What are the advantages Blades could gain from importing from and/or exporting to a foreign country such as Thailand?
Blades would have several advantages if they started to import and or export from Thailand. Since rubber and plastic are cheaper when imported from a foreign country such as Thailand, this would increase Blades’ net income and reduce their cost of goods sold. Since several of Blades competitors are already importing ...view middle of the document...
If 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. Also if they expand to Thailand, Blades, Inc. could be one of the first firms to sell roller blades there and this would give them a competitive advantage.
1. What are some of the disadvantages Blades could face as a result of foreign trade in the short run? In the long run?
There are several disadvantages to foreign trade. The currency fluctuations in Thailand dollar would affect Blades. For instance the dollar cost of imported inputs may become more expensive over time. Blades would also be exposed to the economic conditions in Thailand. For example, if there is a recession, Blades would suffer from decreased sales in Thailand. In the long run, Blades should be aware of any regulatory and environmental constraints the Thai government may impose on it. Blades should be aware of the political risk involved in operating in Thailand; they should research the likelihood of expropriation by the Thai government. They should also figures out how they would monitor the foreign subsidiary with such a huge geographical distance.