International International businessbusinessDoc.Ing.Alena Doc.Ing.Alena

Longauerová,PhD.Longauerová,PhD.

International businessInternational business is is a terma term

• describe all commercial transactions • (private and governmental, • sales, investments, logistics,and

transportation) • that take place between two or more

regions, countries and nations outside their political boundary.

• Crossborders transactions

• .

Why undertake IBWhy undertake IB• Usually, private companies undertake such

transactions for profit;income inreasing, market share increasing and other....

• governments undertake them for profit and for political reasons

• - more jobs for exporter, market.... - Political stability, resources security......

Cross border transactionsCross border transactions• all business activities which involves

of goods, services, resources between two or more nations.

• Transaction of economic resources include capital, skills, people etc. for international production of physical goods and services such as finance, banking, insurance, construction etc.2

A A multinationalmultinational enterpriseenterprise (MNE)(MNE)

• is a company that has a worldwide approach to markets and production or one with operations in more than a country.

• An MNE is often called multinational corporation (MNC) or transnational company (TNC).

• Well known MNCs include fast food companies such as McDonald's vehicle manufacturers such as General Motors, Ford Motor Company and Toyota, consumer electronics companies like Samsung, LG and Sony, and energy companies such as ExxonMobil, Shell and BP.

• Most of the largest corporations operate in multiple national markets.

A A multinational multinational corporationcorporation (MNC) (MNC)

• is a corporation or an enterprise that manages production or delivers services in more than one country.

• It can also be referred to as an international corporation. The International Labour Organization (ILO) has defined an MNC as a corporation that has its management headquarters in one country, known as the home country, and operates in several other countries, known as host countries.

• Some multinational corporations are very big, with budgets that exceed some nations' gross domestic products (GDPs).

• Multinational corporations can have a powerful influence in local economies, and even the world economy, and play an important role in international relations and globalization

ECONOMIC INDICATORECONOMIC INDICATOR

• Economic indicators• - The Consumer Price Index (CPI)

- Gross Domestic Product (GDP)- Unemployment figures- The price of crude oil

The forecast for The forecast for inflation CRinflation CR

•at the monetary policy horizon

• IndicatorHorizon Forecast

• Annual consumer price inflation• 2013, Q1 1.5%• 2013, Q2 1.5% •

The forecast of GDPThe forecast of GDP

• Indicator     Year      ForecastAnnual growth of real

• GDP2011- 1.7%• 2012 0.0% • 2013 1.9%

• Interest rates forecast (3M PRIBOR)

• IndicatorHorizon Forecast• Interest rates 3M PRIBOR• 2012 1.0% 2013 0.9%

• Exchange rate forecast• IndicatorYearForecast• exchange rate CZK/EUR• 2012 24.9• 2013 24.3

Economic integrationEconomic integration• The trade unification between different states • by the partial or full abolishing of customs tariffs on

trade taking place within the borders of each state.

• This is meant :• to lower prices for distributors and consumers• (as no customs duties are paid within the integrated area)

• The goal is to increase trade.

• The trade stimulation effects intended by means of economic integration are part of the contemporary economic

TheoryTheory ofof thethe SecondSecond BestBest• where, in theory, the best option is free

trade,• with free competition • and no trade barriers

• Free trade is treated as an idealistic option, and although realized within certain developed states, economic integration has been thought of as the "second best" option for global trade where barriers to full free trade exist.

TTypes of integrationypes of integration• Horizontal integration: combinations of

competitors, • industrial organisation - combinations of

business firms through economic agreements, cartels, concerns, trusts

• vertical integration to combinations of suppliers with customers.

• In the current sense of combining separate economies into larger economic regions, the use of the word integration can be traced to the 1930s and 1940s

IntegrationIntegration

The ColourThe ColourDescriptionStages of economic integration around the

World:(each country colored according to the most advanced agreement that it participates in.)  

Green :  Economic and monetary union (CSME/EC$, EU/€)  Green - yelouEconomic union (CSME, EU)  Blue- Customs and Monetary Union (CEMAC/franc, UEMOA

/franc)  Braun-Common market (EEA, EFTA)  Orange -Customs union (CAN, CUBKR, EAC, EUCU,

MERCOSUR, SACU)  RED - Multilateral Free Trade Area (AFTA, CEFTA, COMESA,

GAFTA, GCC, NAFTA, SAFTA, SICA,

A A Preferential trade areaPreferential trade area• (also Preferential trade agreement,

PTA) is a trading bloc which gives preferential access to certain products from the participating countries.

