1. What are the advantages Blades could gain from importing from and/or exporting to a foreign country such as Thailand?
Ans: The advantages Blades could gain from importing from and/or exporting to Thailand could be Decrease their cost of goods sold, and increase Blades’ net income since rubber and plastic are cheaper when imported from a foreign country such as Thailand. Due to its superior production process Thai firms could not duplicate the high-quality production process , so establishing a subsidiary in Thailand would preserve blade sales before Thai competitors.
Allow Blades to explore the option of exporting to Thailand by building relationships with some local suppliers. As far as exporting is concerned, Blades could become the first firm to seller roller Blades in Thailand. Diversify their investment by opening option to export to other countries beyond Thailand to ensure company sustainability.
2. What are some of the disadvantages Blades could face as a result of foreign trade in the short run? In the long run?
Ans: The disadvantages Blades could face as a result of foreign trade in the short run are: Exchange rate risk.
Blades would be exposed to currency fluctuation in the Thai baht if importation cost increase without Thai suppliers adjusting their price. International economic condition; if Thailand’s economy undergoes recession, Blades would suffer from sales decrease in Thailand. In the long run, Blades should be aware of the political risk involved in operating in Thailand, such as any regulatory changes or tax increase may impact on Blade’s subsidiary.