MGST 391 Lecture Notes - Countertrade, Installment Credit, Collection Agency

• School: University of Calgary
• Department: Management Studies
• Course: MGST 391
• Professor: Ahmad Ali Sohrabi

Document Summary

Multiple options facilities (mof) comprise variety of instruments through which company can raise funds and include: Counter trade is a trade of goods and services for other goods and services. Barter (direct exchange of goods/services between two parties without a cash transaction) Counter purchase (a reciprocal buying agreement between two parties whereby seller also undertakes to purchase a certain amount of merchandize from other country) Offset (like counter purchase but party can purchase from any firm in the country) Switch trading (a third party trading house buys the firm"s counter purchase credits and sells them to another firm that can better use them) Buyback (one country supplies capital goods and receives its output as partial/full payment) Advantages of counter trade: a mode to finance exports when other modes are not available, competitive advantage over parties preferring cash transactions. Countries lack commercial credit or convertible fcy. Countries use it as an instrument of political, economical policies (e. g. balance of trade, relationships)