• This is done by reducing tariffs, but not by abolishing them completely.

• A PTA can be established through a trade pact.

• It is the first stage of economic integration.

Definition of 'Free Trade Definition of 'Free Trade Area'Area'

• A group of countries that invoke little or no price control in the form of tariffs or quotas between each other.

• • Free trade areas allow the nations to focus on

their competitive advantage and to freely trade for the goods

•  thus increasing the efficiency and profitability of each country.

A A customs unioncustoms union• is a type of trade bloc which is composed

of a free trade area with a common external tariff.

• The participant countries set up common external trade policy, but in some cases they use different import quotas.

• Common competition policy is also helpful to avoid competition deficiency

An An economic unioneconomic union• is a type of trade bloc which is composed of a

common market with a customs union. • The participant countries have both common

policies on product regulation, freedom of movement of goods, services and the factors of production (capital and labour) and a common external trade policy.

• The countries often share a common currency.• Purposes for establishing a economic union

normally include increasing economic efficiency and establishing closer political and cultural ties between the member countries.

An An economic and economic and monetary unionmonetary union

• is a type of trade bloc which is composed of an economic union (common market and customs union) with a monetary union.

• It is to be distinguished from a mere monetary union (e.g. the Latin Monetary Union in the 19th century), which does not involve a common market.

• This is the fifth stage of economic integration. EMU is established through a currency-related trade pact.

• An intermediate step between pure EMU and a complete economic integration is the fiscal union.

Fiscal unionFiscal union• is the integration of the fiscal policy of

nations or states. • Under fiscal union decisions about the

collection and expenditure of taxes are taken by common institutions, shared by the participating governments.

• For example, in federal nations such as the United States, fiscal policy is determined to a large extent by the central government, which is empowered to raise taxes, borrow and spend.

EuropeanEuropean FiscalFiscal UnionUnionItIt• is often proposed that the European Union adopt a form of fiscal

union. • Most member states of the EU participate in economic and

monetary union (EMU), based on the euro currency, but most decisions about taxes and spending remain at the national level.

• However the EU has certain limited fiscal powers. It has a role in deciding the level of VAT (consumption taxes) and tariffs on external trade.

• It also spends a budget of many billions of euro. There is furthermore a Stability and Growth Pact among members of the Eurozone (common currency area) intended to co-ordinate the fiscal policies of member states.

• On 9 December 2011, all EU members except the UK agreed on strict caps on government spending and borrowing, including automatic sanctions for countries breaking the rules.1

ColorColor• :Free trade around the World:

Green :Multilateral free trade agreements or more advanced agreements 

• yellow-green :Bilateral free trade agreements advanced agreements 

• Orange :No free trade agreements, but World Trade Organization members

Complete economic Complete economic integrationintegration

• is the final stage of economic integration.

• After complete economic integration, the integrated units have no or negligible control of economic policy, including full monetary union and complete or near-complete fiscal policy harmonisation.

• A good example of this is a country like the United States of America which can be viewed as a series of highly integrated quasi-autonomous nation states.

• In this example it is true that complete economic integration results in a federalist system of governance as it requires political union to function as, in effect, a single economy

Definition of 'DumpingDefinition of 'Dumping

In international trade, this occurswhen one country exports a significantamount of goods to another country atprices much lower than in thedomestic market.

Definition of 'Protectionism'Definition of 'Protectionism'

• Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition.

• Typical methods of protectionism are • import tariffs,• quotas, • subsidies or tax cuts to local businesses • and direct state intervention.

Definition of 'Tariff'Definition of 'Tariff'• A taxation imposed on goods and services

imported into a country. Also known as a duty tax.

• Investopedia explains 'Tariff‚

• Governments generally impose tariffs to raise revenue and protect domestic industries from foreign competition caused by factors like government subsidies, or lower priced goods and services.

Definition of 'Quota'Definition of 'Quota'

• In the context of international trade, this is a limit put on the amount of a specific good that can be imported.

Worl trade organisationWorl trade organisation• Green – members• Yellow –green – dual and EU• Blue - observer

EUEU• In the EU's unique institutional set-up:• the EU's broad priorities are set by the

European Council, which brings together national and EU-level leaders

• directly elected MEPs represent European citizens in the European Parliament

• the interests of the EU as a whole are promoted by the European Commission, whose members are appointed by national governments

• governments defend their own countries' national interests in the Council of the European Union

Institutions and bodiesInstitutions and bodies • European Parliament • European Council • Council of the EU • European Commission • Court of Justice • Court of Auditors • European Economic and Social Committee • Committee of the Regions • Central Bank • Investment Bank • Investment Fund • European Ombudsman • European Data Protection Supervisor • Interinstitutional bodies • Agencies and decentralised bodies

European CouncilEuropean Council• European Council meetings are

essentially summits where EU leaders meet to decide on broad political priorities and major initiatives.

