Case Analysis

Develop the following ideas.

1. The lack of foreign exchange is causing problems for Third World countries.

(a recent phenomenon in international trade, chronic shortage of foreign exchange in developing countries, the lack of understanding how desperate many developing countries are)

2. The solution to the problem is countertrade.

(countertrade / barter (the exchange of goods for goods); a worldwide phenomenon; to be concentrated between Western manufacturing countries and developing countries; to send highly specialized items - cars, computers, cameras; a middleman representing a developing country)

3. Coburn has to decide whether to take the risk. John McEnroe’s first reaction - finding the proposal ludicrous - changes on further consideration.

(to be worthwhile to accept something; in order to increase sales; risks involved on both sides; to find itself with merchandise it cannot sell; to find a way to sell something.; to ensure a return on the sale)

Critical Thinking Tasks

1.7.2

A. Search the Internet for keywords countertrade,barter, offset, buyback, switch trading, counter purchase. Use the obtained information in your case analysis.

B. Describe a countertrade exchange between two countries. Explain the possible problems associated with countertrade.