EECS 1530 Lecture Notes - Lecture 25: Swim Briefs, Thai Baht
21 Jun 2018
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EECS 1530 Lecture 25 Notes
Introduction
Flow of funds
Exposure to International Flow of Funds Ben Holt, chief financial officer (CFO) of Blades,
Inc., has decided to counteract the decreasing demand for Speedos roller blades by
exporting this product to Thailand.
Furthermore, due to the low cost of rubber and plastic in Southeast Asia, Holt has
decided to import some of the components needed to manufacture Speedos from
Thailand.
Holt feels that importing rubber and plastic components from Thailand will provide
Blades with a cost advantage (the components imported from Thailand are about 20
percent cheaper than similar components in the United States).
Currently, approximately $20 million, or 10 percent, of Blades’ sales are contributed by
its sales in Thailand.
Only about 4 percent of Blades’ cost of goods sold is attributable to rubber and plastic
imported from Thailand.
A blade faces little competition in Thailand from other U.S. roller blades manufacturers.
Those competitors that export roller blades to Thailand invoice their exports in U.S.
dollars.
Currently, Blades follows a policy of invoicing in Thai baht (Thailand’s currency).
Holt felt that this strategy would give Blades a competitive advantage since Thai
importers can plan more easily when they do not have to worry about paying differing
amounts due to currency fluctuations.
Furthermore, Blades’ primary customer in Thailand (a retail store) has committed itself
to purchasing a certain amount of Speedos annually if Blades will invoice in baht for a
period of 3 years.
Blades’ purchases of components from Thai exporters are currently invoiced in Thai
baht.
Document Summary
Exposure to international flow of funds ben holt, chief financial officer (cfo) of blades, Inc. , has decided to counteract the decreasing demand for speedos roller blades by exporting this product to thailand. Furthermore, due to the low cost of rubber and plastic in southeast asia, holt has decided to import some of the components needed to manufacture speedos from. Furthermore, blades" primary customer in thailand (a retail store) has committed itself to purchasing a certain amount of speedos annually if blades will invoice in baht for a period of 3 years. Blades" purchases of components from thai exporters are currently invoiced in thai baht. Holt is rather content with current arrangements and believes the lack of competitors in. Due to the low cost of rubber and plastic in southeast asia, holt has decided to import some of the components needed to manufacture speedos from thailand. Holt feels that importing rubber and plastic components from thailand will provide.
