A

Case Presentation
on
Presented by:-
Kinjal Trivedi
Arati Patel
Presented to:-
Prof. Sushil Mohnthy
Introduction about case

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.

Blades shareholders have been pressuring the company
to improve its performance since Blades has not been
performing well recently. Ben Holt, the companys
chief financial officer (CFO), is contemplating his
alternatives for Blades future. There are no other cross-
cutting measures that Blades can implement in the
United States without affecting the quality of its product.






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


Q. 2 What are some of the
disadvantages Blades could face as a
result of foreign trade in the short
run? In the long run?
Solution 2
The disadvantages Blades could face as a result of
foreign trade in the
short run are: Exchange rate risk. Blades would be
exposed to currency fluctuation in the Thai baht if
importation cost increase without Thai suppliers
adjusting their price. International economic
condition; if Thailands economy undergoes recession,
Blades would suffer from sales decrease in Thailand.
In the long run, Blades should be aware of the
political risk involved in operating in Thailand,
such as any regulatory changes or tax increase
may impact on Blades subsidiary.

Q. 3 Which theories of international
business described in this chapter
apply to Blades, Inc., in the short
run? In the long run?
Solution 3
In this chapter multinational financial management three
theories are given,
Theory of comparative advantage
Imperfect market theory
Product cycle theory

Imperfect Market

A market where costs are too high, encouraging producers either to
stop producing or to find ways to lower costs. For example, if labor
costs are too high in an imperfect market, producers have an
incentive to lower salaries, lay off employees, or cease operations
altogether.

In short run apply theory of imperfect market theory because
in U.S the input available at high cost as compared to
Thailand. So, purchase input from Thailand, few seller of
roller blades. So, its completely apply theory of imperfect market.
Comparative Advantage

The ability of a firm or individual to produce goods and/or services
at a lower opportunity cost than other firms or individuals. A
comparative advantage gives a company the ability to sell goods
and services at a lower price than its competitors and realize
stronger sales margins.
In long run apply two theories which are the comparative
advantage and product cycle theory because the input available at
cheaper cost and the roller blades business in early stage in the
Thailand. so the chance to expand the business in Thailand therefore
the comparative advantage is best for long run.

Product Cycle Theory

Theory suggesting that a firm initially establish itself locally and
expand into foreign markets in response to foreign demand for its
product; over time, the MNC will grow in foreign markets; after
some point, its foreign business may decline unless it can
differentiate its product from competitors.
In product cycle theory the Blades incorporated in U.S sales
declining in the country. So, that time product cycle theory is apply


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?

Solution 4
Blades can benefit from a joint venture because
of the benefits of the partner's political
connections and distribution channel access.
Blades can extend their marketing reach and
access needed information and resources. Also,
it would be easier for Blades to build credibility
with the Thai target market and even access new
markets such as the southern Asian markets that
would be inaccessible without the partner.

Ben Holt the Chief Financial Officers Analyze
international opportunities and Risk Resulting
From international Business.

To Known about the cultural environment and
moral values of Thailand citizens then after the
Established a market is good for both Thailand
and U.S

If sells Roller Blades In Thailand Probably not
Proper Sells in Thailand so, that it is main Risk
for Company.

Based on the discussion above, Ben Holt is very unfamiliar with
international business, and Blades has never operated outside the United
States, hence, establishment of a subsidiary in Thailand is probably not the
best way for Blades, Inc. to gain a foothold in Thailand in the long run.
However, the company can import products from Thailand for their
business operation since Thailands product are cheaper and more
affordable compared to the products of United States. Moreover, Blades
Company should initially consider a joint venture with Thai firms that
manufacture roller blades. With this, the company will be familiarized with
Thais firms, customs and ethics. Thus, the Company is able to analyze
more of their production process in the longer run (during and after the
joint venture).