Blades Case

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  • Topic: Thailand, Bangkok, Thai baht
  • Pages : 2 (558 words )
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  • Published : October 17, 2012
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Chapter 2 - International Flow of Funds - Blades PLC Case Study Ben Holt, the finance director of Blades plc, has decided to counteract the decreasing demand for “Speedos” roller blades by exporting this product to Thailand. Furthermore, due to the low cost of rubber and plastic in Southeast Asia, Holt has decided to import some of the components needed to manufacture “Speedos” from Thailand. Holt feels that importing rubber and plastic components from Thailand will provide Blades with a cost advantage (the components imported from Thailand are about 20 percent cheaper than similar components in the United Kingdom). Currently, approximately $15 million, or 10 percent, of Blades’ sales are contributed by its sales in Thailand. Only about 4 percent of Blades’ cost of goods sold is attributable to rubber and plastic imported from Thailand. Blades faces little competition in Thailand from other UK roller blades manufacturers. Those competitors that export roller blades to Thailand invoice their exports in British pounds. Currently, Blades follows a policy of invoicing in Thai baht (Thailand’s currency). Ben Holt felt that this strategy would give Blades a competitive advantage, since Thai importers can plan more easily when they do not have to worry about paying differing amounts due to currency fluctuations. Furthermore, Blades’ primary customer in Thailand (a retail store) has committed itself to purchasing a certain amount of “Speedos” annually if Blades will invoice in baht for a period of three years. Blades’ purchases of components from Thai exporters are currently invoiced in Thai baht.

Ben Holt is rather content with current arrangements and believes the lack of competitors in Thailand, the quality of Blades’ products, and its approach to pricing will ensure Blades’ position in the Thai roller blade market in the future. Holt also feels that Thai importers will prefer Blades over its competitors because Blades invoices in Thai baht. As Blades’ financial...
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