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

2.2. 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 BA_IBR 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 – 14 points = E 15 – 17 = D 18 – 20 = C = B 24 – 30 = A

CASE study / team project CASE study on one of these topics: 1. BUSINESS RELATIONS … worldwide. The world economy structuring nowadays, may be compared with the past / possible prospects for future. Examples of certain (political) decisions => concrete influence on business or business relations. 2. SMEs (Small & Medium Enterprises) and their role in a globalizing world Companies up to 250 employees (acc.to European definition), their specifics, positives x negatives, could contain some statistics or comparison in various countries. Their major role in society, comparison of views on them in various countries or contexts. 3. FAMILY BUSINESS …and their role in global business, positives x negatives, examples, specifics, problem of handing over to next generations, comparisons in various countries etc. 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. 5. NOT WIDELY KNOWN (UNUSUAL INFORMATION) about BRICS / EU / ASEAN or another international trade grouping

CASE study - elaboration CASE study on one of these topics: 1. Business Relations 2. SMEs and their role in a globalizing world 3. Family Business 4. PRODUCT placement – market study 5. Not widely known information about an international grouping ELABORATION:  Elaboration in teams per up to 8 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 6/10/2014introductory lesson, setting the teams, choosing topics 20/10/2014guest lecture - Ananta Giri: Rethinking Economics: With and Beyond Globalization and Towards Planetary Realizations / consulting on the team projects 3/11/2014lecture / consulting on the team projects 17/11/2014Czech bank holidays 1/12/2014presentation of teams /12/2014presentation of teams 3 + 4, concluding the course

7.7. 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 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:

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 8.8.

NAFTA member states FREE TRADE AREA From 1994 Population: 457 million Density: 25.1/km2 GDP/capita: 35,490 USD Water 7.4% TRIAD – NAFTA 9.9.

EU member states Economic UNION GDP / capita: USD Population: 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 (monetary) & Political union Common marketCustoms unionFree trade area 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 1 st - 2 nd 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 3 rd 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?

What is emerging market economy (EME)? –Emerging markets are nations/markets 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

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 ) –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

–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

–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 RELATIONS Thank you for your attention Ing. Pavla Břečková, Ph.D.