Material and Pioneer Trading Company

Topics: Material, Raw material, Contract Pages: 9 (2567 words) Published: April 15, 2011
Case 25 Harimann International
Executive Summary:
Harimann International was a Delhi-based manufacturer and exporter of finished textiles with sales in excess of 10 million Indian new rupees (INR). The company was launched in May 1990 by Vikram Dhawan after his graduation with a Bachelor of Arts degree. In May 1991, Dhawan added women’s blouses and skirts to his product line; however a particular embroidered cloth become very popular which has generated more sales and revenues. Harimann international was also supported by Indian government, and the government offered various rated incentives in an effort to reduce the country’s international deficit. Vikram was motivated by these government incentives and began to export his products to foreign countries such as Canada, France, and Japan. The company developed very well. The production had averaged 1,000 garments per day and the company had recently acquired the second manufacturing facility and now employed over 100 people. At the end of January 1992, Harimann International received an order of six styles of garments from Pioneer Trading Company which was a large importer of garments products with over 20 retail outlets in Japan and sourced many of its goods from India and Hong Kong to encourage competitive pricing. The pioneer Trading Company was one of Dhawan’s first customers and has been a regular customer ever since. This order was a very high profit margin but Mori Fuji, the founder and president of pioneer, limited Dhawan to ship on April 6. The order was provided two options for Dhawan. He perceived this deal as an important stepping point to establish the business relationship with such an important company. Dhawan prepared all materials for the production process and invested 188,400 INR for this deal. Harimann International will get a big profit if the company could deliver the products on time, but he will lose a big amount of money because of late shipment. After analyzing all production process and required time, Dhawan dispersed time period given by the embroiderer to embroider the good. This estimate allowed the eight days for washing and packing, and tow days for cutting, eight days for sewing, eight days for washing and packing, and one day for final shipping activities. Nevertheless, Dhawan was hoping to arrange for extra time in case any unanticipated problems arose, although he was fairly confident to ship the order by April 6. He also estimated that there was a 20 percent chance some problems would arise that caused him to miss the date, but other there was 80 percent chance for Dhanwan to ship the goods within the deadline to realize a profit of 315,238 INR. The delivered on time will make a good relationship with Pioneer Trading and may bring more order in the future. An analysis of decision tree and the calculation of the expected payoff will suggest that it was better for Dhanwan to get this order for an expected loss of 180,530 INR and maintain the relationship with Pioneer Trading Company for future business. The chance to deliver on time was really very low and would happen only if anything unanticipated happen in the operating process. So, Mr. Dhawan would be better off if he accept the order and devote his efforts to ship the order within the delivery deadline. Analysis of Industry

Harimann International was an Indian manufacturer and exporter of finished textiles. At the beginning it was concentrating its business on brokering, linen households’ goods. The firm used to busy finished linens from a supplier, labeled and packaged them according to customers’ specifications and shipped the package goods to the customers. When the business started to grow quickly and started to export abroad, the production has averaged 1000 garments per day. The company has also acquired a second manufacturing facility and employed over 100 people within a year of its establishment.

Textile manufacturing and export industry was considered...
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