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suffering badly from the strain placed upon it from delays in payment for Argentinian and
other orders. Phosphor bronze valves, if they could possibly be produced, would place a
substantial strain on the foundry, which was currently under pressure from the Moroccan
order, which already was overdue. The MD knew the position of this order, but did not
know exactly what the overall order schedule implied for new demands. A more serious
problem was the exact nature of the agency agreements in the Saudi market. Though J
realised that there were no formal agreements in any country within the Middle East, there
were a number of informal undertakings. However, there appeared to be no existing
records detailing such relationships. You are also unclear whether acceptance of an order
from a Middle East trader would interfere with existing structures.
What action should you as the MD take?
a) Accept the order on current prices?
b) Accept the order at premium prices?
c) Refuse the order?
d) Delay the answer for as long as possible?
You as MD finally manage, with great difficulty, to contact C Phelan, the Technical
Director, by telephone on Saturday evening. You learn that there would be certain
problems in producing the series 5 valve in phosphor bronze, but these were not serious.
The costs of the raw materials and the difficulties of machining the material would mean
that the costs to Burke Engineering would be around 30 per cent higher than the current
price charged for the standard series 5 valve. The amount of time that would be involved in
their manufacture would be approximately 10 per cent longer than the standard, in line
with the experience on other valve types which had also been cast in phosphor bronze.
The Technical Director did not know what the production schedule was and suggested that
no action should be taken until this was clarified. Phelan had no idea on the exact
relationship of the company with its various Middle Eastern intermediaries and suggested
that the MD should clarify this with the Sales and Marketing Department who were
responsible for this. It might be possible for the MD to contact Gemayel Allerian, an agent
responsible for sales in North Africa, who might know who Bajin Arromani was and
whether the order should be accepted and on what terms, should the MD fail to contact the
sales and marketing department.
What action should you as J Franklin now take on the Bajin order?
a) Accept the order on current prices?
b) Accept the order at premium price?
c) Refuse it?
d) Continue to delay the order?
e) Contact the production department to ascertain the production problems associated with
the order?
On Sunday morning, you manage to contact Gemayel Allerian, the main dealer involved in
Burke Engineering North African sales. The MD learns that from time to time Arromani
orders from Burke Engineering rather than some of the other European manufacturers for
particular markets, especially those that had particular problems with US regulations
concerning trade with Iran and Libya. Every year, he ordered around €700,000 of goods
from Burke Engineering and had been one of the best customers in the region, for the last
5 years. He had good contacts in the various ruling classes throughout the Middle East
who were the main investors in chemical factories. He was always willing to pay premium
prices for all the products that he ordered from Burke Engineering but demanded that
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