You are a senior financial analyst at Toppers Inc. and you are considering taking your product line to the international marketplace. You are currently a US based company and have a single product line focus in top end waterproof hiking, and running shoes. Toppers currently have about $200 million in total assets and have a loyal following. Last year Toppers reported net income of $3.5million with a ROA of 7%. However, over the last year the stock price has fallen from its high of $20 to $12 a share. Shareholders and analyst have started to worry that the US market is getting saturated and that the increasing competition from North Face, Merrell, Timberland, and others are going to start taking market share. Thus, they have started pressuring the board of director that Toppers needs to start considering a push into international sales. Thus, the CFO has come to you to consider a number of options. You have had a discussion of attempting to cut costs as an option with your CFO and she has indicated that there are no cost-cutting opportunities without compromising the quality and she indicated that the high quality is what sets the Topper shoes apart and inspires the loyal following in the US market. One idea that your CFO has started to consider is to attempt to take the Topper shoes to Thailand for a couple of reasons. First the Asian market appears to performing well and she thinks the economy will continue to be strong and grow in the future. Second, she points out that we could potentially import rubber and plastic at a lower cost. She also thinks that since they have tropical weather and significant rainfall from time to time that the waterproof hiking boots could be a great seller in the Thai market. She points that another reason that she likes Thailand is that the economy is still in its infancy and is just beginning to appreciate higher end quality products. Finally she has also started to think that in the long run if sales take off of potentially completing a foreign direct investment in Thailand by setting up a subsidiary factory. As the senior financial analyst for Toppers Inc. you have been assigned to analyze the international As the senior financial analyst for Toppers Inc. you have been assigned to analyze the international opportunities and risk resulting from international business. Your initial assessment should focus on the barriers and opportunities that international trade may offer. Your CFO has never been involved in international business in any form and is unfamiliar with all aspect of international business. Your CFO sent you the following questions with the intention of getting your input. 4. What are your thoughts of the foreign direct investment idea in the form of a subsidiary? (i.e. advantages and/or disadvantages) What are some other options available to Toppers? Finally what is your suggestion as the best course of action for Toppers Inc. 5. What are some of the advantages and challenges that Toppers Inc. will face if the decision is made to sell the shoes in the local currency (the Thai baht)? What strategies can Toppers use to attempt to Feduce the risk if the decision is made to use local currency? 6. While completing a quick analyses you notice that some analyst think that Thailand could experience high inflation over the next couple of years. If this happens, how would the high inflation affect Toppers sales, profits, imports, etc? 7. Explain what would happen if the Thai baht depreciated in value to the US$? 8. What do you think would be the best course of action for Toppers Inc. in the short run and long run? Should they even be attempting to penetrate and increase international sales? You are a senior financial analyst at Toppers Inc. and you are considering taking your product line to the international marketplace. You are currently a US based company and have a single product line focus in top end waterproof hiking, and running shoes. Toppers currently have about $200 million in total assets and have a loyal following. Last year Toppers reported net income of $3.5million with a ROA of 7%. However, over the last year the stock price has fallen from its high of $20 to $12 a share. Shareholders and analyst have started to worry that the US market is getting saturated and that the increasing competition from North Face, Merrell, Timberland, and others are going to start taking market share. Thus, they have started pressuring the board of director that Toppers needs to start considering a push into international sales. Thus, the CFO has come to you to consider a number of options. You have had a discussion of attempting to cut costs as an option with your CFO and she has indicated that there are no cost-cutting opportunities without compromising the quality and she indicated that the high quality is what sets the Topper shoes apart and inspires the loyal following in the US market. One idea that your CFO has started to consider is to attempt to take the Topper shoes to Thailand for a couple of reasons. First the Asian market appears to performing well and she thinks the economy will continue to be strong and grow in the future. Second, she points out that we could potentially import rubber and plastic at a lower cost. She also thinks that since they have tropical weather and significant rainfall from time to time that the waterproof hiking boots could be a great seller in the Thai market. She points that another reason that she likes Thailand is that the economy is still in its infancy and is just beginning to appreciate higher end quality products. Finally she has also started to think that in the long run if sales take off of potentially completing a foreign direct investment in Thailand by setting up a subsidiary factory. As the senior financial analyst for Toppers Inc. you have been assigned to analyze the international As the senior financial analyst for Toppers Inc. you have been assigned to analyze the international opportunities and risk resulting from international business. Your initial assessment should focus on the barriers and opportunities that international trade may offer. Your CFO has never been involved in international business in any form and is unfamiliar with all aspect of international business. Your CFO sent you the following questions with the intention of getting your input. 4. What are your thoughts of the foreign direct investment idea in the form of a subsidiary? (i.e. advantages and/or disadvantages) What are some other options available to Toppers? Finally what is your suggestion as the best course of action for Toppers Inc. 5. What are some of the advantages and challenges that Toppers Inc. will face if the decision is made to sell the shoes in the local currency (the Thai baht)? What strategies can Toppers use to attempt to Feduce the risk if the decision is made to use local currency? 6. While completing a quick analyses you notice that some analyst think that Thailand could experience high inflation over the next couple of years. If this happens, how would the high inflation affect Toppers sales, profits, imports, etc? 7. Explain what would happen if the Thai baht depreciated in value to the US$? 8. What do you think would be the best course of action for Toppers Inc. in the short run and long run? Should they even be attempting to penetrate and increase international sales