Technon International is a Canadian high-technology development house. focused on emerging engineerings in radio communications. Technon beginnings constituents in China and has offshore programming activities in India covering certain functionality in its new wrist watch PDA with MP3 and cellular capablenesss. Technon has several Canadian and international patents to protect its proprietary engineering. and has developed some strong non-disclosure understandings for usage with its assorted providers and concern spouses. A little company established in Saskatchewan. Canada. Technon had been making most of its commercial banking through a local recognition brotherhood ( little.
local membership-based Bankss ) . nevertheless. the company late received several interesting enquiries about exporting their latest invention. and realizes they need to develop a relationship with a fiscal services supplier with international banking and export finance expertness.
Technon has narrowed its options to three possible suppliers: a Canadian bank with solid certificates in trade finance. a taking UK-based planetary trade bank. and a mid-tier US regional bank that has expressed involvement in back uping the company’s enlargement to the United States.
Technon is incorporated in Canada. and has rapidly achieved one-year gross revenues in the US $ 500. 000 scope. with strong borders and conservative growing projections of approximately 10 % per twelvemonth. If export gross revenues are factored into the projections. Technon believes that growing rates in the 15-20 % scope are accomplishable. depending on the markets targeted. Asia is particularly promising. given the degree of investing in wireless engineering. and the high rate of acceptance of wireless engineering among all consumer sections. The options
Technon recognizes the demand to take their banking relationship to a new degree in footings of international capablenesss. They continue to be loyal to the Credit Union which helped them to turn and spread out. and do non wish to wholly cut ties with the Credit Union. nevertheless. it is clearly clip to seek an establishment with proved international capablenesss. Canadian Trade Finance Bank ( CTFB )
Canadian Trade Finance Bank is a big fiscal establishment and one of the top two suppliers in Canada. The bank has solid trade finance certificates and maintains a degree of expertness. every bit good as a set of merchandise and service offerings. which make it a feasible participant in the trade finance infinite.
Preliminary treatments suggest to Technon that their concern is a spot little for CTFB ; while the bank selling runs suggest that functioning SME’s is of import to the establishment. the CFO of Technon came off with the sense that CTFB would supply ‘vanilla’ trade finance services – basic merchandises and services applied to familiar dealing types – and would hold limited involvement or capacity to supply Technon with much-needed consultative services. On the other manus. CTFB pricing was clear and competitory. and Technon derived some comfort from covering with a local fiscal establishment. CTFB did bespeak that it would anticipate to go Technon’s primary banker. UK International Bank ( UIB )
UK International Bank is a globally-recognized leader in international finance. planetary banking and trade finance. The UIB history representative in Canada indicated that the bank could offer any fluctuation of trade finance available in the market. had extended letter writer relationships ( including big state and bank lines of recognition ) . and could probably cover any dealing that Technon would prosecute. surely in the foreseeable hereafter. UIB besides offers a alone solution to open history and supply concatenation finance. UIB is recognized as holding several first specializer squads in assorted countries. including high engineering. and has unrivalled contacts in Asia. which could turn out interesting to Technon in footings of future enlargement. UIB is a prime fiscal establishment. with pricing to fit. Technon executives wonder about the kineticss of a small-town company covering with a planetary fiscal establishment. UIB recognizes that it is a foreign establishment runing in Canada. and does non anticipate Technon to end its bing banking relationship. First Trade Bank USA ( FTB )
First Trade Bank. USA. is a regional fiscal establishment and mid-tier US bank with trade finance operations and capablenesss centered around the US Midwest. and no Canadian presence to day of the month. FTB has had good success as a niche supplier of trade services. and has strong relationships with several Canadian concerns seeking to set up operations in the US. FTB offers an equal scope of trade merchandises. though Technon perceives that its consultative capablenesss are limited. The Need
Technon has identified several major demands and outlooks in footings of international and trade finance banking merchandises and services. In add-on to widening extra recognition in support of planned international enlargement. the Company seeks to set up a relationship with a fiscal establishment that understands the challenges of a SME spread outing its international range.
The company expects to cover in both import and export minutess. in a combination of documental missive of recognition and unfastened history minutess. Its primary markets will be the United States. China. India and perchance a raid into the European Union through Ireland. Technon requires important support in footings of advisory services and transactional ‘hand-holding’ . and wishes to command overall banking costs. while guaranting entree to adequate financing—including pre-export funding. every bit good as the option to offer competitory funding options to its abroad purchasers. The Decision Factors
You are a adviser retained to rede the CFO of Technon in footings of the fiscal facets of the Company’s international activities. See the company and its concern. likely nature of its international activities over the average term. specific transactional demands. every bit good as the three campaigner Bankss and their several offerings. Case Study Discussion Questions
1. There are two major schools of thought relation to the constitution and direction of international banking ( trade finance ) relationships with fiscal establishments. One attack suggests that domestic banking and international banking ought to be kept distinguishable and separate. to minimise hazard to the company. and to guarantee that no individual fiscal establishment has inordinate purchase against a company. The 2nd attack suggests that an integrating and holistic attack be taken. where a company establishes a one-stop store relationship with its bankers. Which attack is best suited to Technon? 2. What should the primary determination drivers be for Technon at this phase of its development? 3. Joint the instance in favor of each bank as a possible service supplier to Technon. Note one negative feature. 4. Choose the recommended solution for Technon.
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