Case Study 6-1 Tempo Ltd.

This study is about Faith Terim accepting a barter exchange from North Korea, but the issue is he’s unsure about the process of the transaction.

In summary, Terim is an entrepreneur who established his own business called Tempo Ltd. “The focus of his business was to buy goods from nearby foreign sources and then find buyers for those products in the domestic Turkish market.” His Romanian partner, George Hagi, proposed a deal that Terim could not refuse. It was to trade Turkish chemicals for lumber in North Korea. Terim’s customers usually pay in cash, but a barter exchange wasn’t a problem. “The problem was that North Korea was a communist regime” and “provided support to certain terrorist activities all over the world.” This meant that “North Korea and those with whom it traded were under tight scrutiny from both the United Nations and the United States.” Because of this, it was illegal in Turkey to make transactions with North Korea. So in order for Terim to trade with North Korea, he came up with two options: have the lumber shipped to Romania then transported to Turkey by truck under Romanian documents or have the lumber shipped to Syria, transported by truck to the Turkey boarder, and then bribe officers at the gate to let the lumber into the country.

If it were my case, I would let someone else complete the transaction and I think it would be wise for Terim to do the same because this deal is too risky. There are other costs and risks involved in these proposed transactions not mentioned in the case. For example, if Terim gets caught not only would he have to pay a fine, but he would also develop a bad reputation for illegally trading with a country involved with terrorism. This would put his business in jeopardy because other companies might not want to work with Tempo Ltd. after partnering up with communist and losing customers will definitely cost Terim money. Another reason why I believe Terim shouldn’t complete the transaction is because if he does,...