University Of Finance & Administration INTERNATIONAL BUSINESS [N_IB_B] Ing. Pavla Břečková, Ph.D.

2.2. INTERNATIONAL BUSINESS 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 in detail Doing business in ASIA Foreign market analysis PREDISPOSITIONS for working in IB, expatriation and HR in IB

3.3. CREDIT terms N_IB_B 12 lectures (per 90 mins) Completion: credit / 3 credits Completion CONDITIONS: 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 If unfulfilled => WRITTEN TEST to prove the knowledge

CASE study / team work 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.

Team projects presentation - schedule 14/2/2013introductory lesson, setting the teams, choosing topics / lecture 28/2/2013consulting on the team projects / lecture 14/3/2013presentation of teams / lecture 28/3/2013GUEST lecture / consulting on the team projects 11/4/2013presentation of teams / lecture 25/4/2013concluding the course / lecture (Vltavská) consulting on IB course and topics (Estonská)

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 Stuart Wall, Dr. Bronwen Rees: International Business: A First Course, September Wild, J., Wild, K., Han, J.: International business: the challenges of globalization. 4th ed. – Pearson, Upper Saddle River, ISBN: Woods, M.: International business. Basingstoke, Palgrave, ISBN: Griffin, R.W., Pustay, M.W.: International business: a managerial perspective. 5th int. ed. - Upper Saddle River, Prentice Hall, ISBN:

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?

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 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

12. 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 ) –Personal contacts necessary / local –No win-win (‘loss of face’ danger) –Business cards handling –‘YES’ even if meant NO –No patience to build – interest in quick money –Atmosphere of ‘small business’ VIETNAM

Business doing VIETNAM

CHINA

16. 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 –Patience – time to succeed –Seniority respect –Double check of mutual understanding / samples precision etc. –Contract – precision (parameters, samples – signed etc.) CHINA

One should never do anything to cause a moment of public embarrassment. Chinese to use intermediaries to carry unpleasant news. Chinese society is highly hierarchical – respect that. Relatives, friends, neighbors, classmates, and co-workers are all people to whom one bears some form of obligation. BUT No obligation is felt to others outside of one's circle. CHINA – maintaining harmony

Hand business cards with both hands. Examine business card. Put it into your jacket slowly. Chinese surnames come first, not last. Drop the “deputy” in any official's title. CHINA – introducing / business cards handling

Chinese habits some Westerners experience as offensive include: –belching and spitting on the street, –smoking cigarettes indiscriminately, –staring at foreigners, –laughing at mishaps. Ignore that! CHINA – civilized behaviour?

Only leaders speak. Foreigners introduce ideas, Chinese react. Nodding is NOT agreeing. Find a good interpreter and use him well: –Pause frequently –Avoid slang and colloquialism –Make sure he understands technical terms –But always talk to host, not interpreter –Always restate what was agreed on CHINA – during meeting

Chinese dont say NO When negotiating with Chinese: –“inconvenient” –“under consideration” or –“being discussed”. = in reality means NO CHINA – saying NO

TAIWAN

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

25. 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

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

30. 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

state decides about their imposition TARIFF x NON-TARIFF state’s intention: either reduce IMPORT or support EXPORT AUTONOMOUS (independent, one-sided) result of negotiations BILATERAL (business agreements, credit / loan agreements etc.) MULTILATERAL (integration unions) bilaterální (dvoustranné): CONTRACTUAL 32. State IB policy INSTRUMENTS

33. Summary of basic IB BARRIERS WEAK IB Prohibitive TARIFFS QUOTAS IMPORT DUTIES Other PROTECTI- ONIST measures Sanctions & Embargo Dual use / ‘use conditional’ Nationali- zation

34. Tariff & Non-tariff measures NON-TARIFF Quota = qty restriction TARIFF - Fiscal - Protective - Retributive - Prohibitive  have important effects on consumption, production & structure of a domestic economy  reason for imposing = e.g. protect infant industries

35. Summary of basic IB BARRIERS WEAK IB Prohibitive TARIFFS QUOTAS IMPORT DUTIES Other PROTECTI- ONIST measures Sanctions & Embargo Dual use / ‘use conditional’ Nationali- zation

INTERNATIONAL BUSINESS Thank you for your attention Ing. Pavla Břečková, Ph.D.