Description
This teaching note is an aid to the Pirelli Case.The case describes the decision by the newly appointed Marketing and Sales Director in Germany for a tire producer about a loan request from an independent retailer.
The case shows how suppliers can use credit lines and loans as instruments to "invest" in their clients, and the various potential benefits for the supplier in terms of growth (e.g. higher sales volumes, higher customer penetration, stronger customer loyalty, increased profitability). In order to minimize the risks connected to these practices, commercial companies analyze customer credit issues in a similar way to how banks analyze their customer loans.