I n c o t e r m s C A S E

Music Explosion $-$ Developing a

$$Sound$$ Global Transport Plan

Music Explosion $($ME$)$ produces those really annoying car speakers that rattle

your windows. A typical set of ME speakers retails for $$350$ and weighs $10$ pounds.

However, they are a bit bulky at $6$ cubic feet per set $(2\mathrm{.}0\backslash$times $1\mathrm{.}5\backslash$times $2\mathrm{.}0).$ The speakers

are not overly susceptible to damage, though moisture can be a problem.

The company manufactures their $$Blasters$$ speaker line in San Diego for U$.$S$.$

distribution. The company$$s growth is waning and ME is preparing for expansion

into the Pacific Rim, starting with Japan, Taiwan, and Australia, to turn things around.

Nick Jagr, company president, has negotiated most of the issues to sell Blasters

through automotive aftermarket retailers in those countries. You have been brought

onboard to handle the transportation issues related to the company$$s initial effort in

global fulfillment.

During your first day, Jagr holds a fast paced meeting that bounces across

multiple topics. He occasionally mentions the global expansion project and makes

some offhand comments that are relevant to your new position as director of global

transportation. Since you want to make a positive day$-$one impression, you have

taken as many notes as possible and written down numerous Jagr quotes. They

read:

$$The local market for our product is sad, sad, sad. We need to join the global

marketplace but don$$t want to play with fire. Let$$s take a measured approach.$$

$$Our negotiations are going well but these retailers want to nail down trade terms

with those three letter acronyms before signing on the dotted line. I tried to tell them

that you can$$t always get what you want, but they were pretty insistent on those trade

terms.$$

$$We$$ve got little experience with global freight. Still, we want to play some role in the

transportation process or the retailers will ask for huge discounts. One buyer mentioned

$$Incoterms$$ and taking on responsibilities. We better get up to speed on that or they$$ll

put us between a rock and a hard place.$$

$$I think that a middle$-$of$-$the$-$road transportation strategy is on target. We should

manage the transportation process up to a point and then hand it over to our

distributors and retailers. Somehow this relates to those Incoterms.$$

$$We have to tumble the dice and pick a mode of transport that balances ser$-$ vice and

cost$.$ I like the idea of air freight.$$

$$I think that this international expansion is really going to work out well. Is it just my

imagination, or are we still overlooking some transportation issues? One of the

carriers vying for the business mentioned documentation as being critical.$$

After a few more rambling statements, Jagr got up and began to walk out of

the meeting. Before leaving, he turned to you and said, $$Welcome to the show.

Get your initial thoughts for our global transportation strategy worked out and

email it to me$.$

Be quick, time is not on our side.$$ Instructions:

Incoterms Team Project Case:

Your team is to analyze the attached case. Please be thorough in your answers.

Write a $5-7$ page paper answering the following questions:

Given the information in the case, which Incoterms group $($E$,$ F$,$ C$,$ or D$)$ should

ME pursue as the exporter? Why?

$1.)$ Based on your response to Question$1,$ what responsibilities and risks will

ME assume? Explain.

$2.)$ Which mode of transportation should ME use to move Blasters to their

new markets? What are the benefits this mode would bring?

$3.)$ Why should ME worry about something as mundane as paperwork?

$4.)$ Identify and describe other global transportation issues that Jagr may be

overlooking