Fin Case

1.
Advantages Blades Could Gain from Importing from and/or Exporting

to a Foreign Country such as Thailand:
a. Cost Reduction through Imports:
• Thailand’s weak economic conditions could allow Blades to

source raw materials like rubber and plastic at significantly lower costs.
Importing from Thailand would reduce production expenses without
compromising product quality, given the relatively low cost of labor and
materials in Thailand.
b. Access to a New Market:
• Exporting to Thailand opens Blades to a growing market with

potential demand for leisure products, such as roller blades. Given that
the Thai market is relatively new to such products, Blades could benefit
from being an early mover, establishing brand recognition before
competitors.
c. Diversification of Revenue Streams:
• Expanding into international markets could provide Blades

with alternative revenue sources, reducing its reliance on the U.S. market
where sales have stagnated. This diversification may also offer protection
against economic downturns in the U.S. by tapping into emerging
markets.
d. Competitive Edge:
• By importing parts from Thailand, Blades would be able to

lower production costs, which could give the company a pricing
advantage in the U.S. and other markets. Lower prices may help Blades
stay competitive, even in a slowing market.
2. Disadvantages Blades Could Face as a Result of Foreign Trade in the

Short Run and Long Run:
Short Run:
a. Exchange Rate Risk:
• Currency fluctuations between the U.S. dollar and the Thai

baht could introduce financial volatility. If the Thai baht appreciates
against the dollar, the cost advantage of importing materials from
Thailand might diminish, impacting profit margins.
b. Trade Barriers:
• Blades could face tariffs, quotas, or import/export restrictions

that could increase costs or limit access to the Thai market. These barriers
could make international trade less profitable than anticipated.
c. Supply Chain Disruptions:
• Importing materials from Thailand exposes Blades to risks like

shipping delays, customs clearance issues, or supply chain bottlenecks,
which could slow down production.
Long Run:
a. Increased Competition:
• By exporting to Thailand, Blades risks drawing attention to its

products. As Thai firms become familiar with roller blades and the
production process, local competitors could emerge, offering lower-priced
alternatives, which may erode Blades’ market share.
b. Dependence on Foreign Markets:
• Expanding into international markets could make Blades

reliant on foreign economies, which can be volatile. For instance, if the
Thai economy weakens further or if Thai consumers do not adopt roller
blades at the expected rate, Blades’ international strategy could fail.
c. Political and Economic Instability:

• Operating in a foreign country like Thailand comes with risks
related to political or economic instability, which could affect the business
environment, trade agreements, or labor laws, making it difficult for
Blades to maintain operations.
3. International Business Theories Applicable to Blades in the Short Run

and Long Run:
Short Run:
a. Comparative Advantage:
• Thailand has a comparative advantage in producing raw

materials such as rubber and plastic more cheaply than in the U.S. By
importing these inputs, Blades can lower production costs, leveraging
Thailand’s strengths while focusing on its own expertise in producing high-
quality roller blades.
b. Product Life Cycle Theory:
• In the U.S., roller blades may be in the mature stage of their

life cycle, with demand tapering off. However, in Thailand, where roller
blades are relatively new, the product is in the introductory stage, offering
opportunities for growth as the market develops.
Long Run:
a. Internalization Theory:
• If Blades finds success in exporting to Thailand, establishing a

subsidiary might allow it to control the quality of its products and
processes directly rather than relying on third-party suppliers. This would
reduce transaction costs and increase efficiency, reinforcing its
competitive advantage.
b. Eclectic Theory (OLI Framework):

• In the long run, Blades may find it beneficial to invest directly
in Thailand by setting up a subsidiary. The Ownership advantage lies in
Blades’ unique production process, the Location advantage in Thailand’s
lower production costs, and the Internalization advantage in the ability to
maintain control over the quality and technology used in production.
4. Other Long-Range Plans for Blades:
a. Strategic Alliances or Joint Ventures:
• Instead of establishing a subsidiary, Blades could consider

forming a joint venture with a local Thai company. This would reduce
initial investment and risk, while giving Blades access to local market
knowledge and distribution networks. Such partnerships could ease entry
into the Thai market and allow Blades to expand gradually.
b. Licensing or Franchising:
• Blades could license its technology or production processes to

a Thai company, allowing the local firm to produce and sell roller blades
under the Blades brand. This option would minimize capital investment
and risk, though it would involve less control over production and brand
management.
c. Export Focused on Other Emerging Markets:
• While Thailand is a potential market, Blades could also

consider exporting to other emerging markets, such as India, Vietnam, or
Indonesia. These countries may offer similar opportunities for growth in
demand for leisure products, providing Blades with multiple revenue
streams.
d. Outsourcing Production:
• Blades could outsource some or all of its production to a

third-party manufacturer in Thailand or another low-cost country. This
would allow Blades to benefit from reduced production costs without the
risks associated with owning foreign operations.
In summary, Blades, Inc., could pursue several international strategies to
improve performance, from exporting and importing to potentially
establishing a subsidiary or forming partnerships. Each
strategy comes with its own set of risks and benefits, which must be
carefully evaluated to ensure long-term success.

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1.

Advantages Blades Could Gain from Importing from and/or Exporting

a. Cost Reduction through Imports:

• Thailand’s weak economic conditions could allow Blades to

b. Access to a New Market:

• Exporting to Thailand opens Blades to a growing market with

c. Diversification of Revenue Streams:

• Expanding into international markets could provide Blades

• By importing parts from Thailand, Blades would be able to

2. Disadvantages Blades Could Face as a Result of Foreign Trade in the

• Currency fluctuations between the U.S. dollar and the Thai

• Blades could face tariffs, quotas, or import/export restrictions

c. Supply Chain Disruptions:

• Importing materials from Thailand exposes Blades to risks like

• By exporting to Thailand, Blades risks drawing attention to its

b. Dependence on Foreign Markets:

• Expanding into international markets could make Blades

c. Political and Economic Instability:

3. International Business Theories Applicable to Blades in the Short Run

• Thailand has a comparative advantage in producing raw

b. Product Life Cycle Theory:

• In the U.S., roller blades may be in the mature stage of their

• If Blades finds success in exporting to Thailand, establishing a

b. Eclectic Theory (OLI Framework):

4. Other Long-Range Plans for Blades:

a. Strategic Alliances or Joint Ventures:

• Instead of establishing a subsidiary, Blades could consider

• Blades could license its technology or production processes to

c. Export Focused on Other Emerging Markets:

• While Thailand is a potential market, Blades could also

• Blades could outsource some or all of its production to a

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