Decision to Expand InternationallyPowerslide, Inc., is a U$.$S$.-$based company that has been incorporated in the United States for $3$ years. Powerslide is a relatively small company, with total assets of only $$300$ million. The company produces a single type of product, skates Powerslide. Due to the booming skates blade market in the United States at the time of the companys establishment, Powerslide has been quite successful. For example, in its first year of operation, it reported a net income of $$4\mathrm{.}5$ million. Recently, however, the demand for Powerslide Skates, the companys primary product in the United States, has been slowly tapering off, and Powerslide has not beenPage $1$ of $5$ performing well. Last year, it reported a return on assets of only $5$ percent. In response to the companys annual report for its most recent year of operations, Powerslide shareholders have been pressuring the company to improve its performance; its stock price has fallen from a high of $$20$ per share $3$ years ago to $$12$ last year. Powerslide produces high$-$quality skates Powerslide and employs a unique production process, but the prices it charges are among the top $5$ percent in the industry.In light of these circumstances, Andrew Flintoff, the companys chief financial officer $($CFO$),$ is contemplating his alternatives for Powerslide future. There are no other cost$-$cutting measures that Powerslide can implement in the United States without affecting the quality of its product. Also, production of alternative products would require major modifications to the existing plant setup. Furthermore, and because of these limitations$,$ expansion within the United States at this time seems pointless.Flintoff is considering the following: If Powerslide cannot penetrate the U$.$S$.$ market further or reduce costs here, why not import some parts from overseas and$/$or expand the companys sales to foreign countries? Similar strategies have proved successful for numerous companies that expanded into Asia in recent years to increase their profit margins. The CFOs initial focus is on Vietnam. Vietnam has recently experienced weak economic conditions, and Powerslide could purchase components there at a low cost. Flintoff is aware that many of Powerslide competitors have begun importing production components from Vietnam.Not only would Powerslide be able to reduce costs by importing rubber and$/$or plastic from Vietnam due to the low costs of these inputs, but it might also be able to augment weak U$.$S$.$ sales by exporting to Vietnam, an economy still in its infancy and just beginning to appreciate leisure products such as skates Powerslide. While several of Powerslide competitors import components from Vietnam, few are exporting to the country. Long$-$term decisions would also eventually have to be made; maybe Powerslide, Inc., could establish a subsidiary in Vietnam and gradually shift its focus away from the United States if its U$.$S$.$ sales do not rebound. Establishing a subsidiary in Vietnam would also make sense for Powerslide due to its superior production process. Flintoff is reasonably sure that Vietnam firms could not duplicate the high$-$ quality production process employed by Powerslide. Furthermore, if the companys initial approach of exporting works well, establishing a subsidiary in Vietnam would preserve Powerslide sales before Vietnam competitors are able to penetrate the Vietnam market.As a financial analyst for Powerslide, Inc., you are assigned to analyse international opportunities and risk resulting from international business. Your initial assessment should focus on the barriers and opportunities that international trade may offer. Flintoff has never been involved in international business in any form and is unfamiliar with any constraints that may inhibit his plan to export to and import from a foreign country.

Flintoff has presented you with a list of initial questions you should answer.

Part $1.$ Discuss five $(5)$ advantages Powerslide could gain from importing from and$/$or exporting to a foreign country such as Vietnam?

Part $2.$ What are some of the disadvantages Powerslide could face as a result of foreign trade in the short run? In the long run? Identify & discuss four $(4)$ of the more obvious risks faced by this MNC if it decides to expand internationally in Vietnam.