University Of Finance & Administration

INTERNATIONAL BUSINESS[N_IB]

Pavla Břečková [Ing., Ph.D.]pavla.breckova@vsfs.cz

2.

INTERNATIONAL BUSINESS – main areas

Full-time course = 12 lectures per 90 mins.

•INTERNATIONAL BUSINESS [IB], characteristics, indicators.

•WORLD BUSINESS TERRITORIES, challenges, integration, main

trading blocks [TRIAD, BRIC]

•GLOBAL BUSINESS ENVIRONMENT.

•EMERGING MARKETS, characteristics, features, selected

markets in detail

•BRICS

•Doing business in ASIA

•Foreign market analysis

•PREDISPOSITIONS for working in IB, expatriation and HR in IB

 

EXAM terms N_IB

12 lectures (per 90 mins) - Finished by: exam

Completion CONDITIONS = min. 12 points out of 30

Active participation in the lectures[active listening, discussing, reading, analyzing & interpreting of economic articles or case study results, presence at lectures – 50%]

Case study elaboration & it’s active professional prezentation Knowledge test

ALL BASED ON POINTS AS FOLLOW

5 points = 3/5 presence (if less = 0 points)up to 10 points = success at CASE study

& its prezentation up to 15 points = TEST

TOTAL max 3012 – 14 points = E15 – 16 = D18 – 20 = C21 - 23 = B24 – 30 = A

CASE study / team project

CASE study on one of these topics: 1. BUSINESS TRENDS / opportunities in the next 10 years

Largest threats & opportunities from the point of view of international business, where it (IB) is going. Areas where it is likely to find the business opportunities during next 10 years + explain what brought you to such results.

2. EXPORT STRATEGY Mid term view (3-5 years). What it should lie in, generally - how to support

export (of CZ enterprises), concrete forms + in which business and industry areas (if in any / if not in all of them) + explain why

3. Finding the COMPETITIVE ADVANTAGE for the Czech Republic / or other country Competitive advantage + consequently what areas of business and industry should be preferential (if any) + what to do for succeeding in international business from the point of view of competitive advantage (micro and macro view). Possibly also what kind of business environment (or changes in the present one) would help developing the CZ businesses competitive advantage?

4. PRODUCT PLACEMENT – market study Placing of a product into a foreign market, including product description +

argument why it is suitable for export, analyses of the preferential market (why this market, structure and potential of the target group), mapping competition, potentials + risks, argument why you think your product will succeed.

CASE study - elaboration

CASE study on one of these topics:

1. BUSINESS TRENDS / opportunities in the next 10 years2. EXPORT STRATEGY 3. Finding the COMPETITIVE ADVANTAGE for a country4. PRODUCT placement – market study

ELABORATION: Elaboration in teams up to 8 people Presentation of the results - ppt possible, cca 15 min., structured way, clear outcomes (solutions, results)

PREZENTATION:- up to 15 min. / all the team members should be involved

Team projects presentation - schedule

24/2/2014 introductory lesson, setting the teams, choosing

topics

10/3/2014 consulting on the team projects

24/3/2014 consulting on the team projects

7/4/2014 guest lecture Steffen Schwarz – part of the course & test

Entrepreneurship: Germany and Europe

21/4/2014 Easter

5/5/2014 presentation of teams, concluding the course

7.

LITERATURE SOURCES

Povinná literatura / Mandatory reading: Charles W. L. Hill: Global Business Today, McGraw-Hill/Irwin, 7th edition, 2011 Doporučená literatura / Recommended reading:Allan Sitkin, Nick Bowen: International Business, January 2010.  Stuart Wall, Dr. Bronwen Rees: International Business: A First Course, September 2009. Wild, J., Wild, K., Han, J.: International business: the challenges of globalization. 4th ed. – Pearson, Upper Saddle River, 2008. ISBN: 978-0-13-174743-6. Woods, M.: International business. Basingstoke, Palgrave, 2001. ISBN: 0-333-75979-6. Griffin, R.W., Pustay, M.W.: International business: a managerial perspective. 5th int. ed. - Upper Saddle River, Prentice Hall, 2007. ISBN: 0-13-233532-8

TRIAD – 3 main world trading blocks

NAFTA

ASEAN

• North American Free Trade Agreement• USA, CANADA, MEXICO

• East & South-East ASIA• Indonesia, Malaysia, Philippines, Singapore and Thailand from 1967 Brunei, Burma (Myanmar), Cambodia, Laos and Vietnam

EU

• 28 countries

8.

