INTERNATIONAL BUSINESS

University Of Finance & Administration

INTERNATIONAL BUSINESS [NA_IB] Pavla Břečková [Ing., Ph.D.] [email protected]

INTERNATIONAL BUSINESS – main areas Full-time course = 12 lectures per 90 mins.

•

INTERNATIONAL BUSINESS [IB], characteristics, indicators.

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WORLD BUSINESS TERRITORIES, challenges, integration, main trading blocks [TRIAD, BRIC]

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GLOBAL BUSINESS ENVIRONMENT.

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EMERGING MARKETS, characteristics, features, selected markets in detail

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BRICS

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Doing business in ASIA

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Foreign market analysis

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PREDISPOSITIONS for working in IB, expatriation and HR in IB 2.

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 30 12 – 14 points = E 15 – 16 = D 18 – 20 = C 21 - 23 = B 24 – 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 years 2. EXPORT STRATEGY 3. Finding the COMPETITIVE ADVANTAGE for a country 4. PRODUCT placement – market study ELABORATION:  Elaboration in teams per 4-5 people

 Presentation of the results - ppt possible, cca 10 min., structured way, clear outcomes (solutions, results) PREZENTATION: - up to 10 min. / all the team members should be involved

Team projects presentation - schedule 30/9/2013

introductory lesson, setting the teams, choosing topics

14/10/2013

consulting on the team projects

28/10/2013

Czech bank holidays

11/11/2013

presentation of teams 1 + 2

25/11/2013

presentation of teams 3 + 4

9/12/2013

concluding the course, guest lecture Scott Venezia: Doing business in Mexico

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: 978-013-174743-6. Woods, M.: International business. Basingstoke, Palgrave, 2001. ISBN: 0333-75979-6. 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 7.

TRIAD – 3 main world trading blocks

NAFTA • •

North American Free Trade Agreement USA, CANADA, MEXICO

EU •

27 countries

ASEAN • • • 8.

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

TRIAD – NAFTA NAFTA member states • FREE TRADE AREA • From 1994 •

Population: 457 million Density: 25.1/km2 • GDP/capita: 35,490 USD • Water 7.4%

9.

TRIAD – EUROPEAN UNION

EU member states •

Economic UNION

• GDP / capita: 39.729 USD • Population: - 501 million - density: 115.9/km2 • Water 3.08%

10.

TRIAD – ASEAN

ASEAN • Free Trade Area • GDP / capita: 5,131 USD • Population: 600 million (8.8% of world population) - density: 135/km2

11.

WORLD BUSINESS

Features / consideration:

– – – – –

12.

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

WORLD BUSINESS CHALLENGES

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

13.

WORLD BUSINESS possible PROSPECT

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

14.

ECONOMIC INTEGRATION

Economic (monetary) & Political union Common market Customs union Free trade area

15.

15.

ECONOMIC INTEGRATION Description I. 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)

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 16.

ECONOMIC INTEGRATION Description II. Common / Single market 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.

Economic union

17.

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.

EXPORT 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.

Why to aim to world business territories?

Why export is good for economy / country?

EMERGING MARKETS 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 [EM] entering Special problems related to entering EM –

Lack of information (problematic data collection)

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

VIETNAM

+ • competitive advantage: persistence, hardworking, 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)

23.

• bad infrastructure • no history and exp. in industry / engineering • corruption • QM missing => low VA industries, no experience • business culture (no longterm 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

CHINA

CHINA

+ • 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)

27.

• 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.)

TAIWAN

TAIWAN

– Republic of China – Capital: Taipei – Population: 23 million - Density: 668 /km2

TAIWAN

+ • 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 31.

• 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

INDIA

INDIA

– Capital: New Delhi / largest: Mumbai – Language: Hindi, English – Population: 1,118,521,000 - Density: 361 /km2 - GDP per capita: 3,100 USD

INDIA

+

-

• good education, English

• distinctive ability

• bank sector highly developed

• secluded economy (extremely high import taxes)

• large market with over 1mld. people / growing purchasing power

• changing EUR / USD • productivity

36.

INDIA

Business doing

– English – Demanding negotiations, long (several hours) – Half-truths common – Compromise necessary (Indian bargaining) + keep the positions (manipulation resistance) – Agreements – sticking on

INTERNATIONAL BUSINESS

Thank you for your attention

Ing. Pavla Břečková, Ph.D. [email protected]