A case study on Blade Int Corporation about the inflationary effect. How would a higher level of inflation in Thailand affect Blades (assuming U.S. inflation remains constant)? Despite the Blades already experiencing a decrease in demand for “Speedos” and the high rate of inflation compared to the U.S. inflation rate, it will impact Thailand’s current account, which is expected to decrease. As a result, the demand for exports from other countries will also decline.
Additionally, Blades would be affected in relation to competition from firms in Thailand and U.S. firms conducting business in Thailand.
Local firms in Thailand will be impacted by tax rates on interest and dividends. This is because investors in Thailand typically prefer to invest within the country as the taxes and income from interest and dividends are comparatively lower. However, they may choose to access their earnings by investing in foreign securities. This can result in competition for U.S. firms as investors and other companies may decide to purchase securities from other countries instead of Thailand. The main reason for this is the continuous depreciation of the Thai Baht currency.
The decline in national income in Thailand as a result of the Asian crises had a negative impact on Blades. This decline in national income led to a decrease in demand for imported goods, including those manufactured by Thai-based firms affected by the Asian crises. Additionally, the depreciation of the Thai baht would further affect Blades.
How would Blades be affected in relation to U.S. exporters who invoice their roller blades in U.S. dollars? The ongoing depreciation of the Thai baht will cause U.S. exporters to increase their demand for Thai baht since they invoice their roller blades in dollars. 5. If Blades expands its operations in Thailand and encounters significant financial issues, are there any international agencies that the company can seek out for loans or other financial assistance? If Blades Inc. becomes trapped in a financial crisis.
The company can solve its financial problems by obtaining loans from the International Development Association (IDA), which has a loan policy that is more suitable for underdeveloped or less developed countries. IDA provides loans at low interest rates that companies cannot qualify for from the World Bank. Additionally, the company can seek financial assistance from the Bank For International Settlements, which aims to facilitate international transactions and offers assistance to countries facing financial challenges.
