caso blades traducido

8/10/2019 Caso Blades Traducido

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FINANZAS INTERNACIONALES

CAPTULO 1

CASO DE BLADES, INC.

1.Cules son las ventajas que podra obtener Blades de importar y/o exportar a y desde otro pas como

por ejemplo Tailandia?

Las ventajas que Blades, Inc. podra ganar de importar de Tailandia incluyen el coste de Blades que baja

potencialmente de bienes vendidos. Si las entradas (caucho y plstico) son ms baratas cuando

importado de un pas extranjero como Tailandia, esto aumentara los ingresos netos de Blades. Ya que

los numerosos competidores de Blades importan ya componentes de Tailandia, la importacin

aumentara el espritu competitivo de Blades en los Estados Unidos, sobre todo ya que sus precios estn

entre el ms alto en la industria de la lmina del rodillo. Adems, ya que Blades considera que los

proyectos de la variedad ms largos en Tailandia, importando de y exportando a Tailandia le pueden

presentar una oportunidad de establecer relaciones iniciales con algunos proveedores tailandeses. Por

lo que la exportacin se refiere, Blades, Inc. podra ser una de las primeras firmas para vender lminas

del rodillo en Tailandia. Considerando que Blades se propone cambiar finalmente sus ventas a Tailandia,

esto podra ser una ventaja competitiva principal

2. Cules son algunas de las desventajas a que se podra enfrentar Blades como resultado del comercio

con el extranjero a corto plazo? A largo plazo?

Hay varias desventajas potenciales que Blades, Inc. debera considerar. En primer lugar, Blades se

expondra a fluctuaciones monetarias en baht tailands. Por ejemplo, el coste del dlar de entradasimportadas se puede hacer ms caro con el tiempo si el baht aprecia aun si los proveedores tailandeses

no ajustan sus precios. Sin embargo, las ventas de Blades en Tailandia tambin aumentaran en trminos

del dlar si el baht aprecia, aun si Blades no aumenta sus precios. Blades, Inc. tambin se expondra a las

condiciones econmicas en Tailandia. Por ejemplo, si hay una recesin, Blades sufrira de ventas

disminuidas a Tailandia.

3. Cules teoras de los negocio internacionales que se describieron en este captulo se aplican a

Blades, Inc., a corto plazo? A largo plazo?

Hay al menos tres teoras del negocio internacional: la teora de ventaja relativa, la teora de mercados

imperfecta y la teora del ciclo del producto. A corto plazo, a Blades le gustara importar de Tailandia

porque las entradas como caucho y plstico son ms baratas en Tailandia. Tambin, le gustara exportar

a Tailandia para aprovechar el hecho que pocas lminas del rodillo se venden actualmente en Tailandia.

Ambos de estos factores sugieren que la teora de mercados imperfecta se aplica a Blades a corto plazo.

En la carrera larga, el objetivo es establecer posiblemente una filial en Tailandia y ser uno de los

primeros fabricantes de la lmina del rodillo en Tailandia. La superioridad de su proceso de produccin

sugiere que la teora de la ventaja relativa se aplicara a Blades en la carrera larga. Sin embargo, la teora


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del ciclo del producto tambin se aplica a Blades, desde sus Estados Unidos. las ventas disminuyen y

Blades siente que deben establecer finalmente una filial en Tailandia a fin de conservar su ventaja

competitiva a competidores tailandeses

4. Qu planes a largo plazo, adems de crear una subsidiaria en Tailandia, son opciones para Blades y

que quiz resulten ms apropiadas para la compaa?

Ya que Ben Holt es muy desconocido con el negocio internacional, y desde que Blades nunca ha actuado

fuera de los Estados Unidos, el establecimiento de una filial en Tailandia no es probablemente el mejor

camino para Blades, Inc. para ganar un hueco para apoyar el pie en Tailandia en la carrera larga. Blades

debera considerar al principio una empresa conjunta con firmas tailandesas ese rodillo de fabricacin

lminas. La ventaja sera el acceso a canales de distribucin tailandeses, familiaridad de la firma

tailandesa con aduana y tica en Tailandia y un mercado establecido. Por supuesto, ya que el proceso de

produccin de Blades es nico, una empresa conjunta proveera la filial tailandesa del conocimiento de

los objetivos de produccin, que puede duplicar despus de que la empresa conjunta termina.


