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BF2207 International Finance - Assignment 1A:
Question 1:
As an established brand in the United States (US) faced with falling demand for their primary product , the primary objective that Blades have to meet is to increase their profits in order to keep their shareholders happy and consequently , to keep their investments in the company. With a falling demand, a way to improve the profits earned would be to lower the costs in producing their products. As such, the prima facie advantage that Blades would get from importing from Thailand would the significant lowering of the production costs.
This lowering of production costs stems from a procurement strategy called Low-cost country sourcing (LCCS).1 The abundance of cheap labor in Thailand gives the country and its businesses an edge, as they are now able to produce their products at a much lower cost and thus be able to gain a comparative advantage against their rivals from other countries like the US.
With regards to exporting to Thailand , as the economy is still in its stages of infancy and the people just beginning to open up to leisure sports such as Roller Blading , Blades may be able to gain the first-mover advantage by venturing in to Thailand at this point in time. In addition, the good relations and ties that Blades may build with some of their Thai suppliers, could help to ease their efforts in to breaking into the Thai market and exporting to Thailand
Furthermore with the rising affluence amongst the people in Thailand2, it is likely that more individuals would turn to leisure sports such as, roller blading, during their free time. Coupled with youths in Thailand becoming increasingly “Americanized”.3 This trend therefore, poses as an excellent opportunity for Blades to boost sales in Thailand to off-set the falling demand being experienced in the US.
Finally, by exporting to Thailand, Blades is able to diversify their sales and operations overseas. This way, should their business take off
Question 1:
As an established brand in the United States (US) faced with falling demand for their primary product , the primary objective that Blades have to meet is to increase their profits in order to keep their shareholders happy and consequently , to keep their investments in the company. With a falling demand, a way to improve the profits earned would be to lower the costs in producing their products. As such, the prima facie advantage that Blades would get from importing from Thailand would the significant lowering of the production costs.
This lowering of production costs stems from a procurement strategy called Low-cost country sourcing (LCCS).1 The abundance of cheap labor in Thailand gives the country and its businesses an edge, as they are now able to produce their products at a much lower cost and thus be able to gain a comparative advantage against their rivals from other countries like the US.
With regards to exporting to Thailand , as the economy is still in its stages of infancy and the people just beginning to open up to leisure sports such as Roller Blading , Blades may be able to gain the first-mover advantage by venturing in to Thailand at this point in time. In addition, the good relations and ties that Blades may build with some of their Thai suppliers, could help to ease their efforts in to breaking into the Thai market and exporting to Thailand
Furthermore with the rising affluence amongst the people in Thailand2, it is likely that more individuals would turn to leisure sports such as, roller blading, during their free time. Coupled with youths in Thailand becoming increasingly “Americanized”.3 This trend therefore, poses as an excellent opportunity for Blades to boost sales in Thailand to off-set the falling demand being experienced in the US.
Finally, by exporting to Thailand, Blades is able to diversify their sales and operations overseas. This way, should their business take off