Unit 3 Clinching a Deal

PART 1

DIALOGUE 1

Mr. Johnston, an American businessman, is in England. He is visiting Textafabrik, a firm which manufactures textile machinery. In this con­versation he negotiates a deal with Jack Evans, Textafabrik's Sales Manager.

johnston About those stitching machines, Mr. Evans. I called my colleagues in New York last night. They’ve given me the go-ahead to purchase. We want to place a firm order for the РХ5.

EVANS Excellent. How many do you want to buy?

johnston We'd like five for immediate delivery, and thirty in two months’ time. Bу the end of June, that is.

EVANS I see! That's a very substantial order. Of course, I'm delighted.

JOHNSTON Perhaps I'd better explain. I represent a very large tex­tile group. We've got plants in most of the major cities on the East coast. So, our buying requirements are considerable.

EVANS I’m sorry, I wasn’t aware of that. I mean, I didn’t realise you were that big.

JOHNSTON My fault. I should have made it clear. We need the stitch­ing machines fairly urgently. Recently our factories have been working below capacity, but last week we got some big orders from a clothing store chain.

EVANS Ah, so you'll be going flat out to fulfil them.

JOHNSTON Exactly.

EVANS Well, you know the price of the machines — four thousand five hundred pounds (£4,500). That's without freight and insurance. When we invoice customers, we usually quote prices f.o.b. Southampton. But perhaps you'd prefer the goods to go by air?

johnston No, air freight's too expensive. They can go by sea. But if you don’t mind, I’d like you to quote CIF New York. We prefer it that way.

evans All right, we can do that. You want us to quote for thirty-five PX5s, CIF New York, goods to be shipped by sea.

johnston Correct. There's one other thing. As this is a bulk order, I was wondering …

evans Yes?

johnston What sort of discount could you offer me? Would five percent be reasonable?

evans Uh, I don't think we could go as high as that. As a special concession. . . since you're a new customer, I could possibly give you two per cent (2%) off list price.

johnston Two per cent (2%)? That's not much. This order will be worth over a hundred and fifty thousand pounds (£150.000) to your company.

evans Yes, I realise that.

johnston And don't forget, we may place orders for some of your other machines ...

evans I tell you what. I don't want to haggle with you about this. How about two-and-half per cent (2,5 %)?

johnston (hesitates) Er . . . Oh, I suppose that's fair enough. OK then, agreed.

evans Good. Let's recap, shall we? We're agreed on price, delivery dates - five immediately, thirty by the end of June — and on the discount, two-and a half per cent (2,5 %). What else is there to discuss?

Answer the questions:

1. Why did Mr. Johnston call his colleagues?

2. What did they tell him?

3. How many machines did he want to buy?

4. When should these machines be delivered?

5. Why was his order so substantial?

6. Why did he need these machines urgently?

7. What was the price for the machines?

8. Was the price quoted FOB or CIF?

9. What discount did Mr. Johnston ask for? Did they haggle for a long time?

10. What was the final discount?

11. Why was Mr. Johnston given a special concession?

12. What business matters were discussed in the dialogue?

PART 2

DIALOGUE 2

Mr. Evans and Mr. Johnston are about to conclude their deal. They discuss the method of payment for the stitching machines.

EVANS There is one other thing we've got to decide. That's how you're going to pay us.

JOHNSTON Right. Well, I'm quite happy to leave that up to you. If you want to specify a particular method, it's fine with me.

EVANS I’d like to do it this way, if you agree. First, let's take the five machines for immediate delivery. We'd appreciate it if you could pay cash for those.

johnston Certainly. That means I'll have to transfer the money from my bank in New York to your bank here. I could arrange that fairly easily.

evans Good. Now about the other thirty machines. We'd like you to pay us by Irrevocable Letter of Credit. How do you feel about that?

JOHNSTON That’d suit me fine. I was expecting you to suggest pay­ment by L/C, or something like that.

evans Well, when we deal with a new customer, we always insist on payment by Irrevocable Letter of Credit. That way we make sure we get paid.

JOHNSTON Very sensible. You can't be too careful these days - especially with payments. But I hope that when we get to know each other better …

evans Oh, I can assure you, as soon as we're trading regularly together, we'll offer open account terms.

johnston I look forward to that time. We're going to be ordering a lot of equipment from you, so we want to establish good business relations.

EVANS I agree with you. There is one thing you could do to help in that respect.

johnston Oh, what's that?

evans Well, as you say, we know very little about your organisation. Would it be possible to provide us with some references?

johnston With pleasure. I could give you a bank reference, one from the local business bureau and some trade references.

evans That would be fine. I hope you don't mind my asking.

johnston Not at all. I quite understand. You've got to check us out, make sure we're creditworthy. I'd do the same if I were in your shoes.

evans OK. We seem to be agreed on everything now. You'll pay cash for five machines and settle by Letter of Credit for the other thirty. And you'll provide us with the references.

johnston Great! That wraps things up nicely, I'd say.

evans I think so. We've covered everything now. Look. I’d like to celebrate this deal with you. Would you be free to have dinner with me tonight?

johnston That's very kind of you. Let me see ... I don't think I have anything lined up for tonight. . . Yes, I'd love to.