3/13

Ch1

1. What are the advantages Blades could gain from importing from and/or exporting to a foreign

country such as Thailand?

ANSWER: The advantages Blades, Inc. could gain from importing from Thailand include potentially

lowering Blades cost of goods sold. If the inputs (rubber and plastic) are cheaper when importedfrom a foreign country such as Thailand, this would increase Blades net income. Since numerouscompetitors of Blades are already importing components from Thailand, importing would increaseBlades competitiveness in the U.S., especially since its prices are among the highest in the roller

blade industry. Furthermore, since Blades is considering longer range plans in Thailand, importingfrom and exporting to Thailand may present it with an opportunity to establish initial relationshipswith some Thai suppliers. As far as exporting is concerned, Blades, Inc. could be one of the first firmsto sell roller blades in Thailand. Considering that Blades is contemplating to eventually shift its salesto Thailand, this could be a major competitive advantage.

2.What are some of the disadvantages Blades could face as a result of foreign trade in the short run? In

the long run?ANSWER: There are several potential disadvantages Blades, Inc. should consider. First of all, Bladeswould be exposed to currency fluctuations in the Thai baht. For example, the dollar cost of importedinputs may become more expensive over time if the baht appreciates even if Thai suppliers do notadjust their prices. However, Blades sales in Thailand would also increase in dollar terms if the baht

appreciates, even if Blades does not increase its prices. Blades, Inc. would also be exposed to theeconomic conditions in Thailand. For example, if there is a recession, Blades would suffer fromdecreased sales to Thailand.

In the long run, Blades should be aware of any regulatory and environmental constraints the Thai

government may impose on it (such as pollution controls). Furthermore, the company should beaware of the political risk involved in operating in Thailand. For example, the likelihood ofexpropriation by the Thai government should be assessed. Another important issue involved inBlades long-run plans is how the foreign subsidiary would be monitored. Geographical distance maymake monitoring very difficult. This is an especially important point since Thai managers mayconform to goals other than the maximization of shareholder wealth.

3. Which theories of international business described in this chapter apply to Blades, Inc. in the short

run? In the long run?

ANSWER: There are at least three theories of international business: the theory of comparativeadvantage, the imperfect markets theory, and the product cycle theory. In the short run, Blades

would like to import from Thailand because inputs such as rubber and plastic are cheaper inThailand. Also, it would like to export to Thailand to take advantage of the fact that few roller bladesare currently sold in Thailand. Both of these factors suggest that the imperfect markets theoryapplies to Blades in the short run. In the long run, the goal is to possibly establish a subsidiary inThailand and to be one of the first roller blade manufacturers in Thailand. The superiority of itsproduction process suggests that the theory of comparative advantage would apply to Blades in thelong run. However, the product cycle theory also applies to Blades, since its U.S. sales are declining


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and Blades feels that it must eventually establish a subsidiary in Thailand in order to preserve itscompetitive advantage over Thai competitors.

4. What long-range plans other than the establishment of a subsidiary in Thailand are an option for

Blades and may be more suitable for the company?

ANSWER: Since Ben Holt is very unfamiliar with international business, and since Blades has neveroperated outside the United States, establishment of a subsidiary in Thailand is probably not thebest way for Blades, Inc. to gain a foothold in Thailand in the long run. Blades should initiallyconsider a joint venture with Thai firms that manufacture roller blades. The advantage would beaccess to Thai distribution channels, familiarity of the Thai firm with customs and ethics in Thailand,and an established market. Of course, since Blades production process is unique, a joint venture

would provide the Thai subsidiary with knowledge of the production purposes, which it mayduplicate after the joint venture terminates.


5/13

Ch2

1. How could a higher level of inflation in Thailand affect Blades (assume U.S inflation remains

constant)?

