Lê Phương Anh – 18071012

Class: INS3032 1

Day 1: Blade Inc. Case

1) The cost of rubber and plastics, which are the primary inputs for Blades Inc., is relatively
low in Thailand, and Blades Inc. will be able to cut its production costs by importing
supplies from Thailand. The reduction in production costs will directly benefit the
company by increasing earnings, and the lower production costs will also improve
Blades Inc's competitiveness. The company will be able to outperform its competitors as
a result of its greater competitiveness. Furthermore, importing goods from Thailand will
assist the company in maintaining relationships with local suppliers, which will be
beneficial in the future as the company plans to open a subsidiary in Thailand. This will
make it easier for the corporation to expand in Thailand. Blades Inc., which will sell
roller blades in Thailand, will be the market leader in terms of exporting. This will
undoubtedly provide the organization with a competitive advantage in the Thai market.
Because sales in the US market are dropping, the corporation may preserve profits by
exporting. This exporting will also assist the corporation in reviving its product in the
Thai market and increasing sales.
2) However, there are a number of drawbacks that the business should consider. For
example, the corporation will be subject to foreign exchange risks as a result of currency
changes. Second, the company may be subjected to unfavorable economic conditions,
such as a recession, which could result in lower sales. Because of the great distance
from headquarters, the corporation may be subject to environmental restrictions,
political dangers, and monitoring concerns in the long run.
3) Three theories of international business can be used to assess this case: product life
cycle theory, comparative advantage theory, and market imperfection theory. Because
rubber and plastic are cheaper in Thailand than in the United States, Blades Inc. will
 benefit by importing such materials from Thailand and then exporting the roller blades
to Thailand, where they will be sold at a higher price. Because there are fewer roller
blades marketed in Thailand, it is a good idea to import raw materials at low prices from
Thailand and export high-priced completed products back to Thailand in the near term.
This shows that in the short run, the market imperfect theory holds true. Because the
company intends to establish a subsidiary in Thailand and establish itself as a pioneer in
roller blade manufacture, it may capitalize on its superior manufacturing process. Blades
Inc.'s superior production technique will help them acquire comparative advantage, and
this is where the comparative advantage hypothesis comes into play. Furthermore,
because roller blade sales in the United States are declining, the corporation needs
expand into new markets in order to retain sales or revenue. The product will obtain a
new market in Thailand, and sales will expand, allowing the corporation to gain a
competitive advantage over its Thai competitors. In the long run, the product life cycle
idea holds true.
4) The case shows that Ben has little experience in foreign business, and the Blades have
never grown their operations outside of the United States. In this situation, entering the
Thai market through a subsidiary is not a sensible move, as it will be difficult for Blades
Inc. to maintain its operations. As a result, Blades Inc. should consider forming a joint
venture with a suitable Thai partner in this case. Blades Inc. will gain greater
understanding of the Thai market through its local partner as a result of this. Through its
Thai partner, the company will also be able to take advantage of the distribution
channel, exploit market share, and gain knowledge of existing market practices and laws
in Thailand. This will not just benefit Blades Inc., as the joint venture will provide Thai
partners with the knowledge of Blades Inc.'s production method, which they may use
once the joint venture contract ends.

Day 2: Research about the trade agreement between Vietnam and the US and
China. What benefits and disadvantages does that bring to Vietnam?

1. Vietnam vs the U.S

 On July 13, 2000, in Washington, the Vietnam - US Trade Agreement was officially signed
between Vietnam Trade Minister Vu Khoan and US Trade Representative Charlene Bashefsky,
ending 4 years of continuity negotiations.

The content of the Agreement consists of 4 main parts:

Chapter 1: TRADE OF GOODS

Article 1: Most Favored Nation (MFN)

Article 2: National Treatment (NT)

Article 3: Technical Barriers to Trade (TBT)

Article 4: Sanitary and Phytosanitary (SPS)

Article 5: Business right

Article 6: Opening the market

Article 7: Determination of customs duty calculation value

Article 8: Self-defense

Article 9: Settlement of Disputes

Article 10: State commercial enterprises

Chapter 2: INTELLECTUAL PROPERTY RIGHTS

Articles 1, 2: general definitions.

