Principles and Practice of Management
The ancient skills Training Company was started by Abu Ibrahim as a major house dealing in silken upholstery and carpets
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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