Background of the case
The importance of the decision
The company must have the ability to manage tasks. In addition, they must have the knowledge and ability to perform tasks. The importance of executive is decision because the decision is the heart of the administrate. However, the decision will be in almost every step of the work. Even individuals could not avoid the decision so it seems that the decisions are not to consider. But if this is a big decision, which means that if you make the mistake decision may become much damage or hard to solve. So most of decision should be considered carefully before deciding because any decision of the Executive may refer to the company's survival.
What factor can help to decrease error of making the decision? I think information is key. If you are looking for information and have a good information that can reduce of mistakes. So the characteristics of good information have 4 choices 1. Reliable Source 2. Accuracy 3. Intelligibility 4. Enough and 5. Current.
Causes of the wrong decision may be several reasons such as the decision on the basis of habit, lack of information or bad information, time limit or hurry, careless, some influences dominated, Biases
The importance of the conflict.
What is the conflict? A common conflict is not understand or have no comments of a person or group of people. Due to the differences in attitude, beliefs, experiences, needs. Operational aim method.
Including goodwill that leads to the expression of feelings and actions that is different. This may result in a conflict. The conflict is a conflict within the person, between people, between a group and between the organizations
The importance of negotiation
Negotiate to help seek mutual benefit, reduce conflict and lead to an agreement which is always helpful.
The key to negotiating
1.Sincerity because it helps the confidence and trust
2.Understanding need to have both the content and understanding of human nature (Empathy)
3.Acceptance, It is important to recognize that partners need to both parties. The acceptance by the honor and respect, regardless of the value and dignity of individuals. Accepted as a basis of creating relationships in the negotiations.
4.Communication, the problem of failed negotiations caused by improper communication but most successful of negotiations is good communication. So communication is the basis of creating a relationship. Negotiations must start with a friendly, trust, peace of mind and feel comfortable to negotiate. Therefore, communication is like a door open to negotiation.
The negotiations will be successful. Would look as follows.
1.Both parties feel worth. If there is any parties feel not worth negotiations then was not successful
2.Receive benefit.
3.Most demand of both parties get the response
4.End the problem
5.Both parties glad to do to negotiate again.
Problem
Problem is the agreement of the foreign currency fluctuations value with a foreign partner.
Making Agenda
Alternative solutions
1. Establishment institute that have professional and experienced related to trade with foreign countries to consult problem.
2. Have a Forward Contract
3. Buy the right to purchase or buy the right to sell in the future.
4. Management of foreign currency in accordingly in both revenues and expenses (Natural Hedge)
Conclusion
After negotiating in trading with foreign. Conclude that they are preparing a forward Contract.
Forward Contract is a contract to buy or sell foreign currency in future by the buyer and seller agree to buy or sell any country currency in amount of trading present but in contract can specify delivery date in the future. The seller will use a Forward Contract when seller needs to know exact costs and do not want to worry or face the risk of foreign exchange. The seller can contact the Bank that uses the service. Or at banks for export for request forward Contract or so-called "forward reservations" which exchange rate contracts that will be applied in future or when the seller receives payment from the foreign buyer. The bank is like a middleman who agreed to purchase foreign currency from seller because the Bank will purchase the exchange rate. If buyers are satisfied with the Bank's offer price after that, The Bank will issue a contract to seller call this “Forward contract” which specifies the currency, amount, the exchange rate that the Bank agrees to purchase, and the term of the agreement
Both of buyers and sellers want to share the risk and want to get the most benefit because Forward Contract can distribute the risks and prevention of the risk of exchange rate fluctuations. Also know the exact costs and revenues. In addition to Forward Contract can assume the profit
Because of forward Contract is a way to diversification rick that has been very popular. It also will help to plan money in advance, know the exact cost and easy to control business.
Why didn’t choose others solve the problem? The reason is as follows:
1. The establishment of institute have professional and experienced that related to trade with foreign countries to consult the problem because The Company have to pay cost a lot not worth the benefits and The organizational structure may have a multi-step process to make a waste of time to trading decisions in each
3.Buy the right to purchase or buy the right to sell in the future because the company have to pay more cost which each bank is different. Risk more than Forward Contract. And Purchase rights intend the minimum value to buying or selling rights contract is higher than the Forwards.
4.Management of foreign currency in accordingly in both revenues and expenses (Natural Hedge) because Natural Hedge is manage revenue and expenses Such as determine the revenue and expenses to the same currency and delivered in a matching or similar. However, heart of this solution is matching or matches between cash flow as revenue from one customer came to matching expenses to any partner. If the match is offset perfectly. We can reduce the impact of currency fluctuations but if the transaction was not consistent, it cannot solve the problem and also additional problems.