Article 3: National treatment.

Article 4: Copyright, including for written works, computer programs, data collections, audio
and video recordings.
Article 5: Signals transmitted by satellite.

Article 6: trademarks.

Article 7: inventions.

Article 8: Layout design of integrated circuits.

Article 9: Trade secrets.

Article 10: Industrial designs.

Articles 11 to 18: enforcement of intellectual property rights, procedures, measures, etc.

Chapter 3: TRADE IN SERVICES

Article 1: Scope and Definition

Article 2: Most Favored Nation Treatment

Article 3: Economic Integration

Article 4: National Law

Article 5: Monopolies and exclusive service providers

Article 6: Market access

Article 7: National Treatment

Article 8: Additional commitments

Article 9: Specific commitment roadmap

Article 10: Waiver of Benefits

Article 11: Definitions

 Chapter 4: DEVELOPING INVESTMENT RELATIONSHIPS

Article 1: Definitions

Article 2: National treatment and most-favoured-nation treatment

Article 3: General standards of treatment

Article 4: Settlement of disputes

Article 5: Transparency

Article 6: Specific procedures

Article 7: Technology transfer

Article 8: Entry, temporary stay and recruitment of foreigners

Article 9: Reservation of Rights

Article 10: Expropriation and compensation for war damage

Article 11: Trade-related investment measures biện

Article 12: Application to State-owned Enterprises

Article 13: Negotiations on Future Bilateral Investment Agreements

Article 14: Application to Investments Under this Agreement

Article 15: Denial of Benefits

Benefits
 New opportunities for Vietnam's export development.
 Good opportunity to import source technology products and high-quality raw materials
to serve the needs of industrialization and modernization of the country.
  Opportunities to attract US direct investment for Vietnam's socio-economic
development.
 The implementation of the Bilateral Trade Agreement helps Vietnam to practice its self-
adjustment and adaptability, which creates basic advantages for capacity building in the
market economy.
Disadvantages
 In the Vietnam-US Textile and Garment Agreement, in addition to imposing anti-
dumping duties, the US side also applies quotas to Vietnam's textile and garment
exports to the US and also creates new challenges for Vietnam when exporting to this
market.
 The United States applies the Anti-Biological Terrorism Law, which requires food
processing businesses to register with the US Food and Drug Administration (FDA),
which will make it more difficult for Vietnam businesses when exporting.
 The implementation of the Vietnam-US Trade Agreement in the near future will create
new competitive pressures on Vietnamese enterprises, especially domestic service
businesses when we fulfill our commitments by opening the service market to foreign
partners and implementing the principle of “national treatment”, …Moreover, the US
signing of a Free Trade Area Agreement (FTA) with other countries has created new
trade incentives for countries that have this Agreement with the United States, so
exports of countries with FTAs with the United States will have a greater competitive
advantage than our exports of the same type…
2. Vietnam vs China

The Vietnam-China trade agreement was signed on November 7, 1991 in Beijing, China.

Agreed as follows:

ARTICLE 1: The two signatories, based on the needs and capabilities of each country, actively
promote the long-term, continuous and stable development of the two countries' trade
relations between Vietnam and China.
ARTICLE 2: The two sides give each other most-favored-nation treatment in the taxation of
imports and exports, as well as in the settlement of procedures and regulations on customs
management; This treatment is not related to the preferences and benefits that each country
has and will give to its particular trade objects.

ARTICLE 3: Trade between the two countries is conducted on the basis of contracts signed
between foreign trade companies and other economic entities having the right to do foreign
trade business of the two countries in accordance with the provisions of this Agreement and
the laws of the two countries at the same time in accordance with international trade practices.

ARTICLE 4: The price of goods in a foreign trade contract will be based on the international
market price of such goods, agreed upon by the foreign trade companies of the two countries;
Payment shall be made in a freely convertible currency agreed to by both parties. Specific
issues on payment shall be agreed upon by the banks of the two countries.

ARTICLE 5: The two signatories agree that, in addition to trading using money, foreign trade
companies or other economic entities that have the right to do foreign trade of the two
countries can also conduct trade by other methods that the two sides accepted, to complement
the money trade.

