Katedra řízení podniku a podnikové ekonomiky INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D.

2.2. INTERNATIONAL BUSINESS KS = 3 guided consultations (winter term 2008)  Framework of IB, it’s importance in national economy  Reasons for exchange  International business activities  Entering foreign markets, entry modes (characteristics, risks, sources fixture)  Internationalisation  Role of culture, cultural differences and their impact on mastering business  International trade barriers  Competition in the international arena Within each consultation: practical discussions on topical economical issues INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

3.3. CREDIT conditions B_IB KS = 3 guided consultations (winter term 2008) INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / CONDITIONS: PRESENCE at IB lectures active PARTICIPATION – communication, reading and discussing topical economic issues short PRESENTATION - preparation at home - 5 min. presentation on economical topical issue

4.4. Lecture content  Introduction of each participant  International business  Framework of IB, it’s importance in national economy  Reasons for exchange  International business activities  Entering foreign markets, entry modes (characteristics, risks, sources fixture) INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

5.5. INTERNATIONAL BUSINESS / TRADE  What is international business? = exchange of goods and services undertaken by business bodies across the national border with the foreign business bodies INT business = EXCHANGE across border INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

6.6. 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. /

1. ECONOMICAL 2. POLITICAL 3. CULTURAL 7.7. IB importance + influences  FREE TRADE (international exchange) = 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 etc.) INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

8.8. International business - DISADVANTAGES 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. /

9.9. 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 B) PASSIVE = payments abroad < receipts from abroad MEZINÁRODNÍ OBCHODNÍ VZTAHY [MOV] Ing. Pavla Břečková, Ph.D. /

10. STRUCTURE of IB TERRITORIAL COMMODITY INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

11. Ways of controlling IB  PROTECTIONISM – state intervenes in IB - protects the inner market against foreign competition - supports own products at the foreign markets  LIBERALISM – state limits the interventions in IB - export & import without restrictions - currency convertibility enables access to foreign currency purchases for free trade / exchange INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

12. History of Czech IB  Before 2 nd World War: orientation on western markets Czechoslovakia =10 th most industrially developed country with cooperation and trade relations in western countries  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) MEZINÁRODNÍ OBCHODNÍ VZTAHY [MOV] Ing. Pavla Břečková, Ph.D. /

13. CZ – joining EU CZ member of EU since (in the wave of10 countries – the biggest enlargement in the EU history) Further enlargement (BG and RO) Today 27 countries Negotiations about another countries accession INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

14. Business Advantages & Disadvantages of Czech accession of EU DISADVANTAGES - stronger competition - less freedom in some of state economical decisions INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. / ADVANTAGES - duties elimination - free movement of goods / partly free mov.of labor - larger market (single market)

Gradual process INTERNACIONALIZATION Production units abroad MULTINACIONALIZATION Operations in a global scale GLOBALIZATION 15. INTERNATIONALIZATION - various research approaches = kind of „DEVELOPING & evolutional“ process: 3 forms (acc. to the stage of involvement after expanzion) INT = cover for international operations INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

16. 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. /

17. 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. /

18. 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. /

19. Import & Export EXPORT Quantity of goods and services exported abroad DIRECT x INDIRECT IMPORT Quantity of goods and services imported from abroad Internal dimension of internationalisation INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

20. Contractual international business activities LICENCE licensor provides its patents, trademarks, manuf.processes, 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 (brand, mktg tech) unique product, unique conditions high level of standardization (LR, Starbucks, Coffee Heaven, McD. – color, space solution) ALIANCES Cooperation (customers – purch. Strength / compet. – cartel, capacity, research, anti-red-tape administration) OTHER agreements Technological / Managerial INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

21. INVESTMENT entry modes JOINT VENTURE Major [> 50%] Minor [< 50%] 50 / 50 WOS [Wholly Owned Subsidiary] GREENFIELD ACQUISITION INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

22. Further IB operations Barter 2 sides agree to accept each other’s goods as pay for transaction Clearing Not convertibility 2 countries agree to exchange products Monetary value in 3 rd currency Switch trading involving 3 or more countries ex.: UK comps to Brazil, coffee to It / pay to UK INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

23. CULTURE DIFFERENCES = impact of culture on relationship, employees approach to work, business management and negotiations -> this impact is much > than differences coming out from: o race o sex o specialization [profession] o position INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

24. CULTURE and it’s elements Culture = characteristic way of living = based on ACQUIRED models of behaviour (i.e. not inborn) Culture ELEMENTS  ABSTRACT (values, approaches, opinions, religion – from generation to generation)  MATERIAL (stage of development and types of: technology, structure of consumption in a country / society ) INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

View on what is beautiful (country symbols, black – white, ideal of woman’s beauty) AESTHETICS Hinduismus – way of living (life style): castes (privileged groups of society), common household of a few families, worship (cult) of cow Islam RELIGION length of meeting, outcomes business card handling Ways of business bevior 25. CULTURE – abstract elements - impact on exchange INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

way of thinking of consumers at a market (illiteracy => promotion, advertisements, packaging, labeling) EDUCATION Impossible to pronounce (sound, letter, word) Undesirable meaning LANGUAGE 26. CULTURE – abstract elements - impact on exchange INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

-International exchange -Reasons for IB, advantages x disadvantages -Free trade -IB influences and IB indicators -History of Czech international business -Balance of trade, balance of payments -Liberalism, protectionism -Convertibility, trade barriers, free price creation -Structure of IB (territory, commodity) -Cyclical fluctuation / conjuncture -Incentives (FDI) -Entry modes (import, export, licence, franchise, alliance, JV, greenfield, acquisition) -Switch, clearing, barter 27. KEY terms INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /

28. Thank you for your attention Ing. Pavla Břečková, Ph.D. INTERNATIONAL BUSINESS [B_IB] Ing. Pavla Břečková, Ph.D. /