Hi,

Here is the situation.

Medalta Potteries (2000) Ltd. ("Medalta") manufactures ceramic pottery dishes (tableware). Medalta was started by a relative of the original Medicine Hat pottery company, created in 1912. This original company, along with other ceramic companies, caused Medicine Hat’s economy to thrive in the early 1900’s. Medalta has had success in the dishware market in Canada, with many department stores and other retail chains carrying its product. One of the important reasons for its popularity is the unique, proprietary glaze applied to the dishware, which uses dye some plants found uniquely in the Medicine Hat region. Medalta’s CEO, Jeff Burns, has received expressions of interest from a European company, based in London, UK, Dishes Extraordinaire PLC to act as Medalta’s distributor throughout Europe. As well, Medalta has been approached by a U.S. distributor, Star Kitchenware Inc. to distribute Medalta’s dishes throughout North America. At this point, Jeff Burns wishes to pursue only 1 international opportunity and, thus, must decide between the 2 distributors and the regions they intend to do business in.

My questions are:

1. Which Incoterms to use when products export to Europe? Why?

2. Which Incoterms to use when products export to North America? Why?

Europe: CIF

US: CIP

seems difficult to answer, no experience, but it is better to make one choice with less risk.

According to me whenever we start a new business or a pilot project we tend to use the nearest possible resources and mkts to see if our product is doing well or not and then we expand our horizons.So i think Medalta should definitely go for US distributor as being from the neighbouring market the following factors would be of an advantage to the company.

1. Exports would be by road, so risk would be lesser.

2. Easy understanding of the terms & conditions of the market and Govt. regulations

3. Better understanding of the Market so better initiatives could be taken

4. So Medalta should go with the US distributor with CIF terms

IIf they have to choose one, then it would have to the USA.
1. It is the major trading partner of Canada
2. NAFTA will allow for lower or no duty rates, making the product more competitive in the market leading to higher growth.
3. Shorter transit times will allow for faster supply chain network.
4. Currency will be the US or Cdn dollar and Medalta like most Canadian companies will already have US accounts.
5. Multiple carriers for shippng, clearance and low cost freight rates.
6. Fast, easy and low cost communications. Same language, telephone rates are next to nothing and easy to manage time zones.
7. USA has 350 million consumers, so just having a small part of the market can generate good sales.
8. The terms should be DDU. North American transport is mostly road, except for bulk commodities. Freight rates and services are door to door so if freight is being prepaid, it's prepaid to the consignee's door. If Medalta does not want to be responsible for freight then they would sell Ex Works.

Since there’s only one choice CIF UK base on current condition where the reasons are stated bellow :-

·         Better networking in Europe considering UK are member of EURO

·         US current economy condition are still not yet recovering yet

·         While dealing with UK company nevertheless communicate with US company coincidently

·         After fully utilising company resources in UK company and close the deal start finalizing negotiation with US company

·         Try to close the deal with UK company in European dollars or Pounds

I really agree with "harpreetsingh0610" to choose the USA. However, if cargoes are carried by truck, the appropriate terms could be CIP since CIF was designed for sea freight.

It will be better if this case gave us cities name both in Canada and USA. According to ICC rules, we must pointed point with in place of shipment after the incoterm.