REDUCING RISKS AND COSTS WHEN WORKING WITH INCOTERMS IN PURCHASING WITHIN THE ASIA-PACIFIC REGION

University essay from Högskolan i Jönköping/JTH, Industriell organisation och produktion; Högskolan i Jönköping/JTH, Industriell organisation och produktion

Abstract:

Purpose - The purpose of this study is to explore how risks and costs can be reduced

when working with incoterms in purchasing within the Asia-Pacific region. To fulfil

this purpose, the following two research questions have been developed:

1. How does the case company currently work with incoterms when purchasing

within the Asia-Pacific region?

2. How can risks and costs be reduced when working with incoterms when

purchasing within the Asia-Pacific region?

Method - Theories relevant for the study's purpose were collected through a literature

study. To apply the theoretical framework to empirical data, a case study was conducted

at a company. The empirical data was gathered through interviews and document

studies.

Findings - Use of the standard Incoterms 2010 is considered to be a good tool for

reducing risks and costs when purchasing within the Asia-Pacific region, where risk

management is a necessary complement. It is required that all employees working with

incoterms have the right knowledge about the incoterms in order to use them correctly.

The knowledge can be disseminated through the organisation by using knowledge

management. It is also considered important to understand the differences between

countries, in order to reduce the risk of misunderstanding.

Contributions - The result of the study facilitates for companies who do not know how

to work correctly with incoterms. The study contributes to decreasing the gap in theory

regarding working with incoterms in the APAC region. It also facilitates for companies

who do not know how to disseminate knowledge internally.

Limitations - The case study was conducted at a company based in Thailand, which

limited the ability to communicate, due to linguistic differences.

Future research - It would be of interest to conduct an empirical study at other case

companies of different sizes within the APAC region and in other trade regions. In

addition, it would be interesting to study how internal courses about working with

incoterms can be implemented in different types of organisations.

Keywords - Incoterms 2010, APAC, Asia-Pacific, risk management, logistics costs in

purchasing, knowledge management, relationship between risks and costs.

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