Lamp Shade Imports (Scenario)
The ABC Lamp Company is an SME that designs and manufactures high quality lamps that are sold in high-end furniture stores across Canada and the United States. ABC imports lamp shades from Asia where costs are lower than in North America. ABC has received a large order from a hotel chain that wants to purchase 5,000 lamps in the next three months, and ABC will need to import corresponding lamp shades. ABC recently ended a relationship with a Chinese supplier due to the poor quality of shades that were shipped. ABC managers are seeking a new Asian supplier that can fill the hotel lamp order.
-ABC managers have located a small Asian supplier that can fill the order, but the supplier will need to draw on a substantial amount of its working capital. From which of the following would the supplier most likely seek financial assistance?
A) factoring house
B) local commercial bank
C) World Bank Group
D) Asian Development Bank

Question

Quizplus · Accepted Answer

The most likely source the supplier would seek financial assistance from is a local commercial bank. This is because the request for working capital is not a large enough amount for institutions like the World Bank Group or Asian Development Bank to get involved. Factoring houses typically provide financing for accounts receivable, which is not relevant in this scenario. A local commercial bank would be more appropriate for a small Asian supplier looking for short-term financing to fulfill an order.