Instructions

on the basis of the information given in the following case.
Due to increased competition, Ginger Automobiles, the Indian subsidiary of Pepper Automobile Company (PAC) reported lower sales and profits. PAC expects its new model Limo, developed especially for value conscious customers of India and China, would revive its fortunes. In order to prevent customers from uying competing products, PAC announced the launch of Limo six months before schedule. Due to unrest in its Indian supplier’s plant, deliveries of essential components for its main plant was hampered, and hence it decided to launch Limo in China only as per the original plan. Within a short span of time, Limo captured 30% market share in China, which was 200% higher than expected. Indian customers who had looked forward to purchasing Limo were becoming increasingly unhappy to the non-availability of Limo in India. Ginger’s dealers were worried about loss of business from the customers who might switch to other cars.

Question 37

Mr. Murugan from Chennai experienced the comfort of Limo during his visit to China. He was willing to deposit an approximate price of Limo to buy the first available unit from Mr. Ahmed, a dealer in Chennai, known for fair dealing. Ginger Automobile is yet to announce the actual price, and the process for allocation of the vehicles. In order to maximise his cash flow, Mr. Ahmed should

Solution

Since in the question, we were asked for a way where Mr. Ahmed maximizes the cash flow :

Option A: Collecting the amount from Mr. Murugan maximizes his cash flow but blaming the issue on the PAC part is not justifiable.

Option B: Collecting the 50 percent advance without completely unaware of the pricing could actually give him a loss if it is priced at an amount higher than the expected price.

Option C: Collecting the amount from Murugan maximizes the current money flow and making him aware of the uncertainties is the best way moving forward because this makes him flexible with negotiations.

Option D: Not collecting the amount will not maximize his cash flow and hence the key objective fails.

Option E: Shifting the amount to the company's account will not maximize the cash flow of Mr. Ahmed.


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