Blades, Inc., is a USA based company that has been in corporate in the United States for three years. Blade relatively is a small Company, with total assets of only $200 million. The company produces only a single type of roller blade. Ben Holt the CFO of the Blades Inc.
Total assets of was only $200 million and first year net income of $3.5 million. Return on asset is 7%. It stock price has fallen from high of $20 per share three years ago to $12 last year.
ON THE BASIS OF BLADES INC. CASE
1. What are the advantages Blades could gain from importing from and or exporting to a foreign country such as Thailand? In recent years Thailand experience economy downturn and due to weak economic conditions Blades can gain the followings: • Low prices. Lowering Blades’ cost of goods sold. If the inputs (rubber and plastic) are cheaper when imported from a foreign country such as Thailand, this would increase Blades’ net income. • Import raw material and supplies will be cheap as compare to USA. • Cost reduction in material can achieve economies of scale. • As far as exporting is concerned, Blades, Inc. could be one of the first firms to sell roller blades in Thailand. Since Blades is considering longer range plans in Thailand, importing from and exporting to Thailand may present it with an opportunity to establish initial relationships with some Thai suppliers. • Can increase competitiveness. Competitors are also importing and exporting from Thailand • To survive in its own country
2. What are some of the disadvantages Blades could face as a result of foreign trade in the short run? In the long run? There are several disadvantages to foreign trade. The currency fluctuations in Thailand dollar would affect Blades. For instance the dollar cost of imported inputs may become more expensive over time. Blades would also be exposed to the economic conditions in...