Question

Globalisation represents the opportunity to deliver improved value to end customers by delivering world-class supply relationships in terms of cost, quality, delivery and performance. More and more buyers have to learn to develop a supply base in more than one country in order to remain competitive in the complex and dynamic global business environment.

1. Examine the various types of contracts available to your company ( a vehicle- manufacturing company) when dealing with international suppliers and advise them on which contracts would be most beneficial to achieve a competitive advantage.

Answer 1

With globalization, we can deliver improved value to end customers by bringing world class supply relationships in terms of cost, quality, delivery and performance. Here, business environment is quite complex and there are several suppliers from various countries. In order to remain competitive in international business, we need to form contracts when dealing with international suppliers. There are several suitable contracts, these are as stated below:

• Intellectual Property Licensing: as, my company is Vehicle manufacturing company, here; I can deal with international suppliers by transferring Intellectual property rights. Here, supply can use our patent, copyright and trademark under license, as supplier needs to manufacture various components and parts which are necessary for final products preparation. Hence, Suppliers need authentic right to produce copy righted things.
• International supply agreement: under this agreement or contract, suppliers will manufacture and deliver various goods, items. This agreement will state product and quality requirements, terms and conditions that will help to bring good relationship between vehicle manufacturing company and supplier.
• Franchisee agreement: here, vehicle manufacturing company can also build franchisee agreement. Here, suppliers or delivery person could get right to sell the products manufactured under the license of the company.
• Joint Venture Agreement: with this type of contract suppliers can come together, for example- 2 or more suppliers can form a company to deliver common objective. Such kind of agreement could be helpful for a situation where we find that some objectives are tough enough to get delivered by one supplier.

According to my view, International supply agreement or contract would be great choice for vehicle manufacturing company to deal with suppliers in international trade or business. With this kind of contract we can fulfill several objectives and gain competitive advantages. Here, we will state several requirements that are to be fulfilled by each supplier. Such contract will also include payment terms, period of relationship, work details, dispute resolution clause, terms and conditions and other important details.