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

2. 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 BRICS in detail Doing business in Asia Foreign market analysis PREDISPOSITIONS for working in IB, expatriation and HR in IB

3. 3.3. COMPLETION terms N_IB_B 4 lectures / guided consultations [GC] (per 90 mins) Completion: credit Completion CONDITIONS: Active involvement (presence) in GC min. 50% Active participation 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

4. 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, 2008. ISBN: 978-0- 13-174743-6. Woods, M.: International business. Basingstoke, Palgrave, 2001. ISBN: 0- 333-75979-6. 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

5. 5.5. 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

6. Barter / Import / Export International TRADE FDI / Portfolio investment / WOS etc. International INVESTMENT Licensing / Franchising / Management contracts etc. Other forms of int. business ACTIVITY 6.6. INTERNATIONAL BUSINESS CONSISTS IN:

7. 7.7. 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 Forms of FDI GREENFIELD (new facility) ACQUISITION of (or merger with existing local firm) 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

8. 8.8. How IB differs from DOMESTIC business?  currencies – conversions, risks, rates securing  often legal system – laws  culture – behavior, business practice  resources  technology – way of producing

9. 9.9. STRUCTURE of IB TERRITORIAL COMMODITY

10. 10. STRUCTURE of IB = portfolio of all the business territories the company or country makes business with TERRITORIAL = portfolio of all the business commodities the company or country makes business with COMMODITY

11. 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 11.

12. 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 12.

13. EU member states Economic UNION GDP / capita: 39.729 USD Population: - 501 million - density: 115.9/km2 Water 3.08% TRIAD – EUROPEAN UNION 13.

14. ASEAN Free Trade Area GDP / capita: 5,131 USD Population: -600 million (8.8% of world population) - density: 135/km2 TRIAD – ASEAN 14.

15. 15. Economic (monetary) & Political union Common marketCustoms unionFree trade area ECONOMIC INTEGRATION 15.

16. 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

17. 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.

18. BRIC Free Trade Area encompassing > 25% of world’s land 40% of world’s Population Among biggest and Fastest growing EM (emerging markets) BRIC(S) 18.

19. Features / consideration: – Dollar / Euro ZONE – Business Culture – Law enforcement – Business Barriers – Business threats / opportunities WORLD BUSINESS 19.

20. 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 20.

21. 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

22. 22. International ENVIRONMENT GLOBAL MACRO MICRO

23. 23. 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

24. IB OPERATIONS (micro / operational level) ManufacturingAssemblingDistributionSelling 24.

25. 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) 25. 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

26. QUESTIONS to prove knowledge in IB - part 1 What is International business? Characterize, please. What IB consists in? 3 main categories. What is BARTER? What is FDI? What is HOME x HOST country? What is Portfolio investment? How IB differs from DOMESTIC trade? What are the main differences? What is territorial / commodity structure of IB? What is TRIAD? What do you know about EU / ASEAN / NAFTA? What is BRIC? And what is BRICS? Can you describe the pyramid of ECONOMIC INTEGRATION? What is / what means FTA (free trade area)? What is / what means CUSTOM UNION? What is / what means COMMON MARKET? What is / what means ECONOMIC UNION? GLOBAL business environment – 2 levels: Broad and Specific. Can you explain? Factors influencing IB: Political / Technological / Economic

27. INTERNATIONAL BUSINESS Thank you for your attention Ing. Pavla Břečková, Ph.D. pavla.breckova@vsfs.cz