NAFTA member states

• FREE TRADEAREA• From 1994

• Population:457 million

Density: 25.1/km2 

• GDP/capita:35,490 USD• Water 7.4%

TRIAD – NAFTA

9.

EU member states

• EconomicUNION

• GDP / capita:39.729 USD

• Population:- 501 million- density: 115.9/km2• Water 3.08%

TRIAD – EUROPEAN UNION

10.

ASEAN

• Free Trade Area

• GDP / capita:5,131 USD

• Population:- 600 million (8.8% of world population)- density: 135/km2

TRIAD – ASEAN

11.

Features / consideration:

– Dollar / Euro ZONE– Business Culture – Law enforcement– Business Barriers– Business threats / opportunities

WORLD BUSINESS

12.

Few challenges which will need to be faced by business if expanding their international operations:

• increased competition arising from a greater freedom of world trade

• changing distribution of economic activity across the globe

• acceptance of changes in corporate structures in order to match the strategic changes required to survive the global marketplace

WORLD BUSINESS CHALLENGES

13.

The interesting QUESTION [from an economic perspective]

is what the above means for the future:

• the 19th century was dominated by Great Britain and Europe as colonial powers

• the 20th century by the USA as the great economic power

• the 21st century will be controlled by Asia, and China in particular

WORLD BUSINESS possible PROSPECT

14.

15.

ECONOMIC INTEGRATION

15.

Free Trade Area:

Type of trade bloc, a designated group of countries that have agreed to eliminate tarrifs, quotas and preferences on most (if not all) goods and services traded between them.

It can be considered the 1st - 2nd stage of economic integration (Preferential trading area)

ECONOMIC INTEGRATION Description I.

16.

Customs union

Composed of a Free Trade area with a COMMON EXTERNAL TARIFF. The participants set up common external trade policy, but in some cases they use different import quotas.

Purposes for establishing a customs union normally include increasing econ. efficiency + establishing closer political and cultural ties between members

It is the 3rd stage of economic integration

ECONOMIC INTEGRATION Description II.

17.

Common / Single market

Economic union

A single market is a type of trade bloc which is composed of a FTA (for goods) with common policies on product regulation, and FREEDOM of MOVEMENTof the FACTORS OF PRODUCTION (capital, labour) and of enterprise and services.

The physical (borders), technical (standards) and fiscal (taxes) barriers among the member states are removed to the maximum extent possible. These barriers obstruct the freedom of movement of the four factors of production. To remove these barriers the member states need political will and they have to formulate common economic policies.

A common market is a first stage towards a single market, and may be limited initially to a free trade area with relatively free movement of capital and of services, but not so advanced in reduction of the rest of the trade barriers.

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 and a common external trade policy.

What is?

– when you trade something out of the country. In economics, an export is any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade.

EXPORT

Why export is good

for economy / country?

Why export is good

for economy / country?

Why to aim to world

business territories?

Why to aim to world

business territories?

What is an emerging market?

– Emerging markets are nations with social or business activity in the process of rapid GROW and INDURSTRALIZATION.

– Currently, there are 28 emerging markets in the world, with the economies of CHINA and INDIA considered to be by far the two largest.

– The ASEAN–China Free Trade Area, launched on January 1, 2010, is the largest regional emerging market in the world.

– An emerging market economy (EME) is defined as an economy with low to middle per capita income. • Such countries constitute approximately 80% of the global

population, and represent about 20% of the world's economies. The term was coined in 1981 by the World Bank.

