Ben Holt, chief financial officer (CFO) of Blades, Inc., has decided to counteract the decreasing demand for Speedos roller blades by exporting this product to Thailand. Furthermore, due to the low cost of rubber and plastic in Southeast Asia, Holt has decided to import some of the components needed to manufacture Speedos from Thailand. Holt feels that importing rubber and plastic components from Thailand will provide Blades with a cost advantage (the components imported from Thailand are about 20 percent 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. 

1. How could a higher level of inflation in Thailand affect Blades (assume U.S. inflation remains constant)?

2. How could competition from firms in Thailand and from U.S. firms conducting business in Thailand affect Blades?

3. How could a decreasing level of national income in Thailand affect Blades?

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?

5. If Blades increases its business in Thailand and experiences serious financial problems, are there any international agencies that the company could approach for loans or other financial assistance?