A case study on Blade Int Corporation about Inflationary effect 1. How could a higher level of inflation in Thailand affect Blades (assume U.S inflation remains constant)?
Although the Blades have already a decreasing demand for “Speedos” and the rate of inflation is high relative to U.S inflation rate. It will affect the current account of Thailand which would be expected to decrease and due to this scenario the exports of demand for other countries will also decline.
2. How would Blades be affected relative to competition both from firms in Thailand and from U.S firms conducting business in Thailand?
As with a view of point of local firms they will be affected by the tax rates on interest and dividends because the local investor or firms in Thailand would normally invest with in the country due to the interest on taxes and dividends income are relatively low. They will access their earnings from investing in foreign securities
Competitors in U.S firms the investors and other firms may decide to purchase securities from other countries, rather purchasing Thailand securities the reason is that due to the currency of Thailand (Thai Baht) is continuously depreciating.
3. How could a decreasing level of national income in Thailand affect Blades?
As Thai economy was being affected due to the Asian crises, thus the national income of Thai declined, and causing the decline demand for imported goods which was manufactured by firms based in Thailand were affected by Asian crises. Due to the decrease in national income the current account of Thai would also tends to decrease.
4. How could a continued depreciation of the Thai baht affect Blades? How would it affect Blades relative to U.S exporters invoicing their roller blades in U.S dollars?
Continued depreciation of Thai baht affects the U.S exporters will increase their demand from Thai baht as the exporters are invoicing their roller blades in dollars.
5. If Blades increases its...
Please join StudyMode to read the full document