ARTICLE 6: The two signatories agree to promote folk trade on the border of the two countries;
The specific issues of this sale will be resolved in accordance with the relevant regulations of
the two parties.

ARTICLE 7: The two signatories agree to create favorable conditions for each other in trade
promotion activities such as trade fairs, etc., and to be held by the relevant agencies of the
other country in their respective countries.

ARTICLE 8: To implement this Agreement, the two signatories agree to represent the Ministry
of Trade and Tourism of the Socialist Republic of Vietnam and the representative of the
Ministry of Economy and Foreign Trade of the People's Republic of China, if necessary, will
meet to exchange views on trade issues between the two countries.
ARTICLE 9: After the expiration of this Agreement, commercial contracts entered into under
this Agreement but not yet performed shall continue to be in force until their performance is
complete.

ARTICLE 10: The Ministry of Trade and Tourism of the Socialist Republic of Vietnam and the
Ministry of Economy and Foreign Trade of the People's Republic of China are the two
implementing agencies of this Agreement.

ARTICLE 11: This Agreement comes into force from the date of signing, for a period of three
years. Three months before the expiration of this Agreement, if no Contracting Party has made
a written request to terminate this Agreement, the period of entry into force of this Agreement
shall be automatically extended for one year and shall continue to be extended in that form.

Day 3:

Day 4:

1. Blade, Inc. Case: Assessment of Future Exchange Rate Movements

1) % change = S – S (t-1)/ S (t -1)
% change = 0.026 - 0.022/ 0.022 = 18.18%
2) The Supply of money for trade and the Demand for cash are the two most important
elements in determining the worth of cash.
  When the supply of cash increases, the worth of that cash falls.
 When demand rises, the worth of the cash rises as well.
 When the supply of cash meets the demand for it, it is said to be in balance.
3) Inflation and interest rates would have an impact on the baht.
 Inflationary pressures:

- Devaluation of the Thai baht -> increased Thai desire for US products -> increased Thai desire
for dollar.

- Decrease the desire for Thai products in the U.S -> raise the quantity of baht for purchase

 On the other hand, Thailand's high interest rates may lead to appreciate against the
dollar.
 Excessive interest rates:

- The baht's value against the dollar has increased.

- appealing to US investors -> boosted desire for the baht

- Thai investors would be less interested in US equities, increasing the amount of dollars for
purchase.

4) The money will decline as a result of withdrawals. This happens, as a consequence of

the currency's increased quantity. Blades Inc.'s revenues are priced in baht, so any fall in
value will lead to lower profit for the company. Because of the devaluation of the baht,
baht profits would have been turned into fewer US dollars.
5) Thailand's central bank will attempt to hike interest rates in order to avoid additional
devaluation of the baht. As a consequence, as Thai properties become more appealing
to US investors, desire for Thai baht will climb. This would put even more stress on the
currency 's worth Excessive interest rates on the other hand, may hinder regional
borrowing and spending.
6) Depreciation of the Baht from $0.022 to $0.020
  Borrow Thai baht: 10,000,000/ 0.022 = $454,545,454.50
 Convert the Thai baht to dollars: ($454,545,454.50 million × $0.022) = 10,000,000
 Lend the dollars at 8.10% annualized, which represents a 0.68% return over the 30-day
period (computed as 8.10% × (30/ 360)). After 30 days, Blades would receive:
[$10,000,000 × (1 + 0.0068)] = 10,068,000
 Use the proceeds of the dollar loan repayment (on Day 30) to repay the baht borrowed.
The annual interest on the baht borrowed is 15.40%, or 1.28% over the 30-day period
(computed as 15.40% × (30/ 360)). The total baht amount necessary to repay the loan is
therefore: (454,545,454.5 × (1 + 0.0128)) = 460,363,636.4
 Number of dollars necessary to repay baht loan: ($THB460,363,636.4 × $0.02) =
9,207,272.73
 Speculative profit: ($10,068,000 – $9,207,272.73) = 860,727.27