ANSWER: A high level of inflation in Thailand relative to the United States could affect Blades

favorably. Generally, if a countrys inflation rate increases relative to the countries with which

it trades, consumers and corporations within the country will most likely purchase more

goods overseas, as local goods become more expensive. Consequently, Blades sales to

Thailand may increase

2. How could competition from firms in Thailand and from U.S firms conducting business in

Thailand affect Blades?

ANSWER: Blades would be favorably affected relative to Thai roller blade manufacturers and

relative to other U.S. roller blade manufacturers with operations in Thailand. Both groups offirms will likely be forced to raise their prices if they want to maintain the same profit margin

should inflation in Thailand increase. This is especially true if both groups of firms source their

supplies directly from Thailand, so that the prices of these supplies are subject to the higher

inflation in Thailand. Conversely, Blades cost of goods sold incurred in Thailand is relatively

small. Consequently, costs will not be subject to the higher level of inflation in Thailand to a

great extent and Blades will probably not have to raise its prices to the same extent as Thai

roller blade manufacturers or U.S. manufacturers with operations in Thailand.

3. How could a decreasing level of national income in Thailand affect Blades?

ANSWER: At first glance, it would appear that a decreasing level of national income in

Thailand could hurt Blades financially, as Thai consumers will have less money to spend.

Furthermore, this effect may be magnified because Blades manufactures a leisure product,

which is probably one of the first products Thai consumers will stop buying. The arrangement

Blades has with its primary Thai importer mitigates this effect somewhat, since the latter has

committed himself to the purchase of a certain number of Speedos annually. Nevertheless,

the importer may not offer to renew this arrangement in excess of the original three years if

the Thai economy does not improve.

4.

How could a continued depreciation of the Thai baht affect Blades? How would it affectBlades relative to U.S exporters invoicing their roller blades in U.S dollars?

ANSWER: A continued depreciation of the Thai baht would hurt Blades, especially because the

firm invoices its roller blades in baht. A continued depreciation of the baht means that the


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baht- denominated revenue in Thailand will convert to fewer U.S. dollars. Blades also has

some expenses in baht, but this amount is less than the revenue denominated in baht.

Although Blades would be hurt by a depreciating baht because its exports are denominated in

baht, the demand for Blades products may increase relative to that of its U.S. competitors

exporting to Thailand. This is because most of the U.S. firms exporting roller blades to

Thailand invoice their products in U.S. dollars. If the baht depreciates, Thai importers will haveto convert more baht to dollars in order to pay for the dollar-denominated exports.

5. If Blades increases its business in Thailand and experiences serious financial problem, are

there any international agencies that the company could approach for loans or other financial

assistance?

ANSWER: An agency extending direct loans to corporations involved in international trade is the

International Financial Corporation (IFC). Besides extending loans, the IFC may also purchase

stock in a corporation, thereby becoming part owner


7/13

Ch3

1. One point of concern for you is that there is a tradeoff between higher interest rates in

Thailand and the delayed conversion of Baht into dollars. Explain what this means?

ANSWER: If the net baht-denominated cash flows are converted into dollars today, Blades is not

subject to any future depreciation of the baht that would result in less dollar cash flows.

2. If the net Baht received from the Thailand operations are invested in Thailand, how will US

operations be affected? (Assume that Blades is currently paying 10% on dollar borrowed and

needs more financing for its firm)

ANSWER: If the cash flows generated in Thailand are all used to support U.S. operations, thenBlades will have to borrow additional funds in the U.S. (or the international money market) at aninterest rate of 10 percent. For example, if the baht will depreciate by 10 percent over the nextyear, the Thai investment will render a yield of roughly 5 percent, while the company pays 10percent interest on funds borrowed in the U.S. Since the funds could have been converted intodollars immediately and used in the U.S., the baht should probably be converted into dollarstoday to forgo the additional (expected) interest expenses that would be incurred from thisaction.

3. Costruct a spreadshhet to compare the cash flows rsulting from 2 plans.For this question

assume that allaa baht denominated cash flows are due today.compare the choice of

investing the funds versus using the funds to provide needed financing to the firm?

