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Blades Case

Categories: Best BuyBusiness

Currently, approximately $15 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. Blades faces little competition in Thailand from other UK roller blades manufacturers. Those competitors that export roller blades to Thailand invoice their exports in British pounds. Currently, Blades follows a policy of invoicing in Thai baht (Thailand’s currency).

Ben Holt felt that this strategy would give Blades a competitive advantage, since Thai importers can plan more easily when they do not have to worry about paying differing amounts due to currency fluctuations.

Furthermore, Blades’ primary customer in Thailand (a retail store) has committed itself to purchasing a certain amount of “Speedos” annually if Blades will invoice in baht for a period of three years. Blades’ purchases of components from Thai exporters are currently invoiced in Thai baht.

Ben Holt is rather content with current arrangements and believes the lack of competitors in Thailand, the quality of Blades’ products, and its approach to pricing will ensure Blades’ position in the Thai roller blade market in the future.

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Holt also feels that Thai importers will prefer Blades over its competitors because Blades invoices in Thai baht. As Blades’ financial analyst, you have doubts as to Blades’ “guaranteed” future success.

Although you believe Blades’ strategy for its Thai sales and imports is sound, you are concerned about current expectations for the Thai economy. Current forecasts indicate a high level of anticipated inflation, a decreasing level of national income, and a continued depreciation of the Thai baht.

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In your opinion, all of these future developments could affect Blades financially given the company’s current arrangements with its suppliers and with the Thai importers.

Both Thai consumers and firms might adjust their spending habits should certain developments occur. In the past, you have had difficulty convincing Ben Holt that problems could arise in Thailand. Consequently, you have developed a list of questions for yourself, which you plan to present to the company’s CFO after you have answered them.

Your questions are listed below

  1. How could a higher level of inflation in Thailand affect Blades (assume UK inflation remains constant)?
  2. How could competition from firms in Thailand and from UK and European 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 UK exporters invoicing their roller blades in British pounds?
  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?

Cite this page

Blades Case. (2018, Oct 22). Retrieved from https://studymoose.com/blades-case-essay

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