• Typically, there are around 4 meetings a year, chaired by a permanent president.

EuropeanEuropean ParliamentParliament • Directly elected by EU voters every 5

years, members of the European Parliament (MEPs) represent the people.

• Parliament is one of the EU’s main law-making institutions, along with the Council of the European Union ('the Council').

The European Parliament The European Parliament has three main roles:has three main roles:

• debating and passing European laws, with the Council

• scrutinising other EU institutions, particularly the Commission, to make sure they are working democratically

• debating and adopting the EU's budget, with the Council.

Passing European lawsPassing European laws

• In many areas, such as consumer protection and the environment, Parliament works together with the Council (representing national governments) to decide on the content of EU laws and officially adopt them.

• This process is called "Ordinary legislative procedure" (ex "co-decision").

What does it do?What does it do?

• Its role is twofold – setting the EU's general political direction and priorities,

• and dealing with complex or sensitive issues that cannot be resolved at a lower level of intergovernmental cooperation.

• Though influential in setting the EU political agenda, it has no powers to pass laws.

CouncilCouncil ofof thethe EuropeanEuropean UnionUnion

• Also informally known as the EU Council, this is where national ministers from each EU country meet to adopt laws and coordinate policies.

• Not to be confused with:• European Council – another EU institution,

where EU leaders meet around 4 times a year to discuss the EU’s political priorities

• Council of Europe – not an EU body at all.•

What does it do?What does it do?

• Passes EU laws. • Coordinates the broad economic

policies of EU member countries. • Signs agreements between the EU

and other countries. • Approves the annual EU budget • Develops the EU's foreign and

defence policies. • Coordinates cooperation between

courts and police forces of member countries.

European CommissionEuropean Commission• Composition• The 27 Commissioners, one from each

EU country, provide the Commission’s political leadership during their 5-year term. Each Commissioner is assigned responsibility for specific policy areas by the President.

• The current President of the European Commission is José Manuel Barroso who began his second term of office in February 2010.

PurposePurpose

• The Commission represents and upholds the interests of the EU as a whole. It oversees and implements EU policies by:

• proposing new laws to Parliament and the Council

• managing the EU's budget and allocating funding

• enforcing EU law (together with the Court of Justice)

• representing the EU internationally, for example, by negotiating agreements between the EU and other countries.

DGDG• Departments (DGs)• Agriculture and Rural Development (AGRI) • Budget (BUDG) • Climate Action (CLIMA) • Communication (COMM) • Competition (COMP) • Economic and Financial Affairs (ECFIN) • Education and Culture (EAC) • Employment, Social Affairs and Inclusion (EMPL) • Energy (ENER) • Enlargement (ELARG) • Enterprise and Industry (ENTR) • Environment (ENV) • EuropeAid Development & Cooperation (DEVCO) • Eurostat (ESTAT) • Foreign Policy Instruments Service (EEAS)

• Health and Consumers (SANCO) • Home Affairs (HOME) • Humanitarian Aid (ECHO) • Human Resources and Security (HR) • Informatics (DIGIT) • Information Society and Media (INFSO) • Internal Market and Services (MARKT) • Interpretation (SCIC) • Joint Research Centre (JRC) • Justice (JUST) • Maritime Affairs and Fisheries (MARE) • Mobility and Transport (MOVE) • Regional Policy (REGIO) • Research and Innovation (RTD) • Secretariat General (SG) • Taxation and Customs Union (TAXUD) • Trade (TRADE) • Translation (DGT)

ServicesServices

• Bureau of European Policy Advisers (BEPA) • Central Library • European Anti-Fraud Office (OLAF) • European Commission Data Protection Officer • Historical archives • Infrastructures and Logistics - Brussels (OIB) • Infrastructures and Logistics - Luxembourg (OIL) • Internal Audit Service (IAS) • Legal Service (SJ) • Office For Administration And Payment Of

Individual Entitlements (PMO) • Publications Office (OP)

DG TradeDG Trade• http://ec.europa.eu/trade/

index_en.htm• Market accesss – export from EU to

other countries• http://madb.europa.eu/mkaccdb2/

indexPubli.htm• Export – help – import to EU• http://exporthelp.europa.eu/thdapp/

index_en.html