyers do not take delivery from dealer stock, but wait for factory delivery.

Given the information above, now answer the following questions:

(a) Which Mode of Transportation will you suggest for international supply chain?
(b) If oil companies are starting to use the already congested rail lines, will going 100% into
rail travel be dependable?

Question No. 5 (3 +7 = 10)

Starbucks is pretty much a household name, but like many of the most successful worldwide
brands, the coffee-shop giant has been through its periods of supply chain pain. In fact, during
2007 and 2008, Starbucks leadership began to have severe doubts about the company’s ability to
supply its 16,700 outlets. As in most commercial sectors at that time, sales were falling. At the
same time, though, supply chain costs rose by more than $75 million. When the supply chain
executive team began investigating the rising costs and supply chain performance issues, they
found that service was indeed falling short of expectations. Findings included the problems such
as (i) Fewer than 50% of outlet deliveries were arriving on time, (ii) Several poor outsourcing
decisions had led to excessive 3PL expenses and (iii) The supply chain had, (like those of many
global organizations) evolved, rather than grown by design, and had hence become unnecessarily
complex.

(a) How does Starbucks follow the path to effective cost reduction?
(b) Iidentify the supply chain risks and challenges the company will face? How the risks
could be mitigated?