Every business undertaking is very sensitive to time. This is because every minute lost in the course of carrying out businesses activities translates into a loss of huge amounts of cash inflow into the business. In this perspective, for the container to take one month to be cleared by the customs officials due to the delay that has occurred will translate to its loss of millions of dollars.
Although kiwi is not a perishable good it is important to realize that when goods are still in the port there are many costs that should be paid by the container owner. The first is the storage fees or the warehouse fee. Thus, for the goods to be stored for one month, the cost of storage would even be higher than the $200 expediting fee that is required for the goods to be cleared in one week.
Secondly, calculating the amount of money that the goods would have generated had they been taken into the market instead of laying at the port it would be advisable to pay the $200 expediting fee so that the goods can be released in one week rather than wait for one month. This is because the higher the stock turnover the higher the likelihood of a business making high profits.
In view of this if the goods are cleared within one week they will enter into the market and the buyers will request another consignment of kiwi thus ensuring that there are more movements of goods from the exporter to the buyer. However when the goods are held at the port for a long period of time then it means that there will be less movement of goods between the exporter and the buyer thus hindering the businesses from making the desired profits.
Hence, I would pay the $200 expediting fee for the goods to be released in one week. Whether the expediting fee by the customs official will be remitted to the required authorities or not the container has to be moved from the port to Mauritania to ensure that there are no inconveniences that are caused to the buyer or the customer.
The assigned chapter helps in getting the light into some ways that managers use in their efforts to ensure that their business activities continue without much delay. The institution-based view of strategy suggests that managers and firms rationally pursue their interests and make strategic choices within formal and informal institutional constraints.
If the formal constraints fail then managers go for the next option, that is, informal. This is because institutions have got both formal and informal components which they use to reduce uncertainties and curtail transactions costs. One of the informal components that an institution can use to reduce uncertainties is through relationship-based personalized exchanges.
Giving the custom official the $200 falls under this category of the informal component which is far more important if the company has to reduce transaction costs such as storage costs of the consignment at the port and also reduce uncertainties such as losing business due to the delay the company would have caused to the customer in Mauritania. These are therefore the rules of the game that institutions have to practice in order to ensure that their business activities continue without disturbances.
Uncertainty avoidance which is one of the primary dimensions of national culture formulated by Hofstede is significant in any business in making strategic choices. In the case above the strategic choice that can be made by the exporter is to give out the $200 in order for the container to be cleared within one week instead of taking one month.
- Business Ethics Towards Corporate Social Responsibility
- Aspects Related to Business Ethics
- Business Ethics: Term Definition
- Business Ethics as Aspect of the Firm Functioning
- Business Ethics, Decision-Making and the Code of Ethics
- Business Ethics That Are Used in Business Society
- Business Ethics and Employees as Stakeholders