Sabas, Ivan Timotei A.

BSBA FM IVB FMN12- Special Topics on Financial Management

Prof. Sarabia January 13, 2012

MINI-CASE Croswell International Precious Ultra-Thin Diapers 1. How are pricing, currency of denomination, and financing interrelated in the value chain for Croswells penetration of the Brazilian market? Can you summarize them using Exhibit B? Pricing affects the value chain of the Croswells penetration of the Brazilian market. With the exhibit C, showing that the diaper prices of the competitors is much lower than the Croswells. They must either convince the buyers that they have advantage over the other product, or start to analyze how to lower their price without incurring much loss on profit. The currency of the denomination is in Mexican, thus staving the currency risk to Sousas firm, but if the price of dollars increase even with the Material Hospitalars carrying the risk, the Croswell is still affected. As the greater the risk of Sousas firm will indirectly carry over to the Crosswell, with likely increasing still the price of the diapers in the Brazilian market just to profit. In terms of financing the trade, inventory, and storage, Sousas initial analysis is the bases of the exhibit C. The three; pricing, currency of denomination, and financing will not only factor the salability of the product, or its penetration but also goodwill and reputation of the Croswell that will be establish on the Brazil.

2. How importer is Sousa to the value chain of Croswell? What worries might Croswell have regarding Sousas ability to fulfill his obligations? Sousa will be important to the value chain of Croswell. Without any subsidiary in Brazil, Croswell didnt know the flow and workings of the Brazilian market. It will be also their first venture in that country, and it will set the impression and their reputation in that country. The first worries Croswell can encounter is if the Sousa will pay their obligation. Other is if Sousa can penetrate the market successfully, and last, like in the answers on

no. 1, is Sousa is carrying their name in Brazil, it is not only the Material Hospitalar but also with Croswell reputation, and future dealings.

3. If Croswell is to penetrate the market, some way reducing its prices will be required. What do you suggest? Based on the analysis, and my speculation, the Croswell must suggest to Sousa, that they reduced their profit margin at the beginning as 20 percent is to much high, then there will be the retailers that will also do their profit margin which will increase the price of the product. Sousa must also find alternative financing which must be cheaper to lower the price and still they can afford to gain profit.