Global business environment. Ing. Ladislav Tyll, MBA, Ph.D. University of Economics Prague

Transcription

1 Global business environment Ing. Ladislav Tyll, MBA, Ph.D. University of Economics Prague

2 Lecture contends Global business environment globalization cultural globalization political globalization Global economic and financial environment internationalizetion a globalization requirenments for entry on the global market Přímé zahraniční investice Společné podnikání Další aspekty globalizace

3 Global business environment Globalization The worldwide process of closer integration of single countries and their citizens, driven by the enormous decrease of transport and communication costs and by the abolishment of barriers of the free flow of goods, services, capital, knowledge and in a certain level of people. Globalization viewpoints: globalization of the culture globalization of the economy globalization of the environment

4 Global business environment History 1. Stage New transport possibilities and abolishment of trade barriers Huge flow of goods, capital and labor force 60 mil. citizens moved from Europe to North America 2. Stage Establishment of economic-political groupings (ECC, NAFTA, COMECON) Establishment of international organizations (GATT, OECD, WB, IMF) 3. Stage up to now New telecommunication technologies (Internet, VOIP, GSM, etc.) Reducing of barriers of free movement of goods, capital and people, Closer integration among countries Division of countries into 3 groups: developed developing more globalized developing less globalized

5 Global business environment Pro-globalization forces global seeking for resources new and developing markets economies of scale drift of consumption to a homogenous demand diminishing transport and freight costs development of telecommunication technologies homogenization of technical standards government policies, tariffs, taxes, subsidies Anti-globalization forces rising of ethno-politics decline of neo-liberalism non-governmental organizations and anti-globalization movements anti-americanism

6 Global business environment Measuring globalization volume of goods and services flow volume of labor force flow volume of capital flow volume of information and technologies flow Different globalization indices - dimension: economic social political Most globalized: Singapore, Ireland, Switzerland, Belgium, Sweden Least globalized: Egypt, Indonesia, Iran

7 Global business environment KOF Index of globalization (2008)

8 Global business environment: culture Culture in general Corporate culture Multicultural centers - big cities e.g. Berlin, New York, London Influence of immigration Worldwide expansion of consumer preferences (jeans, Nike shoes, McDonalds, Coke) Worldwide consumerism Global versus traditional (local) culture and religion

9 Global business environment: culture Corporate culture Creativity and artifacts Standards Trust Language Effort Fairness Basic principles corporate philosophy ways of cooperation and competition System of decision making process Symbols Remuneration system Company taboo Myths and legends Values and faith Rituals Way of behavior, dealing

10 Global business environment: culture Corporate culture Acculturation Assimilation Pluralism Separatism Forms of acculturation Structural integration Informal integration Overcoming cultural preoccupation Organizational identification Solving inter-company conflicts

11 Global business environment: culture Human resources management Criteria for selecting employees: Adaptability (Cultural shock) Independence and self-active Health and marital status Self motivation

12 Global business environment: political Country attendance in international organizations Diplomatic missions in the country and missions of the country abroad Country attendance in UN peace operations

13 Global business environment: economic and financial Pillar of economic and financial integration - International trade Absolute advantage theory (A. Smith) Comparative advantage theory (D. Ricardo) Potatoes Heckscher-Ohlin theory of production factors y1 y2 country A country B x2 x TVs Important role of currency exchange rates

14 Global business environment: economic and financial , , ,00 World s GDP and its growth 4,2 4,1 4,0 3,9 Goods and services share on world exports , , , ,00 3,8 3,7 3,6 3,5 3,4 3,3 GDP (US$) (biliony) GDP growth (annual %) 0, ,2 World GDP and Exports growth ( )

15 Global business environment: economic and financial Economic integration 1. Preferential trading area 2. Free trade area 3. Customs union 4. Common (single) market 5. Economic and monetary union 6. Complete economic integration EU, NAFTA, FTAA, ASEAN

16 Global business environment: economic and financial Attributes of economic and financial globalization: 1. Globalization of finances 2. FDI growth 3. Rising role of supranational organizations 4. Global specialization in production placing 5. Globalization of tertiary economy sector 6. Globalization of administrative functions and operations - creation of world office 7. Globalization of tourism

17 Global business environment: economic and financial World institutions: IMF and WB Goal: Financial markets stabilization International financial markets Capital markets Stock markets Bond markets Commodity markets Money markets Derivates markets Foreign exchange markets Exchange business x OTC

18 Global business environment: economic and financial Major world capital markets Total turnover in USD (2007)

19 Global business environment: economic and financial International financial operations (stocks, bonds, securities, currencies) Spot operations x Financial derivates FORWARDS (OTC) FUTURES (Exchange traded) SWAPS (OTC) interest rate currency commodity credit default equity OPTIONS - Call x Put Goals: regular typical trade, speculations, hedging

20 Global business environment: economic and financial International financial operations - exchange rates trend CZK/USD and CZK/EUR

21 Global business environment: economic and financial International financial operations - RISKS Transaction Reporting Interest rate Inflationary The question of the Real interest rate Fisher effect Calculation of the real interest rate 1+ r 1,025 r (CZK - real) = 1 = 1 = 1,0% E(1 + i) 1,037 Expected spot rate (issue from nominal rates) CZK USD 1+ r( CZK) x = 18,5x 1+ r( USD) 1,005 1,0025 = 18,64

22 Global business environment: economic and financial International financial operations - RISKS - MNC internal tools for risk management method leads and lags prompt payments for goods in weak currency deferred payments in strong currencies price adjustments (transfer prices) capital transfers according to interest rates

23 Global business environment: economic and financial International financial operations - Foreign investments Indirect (portfolio capital) Direct (FDI)

24 Global business environment: economic and financial Economic integration in Industry Phases: 1) Trade internationalization 2) Production multinationalization (based on Foreign direct investments) 3) Globalization of innovations (geographic decentralization of scientific-research departments

25 Global business environment Other aspects of globalization Business Ethic Social contract between MNC and the society Ecological aspects (meeting sustainable growth principles)