University of Finance & Administration INTERNATIONAL BUSINESS [N_IB] Ing. Pavla Břečková, Ph.D.

2.2. INTERNATIONAL BUSINESS Part-time course = 4 guided consultations á 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 BRIC and BRICS Doing business in Asia Foreign market analysis PREDISPOSITIONS for working in IB, expatriation and HR in IB

3.3. COMPLETION terms N_IB 4 lectures / guided consultations [GC] (per 90 mins) Completion: credit Completion CONDITIONS: Active participation (presence) in GC min. 75% Active involvement in the guided consultations [active listening, discussing, reading, analyzing & interpreting of economic articles or case study results] If unfulfilled => written TEST to prove the knowledge

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:

BRIC Brazil – Russia – - India – China [+ South Africa] Free Trade Area encompassing > 25% of world’s land 40% of world’s Population (3 billion) Among biggest & fastest growing EM (emerging markets) BRIC(S) 5.5.

o Federative Republic of BRAZIL o RUSSIAN Federation o Republic of INDIA o People’s Republic of CHINA o South Africa (from 2010) = association of emerging national economies above = developing or newly industrialized countries, but they are distinguished by their large, fast-growing economies

BRIC(S) BRIC = a grouping acronym that refers to Brazil, Russia, India, China, which are all deemed to be at a similar stage of newly advanced economic development (not a formal trading block till 2009). S = South Africa (from 2010) acronym was coined by Jim O’Neill (Goldman Sachs) in 2001 came into widespread use as a symbol of the shift in global economic power away from the developed G7 economies towards the developing world it is estimated that BRIC economies will overtake G7 economies by 2027 Prospect: India & China will become the world's dominant suppliers of manufactured goods and services, respectively, while Brazil and Russia will become similarly dominant as suppliers of raw materials.

HRM in IB Human Resource Management [HRM] = activities an organization conducts to use its human resources effectively Strategic role of HRM is complex enough in DOMESTIC firm, but even more complex in IB – issues arising from: *staffing, *management development, *performance evaluation & *compensation activities Issues are complicated by profound differences between countries in:  LABOR markets – specifics, labor law, labor habits, productivity  CULTURE – elements influencing business and day-to-day work  LEGAL systems  Economic systems

9.9. Basic elements of Culture CULTURE Language Communi -cation Religion Values & Attitudes Social structure

10. LEGAL systems Cases create legal precedents COMMON / CASE law Detailed listing what IS and IS NOT permissible CIVIL law Based on the faith & practice of a particular religion RELIGIOUS law Often in communist and dictatorships is whatever the country’s bureaucrats say it is BUREAUCRATIC law

EXPATRIATION - REPATRIATION EXPATRIATE manager = a national of one country appointed to a management position in another country career growth experience compensate  often overlooked problem: inclusion into comp.structure after REPATRIATION of the expat Expatriate failure = premature return of an expatriate manager to the home country - Reasons in multinational companies – next slide = expatriate selection – one way to REDUCE expat failure is by improving selection procedures (within HRM)

EXPATRIATION failure reasons US multinationals: 1. Inability of spouse to adjust 2. Manager’s inability to adjust 3. Other family problems 4. Manager’s personal or emotional maturity 5. Inability to cope with larger overseas responsibilities JAPANESE multinationals: 1. Inability to cope with larger overseas responsibilities 2. Difficulties with new environment 3. Personal or emotional problems 4. Lack o technical competence 5. Inability of spouse to adjust EUROPEAN multinationals:  Inability of spouse to adjust to new environment

13. INTERNATIONALIZATION – MICRO view Special IB operations: e.g. barter, switch, clearing Entry / Operational modes EXPORTINGCONTRACTUALINVESTMENT Motives for foreign expansion / Drivers of INT ProactiveReactive Dimensions of Internationalization INTERNALEXTERNAL

14. Dimensions of INTERNACIONALIZATION Material purchase / components / technology / goods FDI in a company (impact on competition at a domestic market) INTERNAL dimension (active IB in external flow) Export Ownership of production unit abroad Licence / Contracts EXTERNAL dimension INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

15. Further IB operations / countertrades INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / Countertrade = is exchanging goods or services that are paid for, in whole or part, with other goods or services BARTER Exchange of goods or services directly for other goods or services no money is involved (as means of purchase or payment) SWITCH trading 3 parties involved, partly barter + partly money involved or in FIN: Practice in which one company sells to another its obligation to make a purchase in a given country. Counter PURCHASE Sale of goods and services to a country by a company that promises to make a future purchase of a specific product from the country BUYBACK occurs when a firm builds a plant in a country - or supplies technology, equipment, training, or other services to the country and agrees to take a certain percentage of the plant's output as partial payment for the contract OFFSET Agreement that a company will offset a hard - currency purchase of an unspecified product from that nation in the future.

16. Basic business analysis Analysis of external environm. (market) PEST / STEEP / STEEPLE COMPETITION analysis Analysis of inner environm. (company) SWOT Factors: political, economical, social, technological (PEST), ecological (STEEP), legal and European (STEEPLE) Barriers to entry Threat of substitutes Buyer power Supplier power Rivalry / degree of rivalry of present competitors Strengths Weakness Opportunities Threats

17 SWOT českých firem Growing taxes and pays Labour code Admin. burden No concept EU (availability, relations, min.barriers) Non-EU (historical ties, good reputation) B2B x B2C… Business conservatism Languages Averageness Fear from unknown Education Infrastructure Stability Industrial tradition S W TO

QUESTIONS to prove knowledge in IB – part 4 What is BRIC – BRICS? What is expatriation? What is repatriation? What issues are connected with expatriation most often? What are the main areas to deal with when expatriating? What is expatriate failure? What are the basic dimensions of internationalization? What operations COUNTERTRADE might cover? What are the basic business analyses?

INTERNATIONAL BUSINESS - BMCF / TM - winter term 2010 Thank you for your attention Ing. Pavla Břečková, Ph.D.