1. Department of Business Management INTERNATIONAL BUSINESS Ing. Miloš Krejčí milos.krejci@mail.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. Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

3. 3.3. INTERNATIONAL BUSINESS 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. Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

4. 4.4. Decision making–foreign market evaluation Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz  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

5. 5.5. Basic business analysis Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz Analysis of external environm. (market) PEST / STEEP / STEEPLE COMPETITION analysis Analysis of inner environm. (company) SWOT Factors: political, economical, social, technological (PEST), ecological (STEEP), legal and European (STEEPLE) Barriers to entry Threat of substitutes Buyer power Supplier power Rivalry / degree of rivalry of present competitors Strengths Weakness Opportunities Threats

6. 6.6. Key Variables Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz Politics Political System Legal System Laws (affecting business) National Trade Policies Government Stability and Risk Openness to FDI Economics and Market Characteristics Economic System Per Capita GDP and Growth Rate Purchasing Power Inflation Rate Middle Class Size Currency Convertibility and Trends Social / Cultural and Demographic Dimensions of culture Beliefs and Attitudes Language Religion Population and Age Structure Education Urban/Rural Composition Technical Infrastructure ICT level Productivity Cost and Accessibility of Energy Processes and Supply Chain Medical

7. 7.7. Command (Centrally Planned) Economies The state is responsible for making all decisions: What goods and services the country produces; Quantity of production; Prices at which they are sold; and Distribution The state owns all wealth, land, and capital, and allocates resources based on which industries they want to develop. Command economies were common in the 20th century; they proved so inefficient that most have gradually died out. Central planning is less efficient than market forces in synchronizing supply and demand. Today many countries exhibit some characteristics of command economies- examples- China, India, Russia, and certain countries in Central Asia, Eastern Europe, and the Middle East. Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

8. 8.8. Market Economies Decisions regarding production levels, consumption, investment, and savings resulting from the interaction of supply and demand (market forces). Economic decisions are left to individuals and firms. Government intervention in the marketplace is limited. Capitalism (private ownership of production) is closely aligned with market economies. State should establish a legal system that protects private property and contractual agreements. Government may also intervene to address the inequalities that market economies sometimes produce. Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

9. 9.9. Mixed Economies Exhibits market and command economy features, thus combining state intervention and market mechanisms. Most industries are under private ownership, and entrepreneurs freely establish, own, and operate corporations- but the government also controls certain functions, such as pension programs, labor regulation, minimum wage levels, and environmental regulation. The state usually funds public education, health care, and other vital services and owns enterprises in transportation, telecommunications, and energy. Examples- France, Germany, Japan, Norway, Singapore, and Sweden, government often works closely with business and labor interests to determine industrial policy, regulate wage rates, and/or provide subsidies to support specific industries. Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

10. 10. INTERNATIONAL BUSINESS Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

11. 11. Levels of International Strategy Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

12. 12. Unrelated Diversification Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

13. 13. International Strategic Management Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz Environmental Conditions & Trends Environmental Conditions & Trends Opportunities and Threats Opportunities and Threats Inventory of Distinctive Competencies Strengths and Weaknesses Strengths and Weaknesses Identify & Evaluate Options Identify & Evaluate Options Choose Strategy Choose Strategy Implementation Strategy Implementation

14. 14. Pressures for Global Integration Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz Economies of Scale. Concentrating manufacturing in a few select locations to achieve economies of mass production. Capitalize on converging consumer trends and universal needs. Companies such as Nike, Dell, ING, and Coca-Cola offer products that appeal to customers everywhere. Uniform service to global customers. Services are easiest to standardize when firms can centralize their creation and delivery. Global sourcing of raw materials, components, energy, and labor. Sourcing of inputs from large-scale, centralized suppliers provides benefits from economies of scale and consistent performance. Global competitors. Global coordination is necessary to monitor and respond to competitive threats in foreign and domestic markets. Availability of media that reaches customers in multiple markets. Firms now take advantage of the Internet and cross- national television to advertise their offerings in numerous countries simultaneously.

15. 15. Pressures for Local Responsiveness Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz Unique resources and capabilities available to the firm. Each country has national endowments that the foreign firm should access. Diversity of local customer needs. Businesses, such as clothing and food, require significant adaptation to local customer needs. Differences in distribution channels. Small retailers in Japan understand local customs and needs, so locally responsive MNEs use them. Local competition. When competing against numerous local rivals, centrally-controlled MNEs will have difficulty gaining market share with global products that are not adapted to local needs. Cultural differences. For those products where cultural differences are important, such as clothing and furniture, local managers require considerable freedom from HQ to adapt the product and marketing. Host government requirements and regulations. When governments impose trade barriers or complex business regulations, it can halt or reverse the competitive threat of foreign firms.

16. Global Strategy Global Strategy Transnational Strategy Transnational Strategy Multidomestic Strategy Multidomestic Strategy Home Replication Home Replication Pressures for Local Responsiveness LowHig h Low Pressures for Global Efficiencies International Strategy Forms Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

17. 17. Where would you place these companies? Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz Toshiba BMW Unilever Intel City University Disney Citibank Nokia Carrefour Boeing Vodafone Texas Instruments Microsoft Coca-cola Nestle Colgate Palmolive KPMG Heineken

18. 18. EMERGING MARKETS Emerging markets are nations 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 Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

19. 19. 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 Data availability? Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

20. 20. VIETNAM 80 million people est. 1945 division into 2 parts (Hanoi / Saigon – Ho Chi Minh City) Vietnam war 1963 – 73 Member of ASEAN Elements of free trade principles Dynamically developing Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

21. 21. VIETNAM Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

22. 22. VIETNAM Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz 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 +-

23. 23. VIETNAM 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 email) Personal contacts necessary / local No win-win (‘loss of face’ danger) Business cards handling ‘YES’ even if meant NO Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

24. 24. CHINA Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

25. 25. CHINA Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz 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 +-

26. 26. CHINA 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.) Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

27. 27. TAIWAN Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

28. 28. TAIWAN Republic of China Capital: Taipei Population: 23 million Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

29. 29. TAIWAN Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz 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) +-

30. 30. TAIWAN Professional, very polite 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 Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

31. 31. INDIA Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

32. 32. INDIA Capital: New Delhi / largest: Mumbai Language: Hindi, English Population: 1,118,521,000 -Density: 361 /km2 -GDP per capita: 3,100 USD Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

33. 33. INDIA Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz 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 +-

34. 34. INDIA English Demanding negotiations, long (several hours) Half-truths common Compromise necessary (Indian - bargaining) + keep the positions (manipulation resistance) Agreements – sticking on Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz

35. 35. INTERNATIONAL BUSINESS Ing. Miloš Krejčí milos.krejci@mail.vsfs.cz