Production and marketing cooperation

The main factor in the development of production and marketing cooperation should be considered scientific and technological progress (NTP).

The units and parts of the cooperative products can be manufactured both for sale on the foreign market, and for the tasks and technical requirements of the customers. In the second case, the execution of contracts for deliveries in foreign trade activities is of a contract nature. Contracts can provide for joint development of parts and components of machines, equipment, production, taking into account the customer's tasks.

Production is made from own materials and from materials and semi-finished products of the customer. At the same time, the contract rigidly determines the rights of the customer to comply with the terms of delivery of the product, its quality and may even provide for the refusal of the customer in case of breach of contractual terms.

Cooperation contracts affect the interests of many independent firms and enterprises, so the rigidity of sanctions on the irregularity and poor quality of supply is quite rightly supported by penalties of various kinds, compensation for direct losses and lost profits.

Complication of marketing activities in the context of growing competition on the external market facilitates cooperation not only in the production sphere, but also in sales activities.

Sales cooperation is the cooperation of economically independent enterprises that invest in joint sales activities for their products.

Sales cooperation is closely linked with the deepening of the process of specialization and concentration of production. The greatest interest in marketing cooperation has firms, small enterprises, specializing in the production of a narrow range of goods. Thanks to the joint sales, they manage to fully meet the demands of customers and increase their competitiveness.

Currently, there is a merger of production cooperation with the sales. The greatest development in international production and marketing cooperation was in machine-tool construction, robotics, aircraft construction, and automotive industry.

The most progressive variety of supply-side cooperation is a consortium representing a temporary union of economically separate firms.

The suppliers of industrial equipment and engineering companies are united in consortia, some of them, in turn, are large international corporations, engineering firms.

Thanks to the creation of consortia, firms and corporations manage to: a) improve competitiveness through the use of the best design, technological development of the members of the consortium; b) solve the optimization of the use of financial resources through the mobilization of partners by their credit facilities. The distribution of supplies makes it possible to reduce the need for loans needed for a particular partner, taking into account their available funds; c) increase competitiveness on the basis of attracting companies with extensive foreign trade experience to the consortium; d) improve the quality of manufactured products through the division of production tasks, taking into account the experience, knowledge, technical capabilities of firms, corporations.

The initiative to create a consortium is usually a leading engineering firm, capable of becoming a general contractor and general supplier. After negotiations with a number of firms wishing to enter the consortium, the leader of the consortium who is entrusted to represent his interests to the customer (figure 13.1), to organize the preparation of the joint proposal, to participate in bidding, to fulfill contractual obligations is elected with the general consent.

Basic operations for creating a supply-side consortium and its interaction with the customer

Fig. 13.1. The basic operations to create a supply-side consortium and its interaction with the customer:

1а, 1б - the offer of the leader to the firms A and B respectively on the creation of the consortium; 2a, 2b - conclusion of a consortium agreement between the companies A, B and the leader, respectively; 3 - participation of the leader in the bidding process and receipt of the order; 4, 4a, 4b - conclusion of contracts with the customer for the performance of agreed workloads between consortium partners; 5, 5a, 5b - obtaining loans from a partner bank through a consortium; 6, 6a, 6b - payment to customers for work performed by consortium partners; 7a, 7b - payment of remuneration to the leader by the firms A and B, respectively; 8, 8a, 8b - settlements with the bank, respectively, of firms A and B

Consortium partners are economically independent in determining prices, conditions of loans for their share of works and supplies. They independently establish the order of settlements and provide the necessary bank guarantees.

But when it becomes necessary to make a joint proposal, then the members of the consortium, along with the leader, agree on prices, loan conditions, and settlements. In spite of economic independence, consortium partners by mutual agreement are jointly and severally liable for fulfilling contractual obligations by any of them.

The peculiarity of joint responsibility lies in the fact that the customer in case of poor performance of the contract has the right to file a claim to the leader or any member of the consortium, and then the members of the consortium must determine the extent of each partner's liability in breach of contract conditions and allocate financial responsibility.

Currently, consortium agreements practice defining the limits of the responsibilities of each partner. If the limit of responsibility of each member of the consortium, for example, is 10%, and the claim of the customer to it reaches 15%, then 5% are divided among the other partners.

This assistance is caused by the need to preserve the partner's continued breach of his ability to fulfill the order until the contractual obligations are fully completed. In this approach to solidarity, the customers are also interested, therefore they always help to include items about it in consortial agreements.

One of the important areas of cooperation cooperation are compensatory operations. They consist that foreign suppliers together with customers develop projects of industrial objects. Foreign partners can provide customers with financial loans for the purchase of equipment or products and equipment on commodity loans. The agreements on compensatory operations provide for the purchase of products by creditors to repay financial or commodity loans.

The international experience of concluding and executing compensation agreements shows that placing orders for designing, supplying equipment is most advantageous to perform through international bidding. Their implementation due to competition in the market makes it possible to reduce export prices by an average of 20-25% compared to prices negotiated on the basis of direct negotiations.

A fairly noticeable effect for United States customers can be obtained if we entrust the development of technical conditions for the use of domestic products for equipping contracts with foreign engineering firms that have sufficient knowledge of the use of the most modern types of machines, technologies and equipment in projects.

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