Case 25: Harriman International

Case 25: Harriman International

Synopsis:

Harrimann International was a company in India that manufactures and exports finished textiles. One of the purpose for establishing the business, was to enable Dhawan, the owner of the company to raise the necessary found that would help financing his MBA in the United States.

In the course of its business activities, Dhawan received an order from Pioneer Trading Company, his first and regular customer. Taking the order was a good opportunity for Harriman International since it will yield to a high amount of revenue, which will qualify the company for incentives provided by the Indian government. Moreover, The huge profit involved in the project was an opportunity for Dhawan to keep some of his workers on the payroll.

However, despite all the benefits involved in this particular order, Dhawan is facing one challenge: the required deadline for the goods delivery (April 6) seems to be too short and Dhawan believes that there is a 20% chance that he will not be able to meet the stated deadline. If this happens, Dhawan will not be able to take full advantage of his initial revenue. There is a 40% chance that Pioneer will pay him 50% of the contracted price, 40% chance it would pay 30% and a 20% chance that he will only be paid 20% of the contracted price.

Dhawan made a primary investment on the needed material and he believes that if he rejects the project, he will be able to sell the embroidered and unembroidered cloth for 65% and 90% of their respective cost. However, this decision will rune his relationship with his faithful customer.

Objectives:

1. Dhawan wants enough funds to achieve his MBA in the United Stated

2. Dhawan does not want to rune his relationship with his faithful customer Pioneer

3. Dhawan wants to be able to maintain his workers on the payroll

4. Dhawan wants to maximize profit

Decision