Case Study: Tempo Ltd. and North Korean Decisions

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Tempo Ltd. and North Korean Decisions

Tempo Ltd. was established in 1989 by an entrepreneur named Fatih Terim (Wood & Murphy, 2011). The focus of this company is the purchase of foreign goods and selling them in the Turkish market (Wood & Murphy, 2011). In the 1990s the value of the Turkish lira decreased significantly against the U.S. dollar (Wood & Murphy, 2011). Determined to keep Tempo Ltd. afloat, Terim pursued new customers in Bulgaria, Romania, and Greece. Business ventures in Wanson presented a challenge for Terim as terms of payment were in the form of barter and not cash (Wood & Murphy, 2011). Terim would have to provide chemicals to his customers and accept kereste (lumber) as payment. Terim would have to determine the logistics costs of moving the bartered lumbar from North Korea into Turkey. This paper will discuss the two feasible logistics options, total cost of each option, and determine the optimal solution for Terim’s decision.

Terim’s Feasible Options

Doing business with North Korea presented many challenges. Chemical suppliers expect payment for product 60 days after leaving the Turkish ports, approximately the same date as the lumbar leaves North Korea (Wood & Murphy, 2011). The chemicals, which Terim would be selling, were intended for use as fertilizers by the North Korean customers. North Korean bureaucrats, upon visiting, required entertainment and accommodations often referred to as rusvet. These are bribes are used often with Third World governments for risky business ventures. The decision to do business with the North Koreans compromised Terim’s ethical principles immensely. Putting ethical principles aside, Terim determined only two feasible options for moving the lumbar from North Korea to Turkey.

First Option

Terim’s first option consisted of sending the lumbar to a country that would allow it to be shipped in legally (Wood & Murphy, 2011). The lumbar would first have to be shipped to Romania by the Black Sea. When lumbar...