Blades, Inc Case

Blades, Inc. – Consideration of Direct Foreign Investment

1.) Identify and discuss some of the benefits that Blades, Inc. could obtain from DFI.

It looks like Blades is capable of making a higher profit margin in Thailand, compared to the United States. Another benefit would be their product demand should increase if they did business in Thailand. Blades could also sales more money on raw materials by purchasing them in Thailand.

2.) Do you think Blades should wait until next year to undertake DFI in Thailand? What is the tradeoff if Blades undertakes the DFI now?

Since the baht has depreciated and the economic conditions have decreased in Thailand, it would be foolish for Blades to wait until next year. But, if Blades waits until next year the economic condition in Thailand may be better, ensuring Blades of a higher profit potential. In the same aspect, if the economic does improve in the next year, and Blades waits that year, their initial investment will be much higher next year, then it would be this year. Blades should undertake direct foreign investment in Thailand this year, so they can potentially increase their profits, customer base, and get a head of their potential competitors.

3.) Do you think Blades should renew its agreement with the Thai retailer for another 3 years? What is the tradeoff if Blades renews the agreement?

If the economic market in Thailand continues to have problems it would be smart to renew the agreement with the retailers, because it guarantees the purchase of a set amount of product. But, if the economic improves next year, and Blades does renew the agreement they are stuck selling their product at a fraction of the potential profits of the merchandise. If Blades believes the economic market is going to improve they should open this own plant in Thailand and not renew the agreement. This will allow Blades, Inc. to experience the true potential profits of their roller blades.

4.) Assume a high level of...