University Of Finance & Administration INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

Lecture content  History of Czech international business [IB]  European Union principles of IB  Opportunities & Threats of CZ membership in the EU  International Market research (analysis)  Data collection & selection in IB 6. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

History of Czech IB  100 years ago: in “top ten” of the most advanced countries in the world  Before 2 nd World War: orientation on western markets, still Czechoslovakia =10 th most industrially developed country  After 2 nd World War (communist period): CZ „manufactury“ of the communist bloc with over 70 % of export into these countries  1989 fall of socialism: CZ ‟ s IB shift to the western partners again (Questionable move today)  2004 CZ joins EU: Elimination of trade barriers (duties, quotas and other restrictions) Solid business climate in CZ => inflow of FDI (often based on governmental INCENTIVES ) 7. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

CZ - joining EU CZ member of EU since (in the wave of 10 countries - the biggest enlargement in the EU history) 1 st half of 2009 Czech presidency of the EU today 27 countries members are sovereign nations that have agreed to cede certain of their powers to the EU Negotiations about further countries accession 8. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

EU business principles  single market  non-existence of tariffs (custom duty), quotas and administrative restrictions of import & export  prohibition of EU companies DISCRIMINATION (tenders, market operations, certification)  no DUTY CHECKS on the borders within EU members  single business, duty & immigration approach (policy) towards third parties  strict regulations - environment  single currency (EUR) / Schengen Space 9. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

Business Advantages & Disadvantages of Czech accession of EU ADVANTAGESDISADVANTAGES - duties elimination- stronger - free movement ofcompetition goods / partly free- less freedom in mov.of laborsome of state - larger marketeconomical (single market)decisions 10. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

OPPORTUNITIES for Czech ent. at EU single market Custom duties Elimination / removal of business restrictions Cut of bureaucratic cost Mutual approval of norms No need for additional certification Allocation of production units where more effective Low labour cost lower input cost easy access to financial & insurance services release of public orders / commissions 11. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

THREATS for Czech ent. at EU single market Strong competition Threat of lowering the competitiveness of Czech companies (necessity to find another competitive advantage) Pressure on lowering prices & profits SME more vulnerable in competition with MNE Labour market / different social conditions TAX systems 12. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

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. 13. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

Basic business analysis Analysis of external environm. (market) PEST / STEEP / STEEPLE Factors: political, economical, social, technological (PEST), ecological (STEEP), legal and European (STEEPLE) Barriers to entry COMPETITION analysis Analysis of inner environm. (company) SWOT Threat of substitutes Buyer power Supplier power Rivalry / degree of rivalry of present competitors Strengths Weakness Opportunities Threats 14. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

[PEST] P - Political & Legal environment 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: o political system and political stability o influence of interest groups / stakeholders o relation to foreign companies o corruption 15. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

[PEST](P) - LEGAL environment COMMON / CASE law Cases create legal precedents CIVIL law Detailed listing what IS and IS NOT permissible RELIGIOUS law Based on the faith & practice of a particular religion BUREAUCRATIC law Often in communist and dictatorships is whatever the country ‟ s bureaucrats say it is 16. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

[PEST](P) - POLITICAL environment Political IB barriers:  Sanctions  Embargo  Exchange rate manipulation  Dual-use  Nationalization o expropriation o confiscation  Privatization 17. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

[PEST] E - Economic environment  economic policy of government: o IB policy o rate policy  basic macro-economic measures and their development / trend  proportion of „grey economy ‟ 18. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

[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 19. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

[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 20. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

Basic business analysis Analysis of external environm. (market) PEST / STEEP / STEEPLE Factors: political, economical, social, technological (PEST), ecological (STEEP), legal and European (STEEPLE) Barriers to entry COMPETITION analysis Analysis of inner environm. (company) SWOT Threat of substitutes Buyer power Supplier power Rivalry / degree of rivalry of present competitors Strengths Weakness Opportunities Threats 21. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

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 22. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

Data collection SECONDARY / desk analysing of secondary data low cost quick execution PRIMARY / terrain collection & analysis of primary d. relatively high cost time-consuming 23. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

KEY terms - Czech presidency of the EU - EU international business principles - Single market - International market analysis / Competition analysis / Internal analysis - Types of law systems [Case / Civil / Religion / Bureaucratic] - Business Analysis - PEST - international business environment evaluation - Primary x Secondary data, collection 24. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.

Thank you for your attention 25. INTERNATIONAL BUSINESS [E_IB] PhDr. Karel Eliáš, CSc.