Blades, Inc. Case Essay Example for Free

Blades, Inc. Case EssayBen Holt, chief financial officer (chief financial officer) of Blades, Inc., has decided to balk the decreasing demand for Speedos roller blades by exporting this product to Tailand. Furthermore, due to the low cost of meritlessise and plastic in Southeast Asia, Holt has decided to import some of the components needed to manufacture Speedos from Thailand. Holt feels that importing preventive and plastic components from Thailand will provide Blades with a cost advantage ( the components im-ported from Thailand be about 20 percentage cheaper than similar components in the United States). Currently, approximately $ 20 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 U. S. roller blades manufacturers. Those competitors that export roller blades to Thailand poster their exports in U. S. dollars.Currently, Blades follows a policy of invoicing in Thai baht ( Thailands currency). Ben Holt felt that this strategy would fall out 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 3 years. Blades purchases of components from Thai exporters are currently invoiced in Thai baht. Ben Holt is preferably 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 property in the Thai roller blade market in the future.Holt also feels that Thai in the Thai roller blade market in the future. Holt also feels that Thai importers will prefer Blades over i ts competitors because Blades invoices in Thai baht. You, Blades financial analyst, have doubts as to Blades guaranteed future success. Although you believe Blades strategy for its Thai sales and imports are sound, you are concerned about current expectations for the Thai economy. Current forecasts indicate a high take aim of anticipated inflation, a decreasing level of national income, and a continued depreciation of the Thai baht.In your opinion, all of these future developments could affect Blades financially given the companys current arrangements with its suppliers and with the Thai importers. both(prenominal) Thai consumers and firms might adjust their spending habits should certain developments occur. In the past, you have had difficulty convincing Ben Holt that problems could wax in Thailand. Consequently, you have developed a list of questions for yourself, which you plan to present to the companys CFO after you have answered them. Your questions are listed here1. How co uld a higher level of inflation in Thailand than that of US affect Blades import and export respectively in the following two scenarios?a. In the short term, US$ versus THB hold at fixed exchange rate due to a pegged exchange rate policy.b. In the long run, the Thailand trade deficit causes the pegged exchange