Transcript What is international business

Department of Business Management
INTERNATIONAL BUSINESS
Ing. Miloš Krejčí
[email protected]
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.
2.
Ing. Miloš Krejčí [email protected]
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.
3.
Ing. Miloš Krejčí [email protected]
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
4.
Ing. Miloš Krejčí [email protected]
Basic business analysis
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
5.
Ing. Miloš Krejčí [email protected]
Key Variables
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
6.
Ing. Miloš Krejčí [email protected]
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.
7.
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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.
8.
Ing. Miloš Krejčí [email protected]
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.
9.
Ing. Miloš Krejčí [email protected]
INTERNATIONAL BUSINESS
10.
Ing. Miloš Krejčí [email protected]
Levels of International Strategy
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Ing. Miloš Krejčí [email protected]
Unrelated Diversification
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Ing. Miloš Krejčí [email protected]
International Strategic Management
Environmental
Conditions &
Trends
Opportunities
and
Threats
Inventory of
Distinctive
Competencies
Strengths
and
Weaknesses
Identify
& Evaluate
Options
Choose
Strategy
Strategy
Implementation
13.
Ing. Miloš Krejčí [email protected]
Pressures for Global Integration
• 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 crossnational television to advertise their offerings in numerous countries
simultaneously.
14.
Ing. Miloš Krejčí [email protected]
Pressures for Local Responsiveness
• 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.
15.
Ing. Miloš Krejčí [email protected]
Pressures for Global Efficiencies
International Strategy Forms
High
Global
Strategy
Home
Replication
Transnational
Strategy
Multidomestic
Strategy
Low
Low
Hig
h
Pressures for Local Responsiveness
Ing. Miloš Krejčí [email protected]
Where would you place these companies?
Toshiba
BMW
Unilever
Intel
City University
Disney
Citibank
Nokia
Carrefour
Boeing
Vodafone
Texas Instruments
Microsoft
Coca-cola
Nestle
Colgate Palmolive
KPMG
Heineken
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Ing. Miloš Krejčí [email protected]
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 18.
local economy
Ing. Miloš Krejčí [email protected]
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?
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Ing. Miloš Krejčí [email protected]
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
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Ing. Miloš Krejčí [email protected]
VIETNAM
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Ing. Miloš Krejčí [email protected]
VIETNAM
+
• competitive advantage:
persistence, hardworking, 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
22.
Ing. Miloš Krejčí [email protected]
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
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Ing. Miloš Krejčí [email protected]
CHINA
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Ing. Miloš Krejčí [email protected]
CHINA
+
• 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
25.
Ing. Miloš Krejčí [email protected]
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.)
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Ing. Miloš Krejčí [email protected]
TAIWAN
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Ing. Miloš Krejčí [email protected]
TAIWAN
Republic of China
Capital: Taipei
Population: 23 million
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Ing. Miloš Krejčí [email protected]
TAIWAN
+
• 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)
29.
Ing. Miloš Krejčí [email protected]
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
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Ing. Miloš Krejčí [email protected]
INDIA
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INDIA
Capital: New Delhi / largest: Mumbai
Language: Hindi, English
Population: 1,118,521,000
- Density: 361 /km2
- GDP per capita: 3,100 USD
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Ing. Miloš Krejčí [email protected]
INDIA
+
-
• good education,
English
• distinctive ability
• bank sector highly
developed
• secluded economy
(extremely high
import taxes)
• large market with over
1mld. people / growing
purchasing power
• changing EUR / USD
• productivity
33.
Ing. Miloš Krejčí [email protected]
INDIA
English
Demanding negotiations, long (several hours)
Half-truths common
Compromise necessary (Indian - bargaining) + keep the
positions (manipulation resistance)
Agreements – sticking on
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Ing. Miloš Krejčí [email protected]
INTERNATIONAL BUSINESS
35.
Ing. Miloš Krejčí [email protected]