The ancient skills Training Company was started by Abu Ibrahim as a major house dealing in silken upholstery and carpets.
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Principles and Practice of Management
Case Studies
Case (20 Marks)
The ancient skills Training Company was
started by Abu Ibrahim as a major house dealing in silken upholstery and
carpets. He sold most of the products directly through the retail chains and
also through his own boutiques in metro cities. Two years ago, he entered into
a partnership with an old friend, running a direct marketing company to form
Ancient skills Pvt Ltd, a small order business. His partner had good exposure
to this line and they used one of his old factories at Delhi as head office-cum
warehouse. The business took off reasonably well but it was slower than what
Ibrahim had expected. It also required considerable capital to set up the
stocks, computer systems for enquires and follow ups, etc. Recently Ibrahim
received an offer from his old agent, a buying house in Mumbai for large quantity
of hand- woven rugs. The transportation costs were very high and also their
profit was dependent on how well the agent sold the rugs. The risk was that if
the rugs didn’t sell in high volume, the margin would be very low and also disposing
off these unsold rugs would be difficult. They would need to either sell these
through their own store in Mumbai or include these in mail order category. Both
will require large advertising expenses, thus reducing the profit margin. Still
the offer was big enough to give a second thought with 50% chances making a
good deal.
Answer
the following question.
Q1.
Should Ibrahim accept the offer? Give reason for your choice of answer.
Q2.
If the rugs failed to succeed in this sale deal, what options should Ibrahim
exercise for selling the unsold rugs?
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