1. BMCF I TM I Prague University Of Finance & Administration INTERNATIONAL BUSINESS [NA_IB] Ing. Pavla Břečková, Ph.D. pavla.breckova@vsfs.cz

2. 2.2. INTERNATIONAL BUSINESS Full-time course = 12 sessions á 90 mins. 1-2/ What is international business (IB). IB basic indicators - balance of trade / payment. International business importance and influences, differences from domestic trading. Territorial / commodity structure of IB. Global business environment. Comparative advantage, free trade / economy. The main regional trading blocks. 3-4/ Internationalization and Globalization. Drivers of Internationalization. Categories of goods traded internationally (primary, low/high value, capital intensive). FACTORS influencing the IB environment (Political, Economic, Technological). Motives for foreign expansion (microeconomic view). Entry modes and business activities in IB (export, import, contractual, investment activities, FDI). Team work on the semestral project. 5-6/ Culture and its role in international business. Cultural elements and multi-culture communication (verbal, non-verbal, role of eyes, silence etc.). Hofstede’s five dimensions of culture differences. Negotiation and successful presentation of business results in the international environment. Team work on the semestral project. 7-8/ World business territories, Euro / Dollar zones. Emerging markets, newly industrialized countries. International market research (PEST/STEEP), and linkage to Competition analysis (Porter) and SWOT. Data collection and their selection in the international environment. Team work on the semestral project and prezentations. 9-10/ International trade barriers and their assessing. Forms of economic integration, international unions, free trade areas and multilateral agreements The main regional trading blocks (TRIAD). WTO, GATT. Impact of economic integration on micro environment (companies). IB policy instruments (autonomous, contractual) Team work on the semestral project and prezentations. 11-12/ Prerequisites and personal preconditions for working in international business. European Union principles of IB. Opportunities and threats of CZ membership in the EU. SWOT of Czech companies in the international business environment. Topical international business challenges and trends. International Business knowledge summary and evaluation, presentation of team business work results. INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / pavla.breckova@vsfs.cz

3. 3.3. EXAM terms NA_IB 12 lectures (per 90 mins) Completion: exam / 6 credits Completion CONDITIONS: Active participation in the guided consultations [active listening, discussing, reading, analyzing & interpreting of economic articles or case study results, presence at lectures – 50%] Semestral study elaboration & it’s successful prezentation Based on the above you’ll be offered a grade. If unfulfilled / or if unhappy with the offered grade => written exam to prove the knowledge in IB

4. SEMESTRAL 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 (and of the CZ businesses). 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?

5. SEMESTRAL study - elaboration CASE study on one of these topics: 1. BUSINESS TRENDS / opportunities in the next 10 years 2. EXPORT STRATEGY 3. Finding the COMPETITIVE ADVANTAGE for the Czech Republic ELABORATION:  Elaboration in teams per 4-5 people  Presentation of the results - ppt possible, cca 10 min., structured way, clear outcomes (solutions, results) PREZENTATION: - Date – TBC - up to 10 min. / all the team members should be involved

6. 6.6. LITERATURE SOURCES Mandatory: Charles W. L. Hill: Global Business Today, McGraw-Hill/Irwin, 7th edition, 2011 Optional / Recommended: Allan Sitkin, Nick Bowen: International Business, January 2010. Woods, M.: International business. Basingstoke, Palgrave, 2001. ISBN: 0- 333-75979-6. Wild, J., Wild, K., Han, J.: International business: the challenges of globalization. 4th ed. – Pearson, Upper Saddle River, 2008. ISBN: 978-0- 13-174743-6. Griffin, R.W., Pustay, M.W.: International business: a managerial perspective. 5th int. ed. - Upper Saddle River, Prentice Hall, 2007. ISBN: 0-13-233532-8

7. 7.7. INTERNATIONAL BUSINESS  What is international business? = exchange of goods and services undertaken by business bodies across the national border with the foreign business bodies = cross-border commercial transactions INT business = EXCHANGE across border INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / pavla.breckova@vsfs.cz

8. Barter / Import / Export International TRADE FDI / WOS / Portfolio investment etc. International INVESTMENT Licensing / Franchising / Management contracts etc. Other forms of int. business ACTIVITY 8.8. INTERNATIONAL BUSINESS CONSISTS IN: INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

9. 9.9. How IB differs from DOMESTIC business?  currencies – conversions, risks, rates securing  often legal system – laws  culture – behavior, business practice  resources  technology – way of producing INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / pavla.breckova@vsfs.cz

10. 10. INTERNATIONAL BUSINESS  Reasons for participation in IB? = the fact that almost no country is able to SATISFY its’ needs by own goods and base materials -> countries concentrate on manufacturing products which are effective under given conditions (= theory of comparative advantage)  Free economy = stage of involvement in the international trade INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

11. 1. ECONOMICAL 2. POLITICAL 3. CULTURAL 11. IB importance + influences  FREE TRADE (international exchange) = is a system of TRADE POLICY that allows traders to act and transact without interference from government. According to the law of COMPARATIVE ADVANTAGE the policy permits trading partners mutual GAINS from trade of goods and services. = it is an AIM of all the trade economies and consists in:  convertibility (possibility to exchange currency)  free price creation  economical and political barriers elimination (duties, quotas, admin. barriers etc.) INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

