Question

Assume you are the owner of a very large soybean farm in Argentina, a country located in South-Eastern South America. Soybean is a commodity which is traded globally. 70% of all soybeans are used as chicken and pig feed. It has been widely recognised as a very efficient source of protein and energy.

Another use for soybeans is splitting (or crushing) it up into soybean meal and soybean oil – 80% becomes the meal and 20% the oil. Much soybeans are grown in South America (~31% of world total in Brazil, ~18% in Argentina), and demandfor the soybean, soybean meal and soybean oil is growing very fast in Asia (especially China).

One day, you received an unexpected and peculiar call from Zambia (a landlocked nation in Africa). The person over the line identified himself as a procurement officer of Livingstone International. He spoke fluent Spanish and asked if you can sell him two shipments of unprocessed soybeans. His request is large enough to clear out 80% of your annual harvest. The issue is you have never sold on the international front as you have always sold your harvest to the domestic merchants.

Question 1

As the owner of the soybean farm in Argentina, you have never sold on the international front. Research and briefly explain all the possible risks involved if your soybean farm is expanding into global trade. [Hint: Please organise all your research materials into FIVE (5) categories of risks.]

Question 2

What do you need to research about Zambia and Livingstone International in order to assess this new business opportunity for your soybean farm? What is your follow up action pertaining to the business offer from Livingstone International?[Hint: Please separate your research materials and your reflection/opinion in your answers in different paragraphs. You must indicate your final recommendation in the end. ]

Answer 1

1 There can be many risks involved in Trading internationally. These are in 5 categories:

a) It can involve many shipping risks like a ship can drown, and many risks can occur. It can also involve damaging of Soyabean.

b) Business should be authentic. It should work with legal requirements. It will help in creating a pure form of business.

c) In can involve credit risk. Unpaid payment due to unknown business parties may occur.

d) Foreign exchange rates are never constant. It can also affect international trade.

e) Business is all about ethics and values, and this can differ from place to place.

We need to research totally about the licensing, strategizing, importing and exporting, franchising, branding, and foreign direct investment.

As a recommendation, we should also totally research the trends, customs, government rules and regulations, customer behavior, and fashion prevailing international business.we should also research the pricing globally.