Business questions
Part 1.
Case Study 1.
In this case study, the subject in question is incoterms 2020 that specifies the duty of every party involved in a sales transaction. Under Incoterms, the rules and regulations try to specify where risk falls on the buyer or the seller (Schaffer R. et al. 22). In this case, FOB rules dictate that the seller is responsible for all risks until good are loaded into the ship. As such, the seller is liable for any damage that might occur to the goods before they are loaded into the ship. Additionally, the seller can only account for these goods once the ship has departed from the shipping dock. The buyer will gain ownership and risk over the good only if the ship has left the dock. Consequently, the court should rule in favor of the buyer as the goods were damaged before the ship could leave the bay. The seller should, thus, be liable for the damages over the goods.
Case Study 2.
Under this case study, the subject in question is the classification of CamelBak back-mounted packs (Schaffer et al. 22). While the United States government classified the product as travel and sports bags, the company manufacturer was of the opinion that the bag should be treated as insulated food and beverage bags. The government specified that insulated food and beverage bags are to be taxed at a 7% rate, while travel and sports bags were to be taxed at a 17.8% rate. CamelBack packs had an interior plastic bottle that allowed its users to store and carry drinking water. As such, the backpacks should have been treated as insulated food and beverage bags. The courts should have ruled in favor of the company.
Part 2.
Question 1.
Lower set-up and running cost is a major benefit of setting a business and selling products online. This is because costs associated with factors such as premises, wages, and many other operating expenses are greatly reduced. Another advantage is mobility, as the business can be operated from any location. The owner can operate their business as long as he or she has access to the internet. Operating over the internet allows the owner to overcome challenges associated with operating time. That is, the owner is not restricted to what time they can open or close their business. Lastly, running a business over the internet has great marketing benefits, such as easier target marketing (Nedaraja 9). However, such businesses face challenges such as lack of confidence from clients due to many fraudulent online businesses. Lack of shop assistants might also lead to reduced customer service, which translates to lower customer experience. Lastly, online businesses face significant competition due to reduced barriers to entry. This might translate to reduced sales revenue and profits as a result.
Question 2.
While negotiating, it is important to consider government policies affecting imports. Quotas on goods could massively affect imports as they limit the number of goods sold into a country. Additionally, tariffs affect international trade as they define the amount of taxes imposed on imports. Consequently, quotas and tariffs will determine the sales revenue and subsequent profits that a company might reap from exporting products into a country. It is also important to consider the rate of tax on foreign companies while negotiating. Notably, many countries will impose higher tax rates for foreign companies. Restrictions on piracy are also another important factor to consider since counterfeit products can significantly affect a business’s sales revenue. Lastly, one should negotiate on subsidies that will see their company benefit lower costs due to reduced tax rates.
Work cited
Nadaraja, Rubathee, and Rashad Yazdanifard. “Social media marketing: advantages and disadvantages.” Center of Southern New Hempshire University (2013): 1-10.
Schaffer, Richard, et al. International business law and its environment. Cengage Learning, 2011.