12. 12. International business - THREATS Weak self-sufficiency (in case of war or political system change) Dependence (the smaller and econ.developed country => the more important IB is for the country) INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

13. 13. IB INDICATORS [basic]  BALANCE OF TRADE = review of export & import volume in certain period of time A) ACTIVE = export > import B) PASSIVE = export < import  BALANCE OF PAYMENTS = review of currency / exchange receipts and expenditures A) ACTIVE = payments abroad receipts from abroad MEZINÁRODNÍ OBCHODNÍ VZTAHY [MOV] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

14. 14. IB indicators - details  Balance of Trade = EXPORT – IMPORT, the difference between a nation's exports of goods and services and its imports of goods and services, if all financial transfers, investments and other components are ignored. A nation is said to have a trade DEFICIT = if it is importing more than it exports.  Balance of Payments = difference between the money coming into a country and the money leaving the same country -In economics, the balance of payments (BOP) measures the payments that flow between any individual country and all other countries - It is used to summarize all international economic transactions for that country during a specific time period, usually a year. - the BOP is determined by the country's exports and imports of goods, services, and financial capital, as well as financial transfersexportsimportsgoods servicesfinancial capitalfinancial transfers INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

15. 15. STRUCTURE of IB TERRITORIAL COMMODITY INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / 19063@mail.vsfs.cz

16. GLOBAL BUSINESS ENVIRONMENT  Session one is devoted to a discussion of the global context within which IB must function in the 21 st century.  The aim is to describe the external framework which exists today and which will influence company strategies in the international arena.  There are clearly some factors that will be more important than others in determining the likelihood of success in international markets:  The state of the world economy and the rules and regulations governing INT trade and investment are critical  The political and social environment also impinges on businesses, i.e. consideration of the role of culture in IB / importance of cultural empathy to business success

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

18. GLOBAL BUSINESS ENVIRONMENT If a business is to be succesful – it needs to be aware of: the GENERAL ENVIRONMENT – 2 levels of understanding BROAD = relevant to most companies [includes economy, political, tech. world and sociological issues] SPECIFIC = important to the individual business [includes customer / supplier relations, investor requirements, workplace issues] 18.

19. IB OPERATIONS ManufacturingAssemblingDistributionSelling 19.

20. 20. Principle of COMPARATIVE ADVANTAGE  Absolute advantage = a country has an absolute advantage over it trading partners if it is able to produce more of a good or service with the same amount of resources or the same amount of a good or service with fewer resources (copper, oil)  Comparative advantage (David Ricardo 1772-1823) = a country has a comparative advantage in the production of a good or service that it produces at a lower opportunity cost than its trading partners (relativity). = units of production (people/machines) will be employed in those processes in which they are relatively more productive (productivity)  Opportunity cost (John Stuart Mill) = is the value of the next-best choice available to someone who has picked between several mutually exclusive choices - opportunity costs are not restricted to monetary or financial costs: the real cost of output forgone, lost time, swag, pleasure or any other benefit

21. 21. Awareness of the GENERAL ENVIRONMENT – 2 levels of understanding BROAD = relevant to most companies [includes economy, political, tech. world and sociological issues] SPECIFIC = important to the individual business [includes customer / supplier relations, investor requirements, workplace issues] GLOBAL BUSINESS ENVIRONMENT Factors at BROAD level of IB understanding – influences on the IB environment

22. POLITICAL Integration of LDCs and Centrally planned economies into INT economy Difficulties (& oppo) raised by econ.inequalities Role of OECD, WTO, World Bank, EU commiss. -direction of INT Trade & Investment Environmental concerns ECONOMIC INT economic agreem. (liberalisated trade & capital flows) => led to establishing REGIONAL ECONOMIC GROUPINGS - 3 main trading blocks TRIAD GATT (1947-95) =>WTO 2 particular issues of Importance for FUTURE: -Labour standards -Environmental issues FACTORS with SIGNIFICANT INFLUENCES on IB (BROAD level of understanding IB) 22. TECHNOLOGICAL Economic cycles in 50 years waves: -Prosperity -Recession -Depression -Recovery INFROMATION & COMMUNICATION wave (1980/90’) -driven via NETWORKS (comps, tech based com., production, control systems) TRANSPORTATION

23. 23. Economic (monetary) & Political union Common marketCustoms unionFree trade area ECONOMIC INTEGRATION 23.

24. 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 27 countries 24.

25. 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 25.

26. EU member states Economic UNION GDP / capita: 39.729 USD Population: - 501 million - density: 115.9/km2 Water 3.08% TRIAD – EUROPEAN UNION 26.

27. ASEAN Free Trade Area GDP / capita: 5,131 USD Population: -600 million (8.8% of world population) - density: 135/km2 TRIAD – ASEAN 27.

28. Features / consideration: – Dollar / Euro ZONE – Business Culture – Law enforcement – Business Barriers – Business threats / opportunities WORLD BUSINESS 28.

29. INTERNATIONAL BUSINESS - BMCF / TM - winter term 2012 Thank you for your attention Ing. Pavla Břečková, Ph.D. pavla.breckova@vsfs.cz