ANSWER: (See spreadsheet attached.) If Blades can borrow funds at an interest rate below 8percent, it should invest the excess funds generated in Thailand at 8 percent and borrow fundsat the lower interest rate. If, however, Blades can borrow funds at an interest rate above 8percent (as is currently the case with an interest rate of 10 percent), Blades should use theexcess funds generated in Thailand to support its operations rather than borrowing.Plan 1Ben Holt's PlanCalculation of baht-denominated revenue:Price per pair of "Speedos" 4,594 Pairs of "Speedos" 180,000= Baht-denominated revenue 826,920,000Calculation of baht-denominated cost of goods sold:Cost of goods sold per pair of "Speedos" 2,871 Pairs of "Speedos" 72,000

= Baht-denominated expenses 206,712,000Calculation of dollar receipts due to conversion of baht into dollars:Net baht-denominated cash flows now (826,920,000206,712,000) 620,208,000Interest earned on baht over a one-year period (15%) 93,031,200Baht to be converted in one year 713,239,200 Expected spot rate of baht in one year $ 0.022= Expected dollar receipts in one year $ 15,691,262Plan 2Immediate Conversion


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Calculation of baht-denominated revenue:Price per pair of "Speedos" 4,594 Pairs of "Speedos" 180,000= Baht-denominated revenue 826,920,000Calculation of baht-denominated cost of goods sold:Cost of goods sold per pair of "Speedos" 2,871 Pairs of "Speedos" 72,000= Baht-denominated expenses 206,712,000

Calculation of dollar receipts due to conversion of baht into dollars:Net baht-denominated cash flows to be converted (826,920,000206,712,000) 620,208,000 Spot rate of baht now $ 0.024= Dollar receipts now $ 14,884,992Interest earned on dollars over a one-year period (8%) 1,190,799= Dollar receipts in one year $ 16,075,791Calculation of dollar difference between the two plans:Plan 1 $ 15,691,262

Plan 2 16,075,791Dollar difference $ (384,529)Thus, the cash flow generated in one year by Plan 1 exceed those generated by Plan 2 by

approximately $384,529. Therefore, Ben Holt's plan should not be implemented.


9/13

Ch4

1.

What is the relationship between the exchange rates and relative inflation levels of the twocountries? How will this relationship affect Blades Thai revenue and costs given that the baht is

freely floating? What is the net effect of this relationship on Blades?

ANSWER: The relationship between exchange rates and relative inflation rates is summarized by the

purchasing power parity (PPP) theory. When one countrys inflation rate rises relative to that of

another, the demand for the former countrys currency declines as its exports decline (due to its

higher prices). Furthermore, consumers and firms in the country with higher inflation tend to

increase their importing. Thus, the absolute form of PPP states that prices of similar products of two

different countries should be equal when measured in a common currency. The relative form of PPP

states that prices of similar products of different countries will not necessarily be the same when

measured in a common currency because of market imperfections. However, it states that the rate

of change in the prices of products should be similar. Both forms of the theory suggest that the

currency of the country with the higher level of inflation should depreciate to offset the inflation

differential.

Since the baht has become a freely floating currency, the currency should be expected to depreciate

due to the high inflation levels prevailing in Thailand. Blades revenue generated in Thailand will be

negatively affected by PPP. Because of Blades export arrangement, it is unable to increase its prices

in line with Thai levels of inflation. However, since Blades exports are denominated in baht, a

depreciation of the baht will result in a conversion of baht into fewer dollars. Blades cost of goods

sold generated in Thailand will increase as Thai exporters adjust their prices according to Thai

inflation rates. However, the high prices resulting from high levels of inflation in Thailand may be

somewhat offset by a depreciation of the baht.

Since Blades generates net cash inflows from its Thai operations, it will be negatively affected byPPP.

2.

What are some of the factors that prevent PPP from occurring in the short run? Would you expectPPP to hold better if countries negotiate trade arrangements under which they commit themselvesto the purchase or sale of a fixed number of goods over a specified time period? Why or why not?


