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issue in transaction - Case Study Example
Finance & Accounting
Pages 10 (2510 words)
Issue in case transaction Date PHASE I Manufacture and Sale of Product This form of business is taking place between businesses in two countries that are quite far away apart. Gumpbell Soup Company is based in the United States while Hen Hao is based in China…
The business during the manufacture and sale of large quantities of soup are likely to experience gains or losses due to the difference in foreign exchange translations. Losses or gains will also be experienced because of misjudgment on what, where or when to invest. This is a case of capital financing decision. A. Specifications The Oriental Delight soup product should and has to be produced just as the formula that was formulated by Specialty Laboratory. Apart from the production, the product must also be canned and labeled according to the requirements of Hen Hao. The specifications are well laid down and no change shall be made to them unless through writing. Concerning the specifications there is a risk that Gumpbell may not produce the goods exactly as prescribed and when this takes place, the company will suffer the damages as the goods are rejected by Hen Hao. Such an impact can be avoided if Gumpbell is sure of its production capacity to be able to fulfill the contract to the end. In addition, the labor employed by Gumpbell must posses the skills required by customers and when this is not available then Gumpbell has to recruit such a labor to avoid such risks. B. Quantities Quantities will depend on the demand requirements by the consumers as studied by the supplier (Hen Hao). ...
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