Case Study

1.How could higher level of national income in Thailand affects blades?

Although the Blades already have a declining market for "Speedos," and the inflation rate is strong
compared to the inflation rate in the United States. This will affect Thailand's current account,
which is projected to decline, and owing to this scenario, market exports to other countries will
also decline

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

As with local firms, interest and dividend tax rates will be affected because local investors or
companies in Thailand would normally invest with them in the country due to interest on taxes
and dividend income is relatively low. They will have access to their earnings from investing in
foreign securities Competing firms in the United States that investors and other firms may decide
to purchase securities from other countries, rather than buying Thai securities, the reason is that
Thailand's currency (Thai Baht) is continuously depreciating.

Not only that, Blades is engaged in business (both exports and imports) from Thailand in Thai
Baht. Other U.S. competitors that export to Thailand invoice their exports in U.S. dollars. This
gives Blades a competitive advantage as Thai importers do not have to worry about paying
different amounts due to currency fluctuations.

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

If Thailand's national income decreased and the demand for imported goods produced by
companies based in Thailand decreased. Due to the decrease in national income, the company
Thailand's current account would also tend to decrease.
4. How could a continued depreciation of the Thai Baht affect blades ? how could it affect
Blades relative to U.S. exporters invoicing their roller blades in U.S. dollars?

A Thai baht depreciation will hurt Blades, particularly because the firm invoices its roller blades in
baht. Continued baht depreciation means Thailand's baht-denominated income would translate
to fewer US dollars. Blades Inc. still has some expenditures in baht, but that number is lower than
in baht.

Although Blades may be harm by a depreciating baht because its exports are denominated in
baht, the market for Blades products may rise relative to that of its U.S. competitors exporting to
Thailand. That is because the majority of U.S. businesses that sell roller blades to Thailand invoice
their goods in U.S. dollars. When the baht depreciates, Thai importers would have to turn more
baht into dollars to pay for exports denominated in the dollar

5 .If Blades Increase its business in Thailand and experiences serious financial problem,
are there any international agency that the company could approach for loan or other
financial assistance?

If Blade Inc. is expanding its business in Thailand and is experiencing serious financial difficulties,
Blades may apply for a loan from the International Financial Corporation (IFC). IFC not only grants
loans to corporations, but also purchases stocks. The International Financial Corporation is acting
as a catalyst. It provides loans to support the economic development of the private sector.