Harimann International Essay

Executive SummaryVikram Dhawan is the president of Harimann external that he established in May of 1990. Vikram established the origin in an effort to fund his impending Masters in demarcation giving medication in the united States. The business is located in Delhi, India where tax incentives ar oblationed for business who export tidys and reals to targeted countries including Japan, Canada, and France. Incentives in India include no tax on goods shipped to target countries, incentives on shipments exceeding 150,000 INR, partial rebated duties taxes on raw corporeals import for the use of exported goods, cash incentives, and license renewals for materials used in production. Harimann global in its first year, 1990, focused on the exporting of linen household goods. Business was slow and acquires were low until 1991 when a particular type of hand-embroidered tabularize linen became very popular. Sales and orderlinesss increased.Dhawan was then faced with the inability to depone on his supplier after the demand exceeded their ability to provide material need for the impending orders. Dhawan then established a second manufacturing installing leaseing over 100 employees and producing an average of 1,000 garments a day. In January of 1992 one of Harimann multinationals first clients lead up Trading Company requested samples and later(prenominal) lay an order with Harimann for six styles of garments. The order well exceeded the 150,000 INR requirements and qualified for another(prenominal) incentives provided by the Indian government. Pioneer Trading Company also placed a stipulation on the order that it had to be provided by the deadline of April 6th. This deadline would break dance Harimann external about two months to fulfill the order. Placing the order would allow Harimann to unsex a banging profit, but also allow him to continue to employ workers for an extend period of time that would be furloughed in other cases. last ProblemWhat should Harimann International choose to do? Should they convey the order and potentially make a high profit deal, continue the relationship with Pioneer Trading Company, and benefit Harimann International employees or deny the deal and not suffer the potential for a lose by not see the April 6 deadline established by Pioneer Trading Company? synopsis of the Industry and the CompanyTextile production and trade is the leading intentness in India. According to India Brand Equity Foundation (ibef.org) the cloth labor provides 14% of the industrial production, 4% of Indias Gross Domestic production (GDP) , and 10.63 % of export earnings. The textile industry is second only to agriculture in providing employment to the people of India proving over 35 million employment opportunities. The textile industry in India produced over 7.58 billion in revenue compared to the United States at 7.21 billion between April and July of 2010. Indian government provides incentives to organizations exporti ng large amounts of textile products. Incentives include tax breaks on imported raw material as well as exported finished goods, cash incentives, and insurance benefits to employees of the organization. feasible Decision AlternativesHarimann International is faced with a number of conclusivenesss to be do. first Vikram Dhawan can reject the order entirely and risk losing an established node who has helped his organization grow over the past year. A second alternate(a) is to accept the order as well as the deadline of April 6th release the risk of not meeting the deadline. This alternative has the potential of making a substantial profit due to the size of the order and the incentives provided by the Indian Government. This alternative also provides more work for employees of Harimann International that would not contribute been provided if the order is not accepted. The alternative also has the potential for disaster in that it if the deadline is not meet the respected client could and future profits could be lost. The third is to accept the order, not meet the deadline, and sell at a reduced price to Pioneer. This alternative also has the risk of losing an established client and future business.Evaluation of AlternativesThree alternatives face Vikram Dhawan of Harimann International. The first is to not accept the offer and reject the proposal of delivering the product to Pioneer Trading Company. The ending would have lasting repercussions with the relationship between the two companies and inevitably salute Harimann International future profits. Harimann International forget also incur a red due to purchasing the product already and having to resale. The decision trees put in tables 3 and 4 show the loss after marketing the embroidered product at 65 % of cost and the unembroidered product at 90% of cost to be a loss of $45,202.50. The second is to accept the offer with two different answers. The first outcome is that the order is completed and delivered on time. This outcome of alternative two will gain a profit of $315,238.The completion of the order will also keep a good relation between the two companies with the adventure of further profit for Harimann International in the future. The second outcome is some what more complicated. The second outcome consists of probabilities that Dhawan believes will occur. As seen in tables 3 and 4 the probabilities will be applied if the shipment is not delivered on time. If the order is not delivered on time Dhawan believes that the probability of 50% payment will occur 40% of the time. The payment for this occurrence will create a loss for Harimann International of $72,081. The probability of 30% payment Dhawan believes is 40% netting a loss of $311,380. The final probability is 20% of a 20% payment of $360,720.Recommendationsafter careful review of the two alternatives Dhawan should proceed with the order. With an 80% prospect of end the order and a profit of $315,238 he should take the risk. Tables 3 and 4 both show the probability in dollars of accepting the order to be in the positive at $270,132.32. Table 3 uses color codes to pock the arithmetic occurring and 4 is a more simple way of presenting the decision tree. Table 1 shows the total profit that can be made by achieving the order on time. Table 2 shows the loss that will be incurred if the order is not delivered on time. Even though the possibility of incurring a $360,720 loss is possible, the probability of it occurring is very small. With an 80% chance of completing the order on time Dhawan should take and complete the order with Pioneer Trading Company for a profit and securing future business that will also bring in more profit for Harimann International.