Answer the questions:

1. What was the last question Mr. Evans and Mr. Johnston discussed?

2. Who offered the method of payment?

3. How should Mr. Johnston pay for the five machines for immediate delivery? What does it mean?

4. What method of payment was offered for the other thirty machines?

5. Why is this method used when they deal with a new customer?

6. What method would they use in the future?

7. What references did Mr. Evans ask Mr. Johnston to provide him with?

8. Why did he need these references?

9. What was the end of their conversation?

ex.1. Insert the necessary prepositions.

1. This factory is working __ full capacity as it is heavy__ orders.

2. Our Production Manager has been working flat __ for two weeks now.

3. You can pay for the samples now or settle __ later.

4. It’s better to check __ our customer as it is going to be our first transaction with him.

5. I’m glad I’m not __ his shoes!

6. The General Director has a visit to the assembly shop lined __.

ex.2.Paraphrase the following sentences using your active vocabulary.

1. I’m not going to argue with you over the price.

2. We are working as hard as we can.

3. I’d like to repeat the main points.

4. They have given me the permission to do it.

5. You have to be sure we are an honest and reliable company.

6. I’d do the same if I were in your position.

7. We have discussed all the aspects of the deal.

8. I haven’t got any meetings planned for tomorrow.

9. We are going to transfer money from our bank to yours.

10. This order is definite.

ex.3.Translate the following sentences into English.

1. Наш завод работает ниже своих возможностей, а мы хотим, чтобы он работал на полную мощность.

2. Прежде чем мы заключим сделку, я хочу обсудить ее с коммерческим директором.

3. Как Вы собираетесь расплачиваться с нами?

4. Так как это оптовый заказ, мы можем пойти на уступки.

5. Мы могли бы предложить Вам 2% скидку с прейскурантной цены.

6. Предоставьте нам рекомендацию из банка и информацию о состоянии дел Вашей фирмы. Тогда мы будем уверены, что Вы платежеспособны.

7. Безотзывный аккредитив – один из самых распространенных методов оплаты в международной торговле.

8. Им придется работать изо всех сил, чтобы выполнить этот заказ.

9. У Вас есть какие-нибудь планы на сегодняшний вечер?

10. Если мы хорошо знаем покупателя и доверяем ему, мы можем предложить ему условия открытого счета.

ex.4. Read the following statements. Say whether they are true, if not correct them.

1. Air freight is much cheaper than shipping by sea.

2. A new customer can get a special concession for a trial order.

3. If factories get some big orders they work below capacity.

4. FOB prices include freight and insurance.

5. A bulk order is a substantial one.

6. If the company needs the goods urgently it should order them for immediate delivery.

7. Irrevocable Letter of Credit is the most acceptable method of payment with regular customers.

8. If you want to know more about an organization you should be provided with some references.

9. Open account terms can be offered to a new customer.

Read and translate the following text:

Bruce Stevens of Harbour Imports Pty, Melbourne, Australia, wanted to pay Peter Weaver of Clothco Ltd, Manchester, UK, for some cloth. Bruce wrote to his bank on a special form and asked them to open an irrevocable documentary credit. A Letter of Credit from Bruce's bank guarantees payment in Britain at a later date. If it is irrevocable, it cannot be cancelled. Neither Bruce nor his bank can change their minds and refuse to pay. Peter's bank knows Bruce's bank very well and they know they will receive the money, so they confirmed the Letter of Credit. This means that they guaranteed to pay the money so Peter was sure he would be paid. However a Letter of Credit is not negotiable so Peter had to wait until the Letter of Credit was paid before he received his money.

Answer the questions:

1. Who applies for a L/C, the importer or the exporter?

2. Who issues a L/C?

3. If a L/C is not irrevocable, who might not pay?

4. If a L/C is not confirmed, who might not pay?

5. Can you discount a L/C?

ROLE PLAYS

1.Your partner is going to sell his company's product abroad, but he doesn’t know much about the terms of delivery and methods of payment used in foreign trade. Give him the information he needs and help him to choose the most suitable ones.

2. Textafabrik and the large textile group, represented by Mr. Johnston have been trading successfully for some time. Now they negotiate possible changes in the terms of delivery and methods of payment.

Problem-solving

A supplier based in a foreign country offers you goods with a well-known and prestigious logo on them at a surprisingly low price. At that price you suspect that they must be copies but they would certainly deceive the customer. Would you buy them and market them? Is there anything else you would do?

Answer the questions on the topic:

1. What questions are usually discussed before clinching a deal?

2. What quotation terms do you know? Characterise each of them and explain their pluses and minuses.

3. What methods of payment do you know? Speak about each one.

4. What method is used when:

- you don't know the customer well and the order is rather substantial?

- you don't know the client well but the order is rather urgent and not very large?

- you have been trading for a long time?

5. Which is the quickest/slowest/most reliable/least reliable method?

6. What is the difference between L/C and IL/C?

7. Why is it necessary to know a lot about a potential customer?

Unit 4