10/13

ANSWER: PPP may not hold because exchange rates are affected by other factors in addition to the

inflation differential between two countries, such as relative interest rates, national income levels,

and government controls. Furthermore, certain goods may not be affected by PPP because no

suitable substitutes are available in the home country. Thus, the trade relationships between two

countries for these goods may not be affected by inflation rate differentials in the manner suggested

by PPP.

Arrangements whereby firms with differing inflation commit themselves to the purchase of a fixed

number of goods over a specified period of time will cause PPP not to hold, at least in the short run.

This is because contractual agreements are not easily terminated, causing a delayed impact of

inflation rates on trade relationships and, consequently, exchange rates.

3.

How do you reconcile the high level of interest rates in Thailand with the expected change of thebaht-dollar exchange rate according to PPP?

ANSWER: High levels of real interest rates in a given country may increase the demand for that

countrys currency as foreign investors can earn higher rates of return in the foreign country than

may be available domestically. This would place upward pressure on the currency of the country

with the higher level of real interest rates. However, the high level of nominal interest rates in

Thailand are primarily the result of high expected levels of Thai inflation. Therefore, according to the

international Fisher effect (IFE), the Thai baht should depreciate by an amount sufficient to offset

the nominal interest rate differential between Thailand and the U.S.

4.

Given Blades future plans in Thailand, should the company be concerned with PPP? Why or whynot?

ANSWER: Although PPP may not hold well in the short run, it has been found to hold reasonably well

in the long run. Since Blades is under a three-year export arrangement with Entertainment Products,

Inc. and since it is considering the expansion into Thailand, the company should be concerned with

PPP; in the long run, the relatively high level of Thai inflation may result in a depreciation of the baht


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sufficient to offset the inflation differential. Yet, Blades will be able to renegotiate its arrangement

once the three-year period for the existing arrangement is over.

5.

PPP may hold better for some countries than for others. Given that the Thai baht has been freelyfloating for only a short period of time, how do you think Blades can gain insight into whether PPPwill hold for Thailand?

ANSWER: One possible way to determine whether PPP holds between two countries is to regress

historical exchange rate changes on the inflation differential between two countries. However, this

form of testing whether PPP holds is not appropriate for Thailand, since the baht has only been

freely floating for a short period of time; when the baht was pegged to the dollar, the baht-dollar

exchange rate was not affected by the inflation rates in the two countries.

One possible alternative is to investigate, via regression analysis, whether PPP holds between the

U.S. and a country similar to Thailand in terms of inflation rates, other economic characteristics, and

trade relationships with the U.S. The regression results could then be used to assess how the baht-

dollar exchange rate may be affected by the inflation differential between the U.S. and Thailand in

the future.


12/13

1.How percentage changes are measured?

An exchange rate measures the value of one currency in units of another currency. A decline in

currency value is often referred to as depreciation. The increase in currency value is referred as

appreciation and it is measured as:

Percentage change in currency:

= S-St-1

St-1

= (.026-.022)/.022

= 18.18%

S represents recent and S t-1 represents earlier spot rate

Positive change reflects appreciation in Thai baht

2.Basic factors that determine value of currency? What is relationship in equilibrium?

Demand and Supply are two basic factors that determine the value of a currency. Cycle can be

analyzed as:

Change In Economic Factors

Change in Trade-flows/Capital-flows

Change in Demand/supply

Change in Equilibrium

At equilibrium exchange rate demand for currency () is equal to supply of currency ()

against any other currency (i-e $).

3.How high level of inflation and interest rates will effect Thai bat's value?

High Inflation will likely reduce baht's value

High Interest rates are expected to Increase bahts value.

4.How lack of Confidence in baht's will effect Blades ?

Blades CGS will reduce and GP will increase.

Blades Revenue will decrease due to fixed price and quantity of Speedos.


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Assumptions:

We assume here that US and Thailand are mainly invloved in trading say 60% so to some

extent it will and should depreciate relative to US $.

Supplier doesnt increase prices of inputs i-e they remain the same

5.How Thai Central Bank Can reduce outflow of funds using interest rates ?

Thai Bank can increase interest rate to make investment in Thailand attractive than any other

countries.

Assumptions:

If other central banks dont make same adjustments at same time.

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