University Of Finance & Administration
INTERNATIONAL BUSINESS
[N_IB]
Pavla Břečková [Ing., Ph.D.]
pavla.breckova@vsfs.cz
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
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 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
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
•
28 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.
pavla.breckova@vsfs.cz