Appreciation of the Baht from $0.022 to $0.025

 Borrow dollars: 10,000,000

 Convert the dollars to Thai baht: ($10 million/ $0.022) = 454,545,454.5
 Lend the baht at 14.80% annualized, which represents a 1.23% return over the 30-day
period [computed as (14.80% × (30/ 360)). After 30 days, Blades would receive:
(THB454,545,454.50 × (1 + 0.0123)) = 460,136,363.6
 Use the proceeds of the baht loan repayment (on Day 30) to repay the dollars
borrowed. The annual interest on the dollars borrowed is 8.20%, or 0.68% over the 30-
day period (computed as 8.20% × (30/ 360)). The total dollar amounts necessary to
repay the loan is therefore: ($10,000,000 × (1 + 0.0068)) = 10,068,000
 Number of baht necessary to repay dollar loan: ($10,068,000/ $0.025) = 402,720,000
 Speculative profit: (THB460,136,363.6 – THB402,720,000) = 57,416,363.6
 Dollar equivalent of speculative profit: (THB57,416,363.6 × $0.025) = 1,435,409.09

2. 6 bai tap cuoi chap 4

Day 6: Blade, Inc. Case: Assessment of Government Influence on Exchange Rates

1) The Thai state's involvement move was a straight involvement as the state traded dollar
assets for baht to boost the currency. This step would raise baht desire while also
increasing the quantity of dollars for trade, putting higher pressure on the baht. A
central bank uses indirect action to try to impact the worth of a currency by altering the
elements that determine it. If the Thai administration wished to boost the baht, for
instance, it could have raised interest rates by reducing the Thai currency supply.
2) The Thai administration's participation was a non-sterilized involvement. A central bank
uses non-sterilized involvement to operate in the international exchange market
without accounting for changes in the currency supply A central bank gets involved in
the international exchange market through sterilized manipulation while maintaining
the cash supply. The dollar cash supply has expanded after the Thai state exchanged
dollar assets for baht in the international exchange market An expansion in the cash
supply could lower interest rates in the United States, weakening the dollar against the
baht. As a result, non-sterilized intervention could amplify the desirable outcomes of the
intervention. Non-sterilized involvement may be more beneficial if the Thai state 's goal
is to raise the worth of the baht.

3) Inflation can be transferred from one nation to another under a fixed exchange rate
regime. For example, throughout a fixed-exchange rate regime, if Thailand had fairly
significant inflation, Thai customers may have moved some of their expenditures to US
items. Likewise, customers in the United States may have cut their purchases of Thai
items. This would result in a drop in Thai production and an increase in jobless. It may
also result in increased inflation in the United States as a result of the overwhelming
desire for American goods. As a result, rising inflation in Thailand could lead to
significant inflation in the United States. This impact would most likely be more
noticeable for firms like Blades, as their manufacture costs would increase, but they
export at a fixed price.
4) Thailand's inflationary difficulties may be exacerbated by a freely moving currency rate. 
For instance, if Thailand's inflation rate is excessive, the baht may decrease. As a result
of the lower baht, import costs may rise, raising the cost of Thai components and
 suppliers and, as a result, the cost of completed items. Furthermore, greater overseas
prices (from the Thai viewpoint) may compel Thai customers to buy national goods. 
Because both its exports and imports are valued in baht, Blades does not participate to
these issues. As a result, a devalued baht would have little effect on businesses
importing from Blades. A freely fluctuating exchange rate structure could still harm
blades, as the gross baht collected is still vulnerable to exchange rate risk when
converted to dollars.
5) Thailand must reverse the swap of its baht reserves for dollars in order to complete the
swap arrangement, according to the conditions of the deal. It will have to swap dollars
for baht at some point in the future. However, due to the baht's depreciation in value,
Thailand's central bank will require more baht to be exchanged for the dollars required
to reimburse the other central banks. The Thai government's purchase of dollars on the
foreign exchange market will increase demand for dollars while decreasing the quantity
of baht for sale, putting downward pressure on the baht's value. Because Blades has net
baht inflows, the completion of the swap agreement will have a negative impact if the
activities required to finalize the agreement cause the baht to drop further.

Day 11: Bai excel