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

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

3. 12 lectures (per 90 mins) - Finished by: exam
EXAM terms NA_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 – 17 = D
18 – 20 = C
= B
24 – 30 = A

4. 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

5. 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 5

6. 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, 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:

7. Team projects presentation - schedule
6/10/2015 introductory lesson, setting the teams, choosing topics
20/10/2015 lecture / consulting on the team projects
4/11/2015 at 12,30 p.m. GUEST lecture Ivan Jukl (instead of regular session Nov 3rd- to be marked in Presence sheet), in ESTONSKA site – Congress Centre (= hall opposite Reception)
17/11/2015 Czech bank holidays
1/12/2015 lecture / presentation of teams 1 + 2
15/12/2015 lecture / presentation of teams 3 + 4, concluding the course (possibly the TEST)

8. International ENVIRONMENT
GLOBAL
MACRO
MICRO

9. INTERNATIONALIZATION – MICRO view
Dimensions of Internationalization
INTERNAL
EXTERNAL
Motives for foreign expansion / Drivers of INT
Proactive
Reactive
Entry / Operational modes
EXPORTING
CONTRACTUAL
INVESTMENT
Special IB operations: e.g. barter, switch, clearing 9. 9

10. INTERNATIONALIZATION – MACRO view
Basic drivers of INT:
Innate strategic capability
Access to production factors, which its overseas competitors lack
Economies of scale (its unit costs of production are lower than competitors’ – based on volume)
patented product
exceptional reputation
comparative advantage
10. 10

11. Goods traded internationally - categories
For these reasons, GOODS which are traded internationally typically tend to fall into 4 broad categories:
Minerals, agriculture products (comparative advantage)
PRIMARY products
Low-fashion clothing
Producer enjoys preferential access to production factors
LOW VALUE added goods
firms enjoying the right strategic capabilities
HIGH VALUE added goods
only large-scale production on an international scale can allow firms to reach their min.efficient scale of production
CAPITAL-intensive goods
11. 11

12. INTERNATIONALIZATION
- various research approaches
process of increasing involvement of enterprises in international markets, although there is no agreed definition of internationalization or international entrepreneurship
INTERNACIONALIZATION
the decision to establish foreign direct investment (FDI)
production units abroad
MULTINACIONALIZATION
an ongoing process by which regional economies, societies, and cultures have become integrated through a globe-spanning network of communication and trade
integration of national economies into the international economy through trade, FDI, capital flows, migration, and the spread of technology
GLOBALIZATION
INT = cover for international operations
12. 12

13. MOTIVES for foreign expansion
PROACTIVE motives
Profit advantage
Unique product
Technological advantage
Exclusive information
Tax advantage
Economy of scale
REACTIVE motives
Strong competition
Over-production
Domestic revenues decline
Capacity (surpluses)
Saturated domestic market
Customer distance / logistic point distance
13. 13

14. Wholly Owned Subsidiary
Entry modes & business activities in IB
ENTRY MODES
EXPORTING
Direct export
Indirect export
CONTRACTUAL
Licence & Franchise
Aliance
Other
INVESTMENT
Joint venture
Major / Minor /
50-50%
Wholly Owned Subsidiary
Greenfield
Acquisition
14. 14

15. EXPORT IMPORT INTERNATIONAL TRADE
Quantity of goods and services exported abroad
Selling of products made in one’s own country for use or resale in other countries
DIRECT x INDIRECT (intermediary)
IMPORT
Quantity of goods and services imported from abroad
buying of products made in other countries for use or resale in one’s own country
Internal dimension of internationalisation

16. CONTRACTUAL international business activities
LICENCE
contractual agreement in which a firm in one country licenses the use of its INTELLECTUAL property to a firm in a second country in return for a RAYALTY pay
licensor provides its patents, trademarks, know-how, trade secrets x royalty
beer breweries, Skoda
avoiding restrictions – investment / testing market
FRANCHISE
Provision of right to make business in a certain – in advance agreed way (recipe, brand names, trademarks, logos, mktg techniques, procedures) for a royalty payment
unique product, unique conditions
high level of standardization (LR, McD. – color, space solution)
ALIANCES
Cooperation (customers – purch. strength / compet. – cartel, capacity, research, anti-red-tape administration)
OTHER agreements
Technological / Management

17. INVESTMENT business activities
JOINT VENTURE
an entity formed between two or more parties to undertake economic activity together
Major [> 50%] - Minor [< 50%] / 50
WOS [Wholly Owned Subsidiary]
GREENFIELD
ACQUISITION
MNC / MNE / MNO
MNC = buy resources, create goods in a variety of countries & then sell them in a variety of countries. Coordination of activities from headquarters (often).
MNE = non-for-profit organizations (Int.Red Cross) and non typical MNC
MNO = general term when referring to both non-for-profit and profit-seeking organizations

18. FDI = Foreign Direct Investment
International INVESTMENTS - generally
FDI = Foreign Direct Investment
investments made for the purpose of ACTIVELY CONTROLLING PROPERTY, assets, or companies located in host countries
home x host country
Portfolio Investment
purchases of foreign financial assets (stock, bonds, certificates, deposits) for a purpose OTHER than CONTROL

19. Counter trade Further IB operations / countertrades OFFSET
= 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.

20. Decision making – foreign market evaluation
PEST / STEEP / STEEPLE analysis
Competition analysis (Porter)
SWOT analysis
BENCHMARKING
Emerging market trends
DATA collection:
Secondary data
= was collected already
Primary data
= necessary to obtain it
20. 20

21. SECONDARY / desk PRIMARY / terrain
Data collection
SECONDARY / desk
analysing of secondary data
low cost
quick execution
PRIMARY / terrain
collection & analysis of primary d.
relatively high cost
time-consuming
21. 21

22. IB works in a certain environment, which has an influence on:
INT environment & its influence on business
IB works in a certain environment, which has an influence on:
Decision making WHETHER OR NOT to enter this market (market selection)
Entry mode (the form of entry)
Choosing of mktg strategy
PEST analysis = analysis of int.envi:
Political & Legal e.
Economical e.
Social & Cultural e.
Technological e.
22. 22

23. Legal environment: [PEST] P – Political & Legal environment
possibility to control ownership
possibility to buy properties (lands, buildings)
possibility to repatriate the profit abroad
law enforcement
possibility to set up a new company & finishing entrepreneurship
Political environment:
political system and political stability
influence of interest groups / stakeholders
relation to foreign companies
corruption
23. 23

24. Political IB barriers: Sanctions Embargo Exchange rate manipulation
[PEST] (P) – POLITICAL environment (2)
Political IB barriers:
Sanctions
Embargo
Exchange rate manipulation
Dual-use
Nationalization
expropriation
confiscation
Privatization
24. 24

25. economic policy of government: IB policy rate policy
[PEST] E – Economic environment
economic policy of government:
IB policy
rate policy
basic macro-economic measures and their development / trend
proportion of ‘grey economy’
25. 25

26. [PEST ] S – Social & Cultural environment
Culture:
Extent of freedom of society
Hierarchy
Value orientation (e.g.: western pattern etc.)
Institutions:
Family
Religious bodies
Educational institutions
Further factors:
Language
Non-verbal communication
Way of dressing
Aesthetics
Life styles
26. 26

27. [PEST] T – Technological environment
existence & quality of basic infrastructure
quality & availability of communication infrastructure: TV, broadcast, phones etc.
IT – possibility of data transfer abroad => internationalization of services, standardisation
approach to information
E-commerce / e-business
B2C, B2B, C2C (e-Bay), C2B
27. 27

28. BASIC COMPANY ANALYSIS

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