Business Essay

959 Words Oct 8th, 2012 4 Pages
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.

Financial Information

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
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• 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 it is very necessary to import from Thailand. While on the other hand it can export the ready goods to Thailand as their economy is very weak and there are lot of opportunities for organization like Blades.
What are some disadvantages Blades could face as a result of foreign trade in the short run? In the long run?

There are several potential disadvantages Blades, Inc. should consider:

Θ First of all, Blades would be exposed to exchange rate risk. The appreciation of Thai currency may hamper their business.

Θ Blades, Inc. would also be exposed to the economic conditions in Thailand. For example, if there is a recession, Blades would suffer from decreased sales to Thailand.

Θ In the long run, Blades should be aware of any regulatory and environmental constraints the Thai government may impose on it (such as pollution controls).

Θ In addition, the company should be

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