1. University Of Finance & Administration INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. pavla.breckova@mail.vsfs.cz

2. 2.2. INTERNATIONAL BUSINESS Full-time course = 12 lectures (summer term 2010) 1-2 What is international business. Comparative advantage. Protectionism x Liberalism. 3-4 Internationalisation and Globalisation. Foreign expansion. Entry modes. 5-6 Culture and its role in IB. Culture differences. Negotiation and presentation of business results. 7-8 CASE Study elaborated in teams (no regular lecture held at VSFS, April 1 st, 2010) 9-10 Czech IB. European Union. International market research (analysis). Data collection. 11-12 International trade barriers. Economic integration. Personal preconditions for working in IB. SWOT of Czech companies. Within each lecture: - practical discussions on topical economical issues - article: reading + analyses - team knowledge competition INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

3. 3.3. CREDIT conditions B_IB Full-time course = 12 sessions (summer term 2010) INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz CONDITIONS: PRESENCE at IB lectures: 50% short TEAM PRESENTATION - preparation at home: 10- 15 min. presentation on international business issue lecture marks based on active PARTICIPATION: communication, reading and discussing topical economic issues / team knowledge COMPETITION If unfulfilled: 1. knowledge test / 2. semester elaborated paper + test PLEASE NOTE: April 1 st, 2010 lecture will not be held at VSFS – instead: YOU ARE SUPPOSED TO WORK ON CASE STUDY (in teams) + to present your RESULTS on regular lecture April 15 th, 2010

4. 4.4. TEAM PREZENTATION 10-15 mins. team presentation (normally in ppt, each team member talks/presents, preparation at home necessary) Following topics: 4.3.2010 Globalisation: influence on business, examples 18.3.2010 CSR (Corporate Social Responsibility): opportunity or necessity, examples 15.4.2010 EU (European Union): influence on Czech businesses, examples 29.4.2010 Personal preconditions for working in IB (International Business) INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

5. 5.5. Common session STRUCTURE  IB NEWS – small talk / discussion – topical business issues  LECTURE  READING – analyzing – interpretation of an article (team work) / Prezentation of the materials prepared at home  Team PRESENTATION + audience evaluation  Quick team knowledge COMPETITION INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

6. 6.6. Lecture content  INTERNATIONALISATION  dimensions  motives for foreign expansion  Drivers of internationalisation  Goods categories traded internationally  Entry / operational modes  Special IB operations INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

7. 7.7. International ENVIRONMENT INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz GLOBAL MACRO MICRO

8. 8.8. INTERNATIONALIZATION – MICRO view INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz Special IB operations: e.g. barter, switch, clearing Entry / Operational modes EXPORTINGCONTRACTUALINVESTMENT Motives for foreign expansion / Drivers of INT ProactiveReactive Dimensions of Internationalization INTERNALEXTERNAL

9. 9.9. INTERNATIONALIZATION – MACRO view INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz 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 Basic drivers of INT:

10. 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 10. Goods traded internationally - categories For these reasons, GOODS which are traded internationally typically tend to fall into 4 broad categories: INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

11. 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 11. INTERNATIONALIZATION - various research approaches INT = cover for international operations INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

12. 12. 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. / 19063@mail.vsfs.cz

13. 13. MOTIVES for foreign expansion PROACTIVE motivesProfit advantageUnique product Technological advantage Exclusive informationTax advantageEconomy of scaleREACTIVE motivesStrong competitionOver-productionDomestic revenues declineCapacity (surpluses)Saturated domestic market Customer distance / logistic point distance INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

14. 14. Entry modes & business activities in IB ENTRY MODES EXPORTING Direct export Indirect export CONTRACTUAL Licence & Franchise AlianceOther INVESTMENT Joint venture Major / Minor / 50-50% Wholly Owned Subsidiary Greenfield Acquisition INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

15. 15. INT. TRADE EXPORT 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 INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

16. 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 INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

17. 17. INVESTMENT business activities JOINT VENTURE an entity formed between two or more parties to undertake economic activity together Major [> 50%] - Minor [< 50%] - 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 INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

18. 18. 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 INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

19. Import / Export International TRADE FDI / Portfolio inv. // JV / WOS / MNO etc. International INVESTMENT Barter, Switch trading, Buyback,. Other forms of int. business ACTIVITY (counter-trades) 19. INTERNATIONAL BUSINESS CONSISTS IN: INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

20. 20. Further IB operations / countertrades INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz Counter trade = 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 without the use of money as means of purchase or payment SWITCH trading 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.

21. -Internationalization, drivers of internationalization -Dimensions of internationalisation: internal x external -Motives for foreign expansion: proactive x reactive -Home x Host country -Economies of scale -Entry / opeartional modes -Exporting -Contractual -Investment -FDI x Portfolio investment -Countertrade operations (Barter, Switch, Counter purchase, Buyback, Offset) 21. KEY terms INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

22. 22. Thank you for your attention Ing. Pavla Břečková, Ph.D. 19063@mail.vsfs.cz INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz