Case Study

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Blades Incorporation Case:

Q.1: What are the advantages BLADES could gain from and/or exporting to a foreign country such as Thailand?

Thailand has an unstable economy BLADES can import raw material from Thailand at low price; its production cost will reduce.

BLADES can capture the market of Thailand by exporting its finished goods to Thailand, because there is no another competitor.

Q.2: What are the some disadvantages BLADES could face as a result of foreign trade in the short run and In the long run?

In the short run BLADES may face following disadvantages:
1) Restrictions may be imposed by the government because its local firms may influence. 2) There may be currency fluctuation.

In the long run BLADES may face the following disadvantages: 1) Political Risk
2) culture
3) Increased agency cost

Q.3: Which theories of international business described in this chapter apply to BLADES, Incorporation in short run ?In the long run?

Imperfect market theory applied in short run. In short run mobility of sources may not possible. But in long run mobility of resources is possible.

Competitive advantage theory applied in long run .Competitive advantage is an advantage which other firms cannot achieve even in long run.

Q.4: What long range plans other than establishment of a subsidiary in Thailand are an option for BLADES and may be more suitable for the company?

BLADES have the option to establish a franchise in Thailand; they can also establish a joint venture in Thailand other than opening a subsidiary.
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