ISSUES IN THE CASE: 1) Declining US Sales 2) Share price of Blades Inc.

going down 3) No possibilities for reducing costs in US 4) Reducing Return on Assets 7%

ALTERNATIVES FOR SOLVING THE ISSUES:

1)

Importing Raw material from Thailand Thailand due to its quality and cost of raw material as a world leader Immediate Exporting to Thailand Lack of Competition, there is growing demand for leisure products Immediate Setting up of a subsidiary in Thailand in case the US sales do not rebounce Medium Term

2)

3)

EXPORTING PROBLEMS AND PROSPECTS: 1) Increase in Sales Revenue 2) Using unutilized capacity of asset in US may reduce the per unit fixed costs. 3) Decreased volatility in sales revenue due to market diversification. PROBLEMS: 1) Weak Economy Inflation high, GDP growth is decreasing, Low per capita disposable income, Depreciation in currency, High unemployment, political instability, volatile markets for

factor inputs, persisting BOP deficits, decreasing reserves, 2) Pricing in Dollars or Thai Bahts given problems in Thai economy and the currency is depreciating. Generally better to price in Thai Bahts for local competition and manage transaction exposure by derivative contracts. IMPORTING: PROBLEMS: 1) Due to volatility in raw material prices in Thai Bahts in Thailand, the dollar cost of imports may also fluctuate.

2) US Import sanctions and duties. PROSPECTS:

1)

Cost of importing raw materials will be low due to lower cost of production of them in Thai Bahts and also while converting them into Dollars.

FDI IN Thailand: PROSPECTS: 1) Certain weaknesses related employment, low growth rate of GDP can be exploited with an FDI

2) Thailand can be a base for exporting to ASEAN countries. 3) Market Diversification PROBLEMS: 1) Higher Inflation in the economy requires adjustments in the Pricing, and Discount Rates for the country. 2) Taxation laws in Thailand and whether they are higher than US, if so is there a double taxation avoidance agreement. Then a scope for transfer pricing.