– One key characteristic of the EME is an increase in both local and foreign investment (portfolio and direct). A growth in investment in a country often indicates that the country has been able to build confidence in the local economy

EMERGING MARKETS

Special problems related to entering EM

– Lack of information (problematic data collection)

EMERGING MARKETS [EM]entering

EM’s market-potential analysis:– Market SIZE– Market INTENSITY – estimates wealth, buying

power– Market GROWTH rate – GDP, energy

consumption etc.– Market CONSUMPTION CAPACITY – spending

capacity (% of middle class, core of buying power)– Commercial INFRASTRUCTURE – chanels for

com./distrib.– Economic FREEDOM – free market principles

domination– Market RECEPTIVITY – market ‘openness’– Country RISK – of doing business

VIETNAM

• 80 million people• est. 1945 • division into 2 parts (Hanoi /

Saigon – Ho Chi Minh City)• Vietnam war 1963 – 73• Member of ASEAN• Elements of free trade

principles• Dynamically developing

VIETNAM

23.

• competitive advantage: persistence, hard-working, humility

• education – better avg.in south Asia (no illiteracy)• not developed country

but growing rapidly (7-8%)• relations (1/4 million of

V.studied in CZ – backbone of V.economy)

• bad infrastructure • no history and exp. in industry / engineering

• corruption• QM missing => low VA industries, no experience

• business culture (no long-term relations / businesses)• very low law enforcement• not fully liberalised envi

VIETNAM

+ -

Business doing

– Patience, long meetings / negotiations– No long contracts – chaos: changing mind,

no reliability in European understanding (effort to satisfy)

– No business drive in Euro perception (enq./offers – lengthy via email)

– Personal contacts necessary / local– No win-win (‘loss of face’ danger)– Business cards handling – ‘YES’ even if meant NO

VIETNAM

Business doing

VIETNAM

CHINA

27.

• hard-working • education – in towns and

industry areas• no-VA parts (or

normalised) very cheap• massive gov. investments

in infrastructure• railways net / HSR (but

due to industrialization too busy)

• rising prices• only large series /

payments in advance• control (necessity of Chinese citizen in the business) - not fully

liberalised envi• quality instability (no

sustainable Q)• fractionalism

• no ENVI issues / labour conditions

CHINA

+ -

Business doing

– Smiles not usual in business– Nepotism, preference of family members– Patience – time to succeed– Seniority respect – Double check of mutual understanding /

samples precision etc.– Contract – precision (parameters, samples

– signed etc.)

CHINA

TAIWAN

TAIWAN

– Republic of China– Capital: Taipei– Population: 23

million

- Density: 668 /km2

31.

• extremely hard-working • good knowledge of English

(EU/USA education)• industrial tradition (cca 30 years)• no-VA parts (or normalised) very

cheap• flexibility & professional approach

(enq./ sampling / quality)• ISO norms not a formality

• good infrastructure: airport / HSR• fully free market

• raw materials import – dependence on China • changing EUR / USD • status manipulation +

pretending “made in Taiwan” (PRC reality)• frequent typhoons

(supplies postponing)

TAIWAN

+ -

Business doing

– Professional, very polite – Business cards handling– Quick response / sticking on agreed– Willingness to sort out the claims– No need to double-check understanding– In machine production – taking shoes off in

offices– Strong green teas at business meetings

TAIWAN

Business doing

TAIWAN

INDIA

INDIA

– Capital: New Delhi / largest: Mumbai

– Language: Hindi, English

– Population: 1,118,521,000

- Density: 361 /km2 - GDP per capita:

3,100 USD

36.

• good education, English

• bank sector highly developed

• large market with over 1mld. people / growing

purchasing power

• distinctive ability

• secluded economy (extremely high import

taxes)

• changing EUR / USD

• productivity

INDIA

+ -

Business doing

– English – Demanding negotiations, long

(several hours)– Half-truths common– Compromise necessary (Indian -

bargaining) + keep the positions (manipulation resistance)

– Agreements – sticking on

INDIA

INTERNATIONAL BUSINESS

Thank you for your attention

Ing. Pavla Břečková, Ph.D.pavla.breckova@vsfs.cz