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Business Economics - Pokropivny SF

2.3. International Business spine

Concept and forms of international business. The current stage of development of the world economy is characterized by an intensive expansion of international business activities, ie activities carried out by the scientific, technical, industrial, commercial, service and other mutually beneficial cooperation of business entities of the two countries and more (international partners). The main incentive to intensify and improve the participation of partners in international business is the ability to increase the scope and effectiveness of business due to the internationalization of certain market segments, the use of new sources of additional necessary material (investment) resources, diversification of production and economic activity.

The subjects of international business are its members, who are able to work effectively to implement their own business interests. Law of Ukraine "On Foreign Economic Activity" subjects such activities are recognized:

1) individuals - citizens of Ukraine, foreign citizens and persons without citizenship who have Dea - and capacity;

2) legal entities registered in Ukraine and permanently residing in its territory;

3) structural units of economic entities of foreign countries (subsidiaries, affiliates, branches, representative offices);

4) joint ventures, having permanent residence in Ukraine.

Theory and Practice of International Business provide certain levels and forms of internationalization of the different economic agents (Fig. 2.3).

Fig. 2.3. The levels and forms of internationalization international business

The first and lowest level of internationalization on the form of entrepreneurial activity belongs to the execution of certain foreign economic operations - import-export, leasing, mediation, as well as consulting and marketing services.

The second form of business covers a variety of international character of industrial cooperation - scientific and technical (research, design and testing work), production, sales, service (after-sales maintenance and repair of durable goods). It is also characterized by a relatively low level of internationalization of enterprises and organizations.

The relatively high level of internationalization of business entities reflects the joint enterprise, which is done through the establishment and operation of joint ventures, licensing and management contract.

The fourth form of international business activities with the highest level of internationalization of business entities are complex regional industrial and multilateral economic relations (cross-border and coastal trade, the formation of consortia, the implementation of concession contracts, and so on. N.).

The practical realization of individual shapes is achieved in two ways international business: the first - without creation of a new legal entity - only on the basis of the economic agreement (contract); the second - the establishment of a new joint venture or overseas branch (representation) as a subject of international business.

Joint ventures. International joint venture (SMEs), is considered to be the legal form of a compound of the efforts of different national partners in the areas of investment, management, production or provision of services, trade, waste management, distribution business risks, etc. Motivational mechanism SME institutions created at the macro and micro levels of the national economic system.

The need for the formation and operation of SMEs as a form of implementation of exit strategies in the domestic and foreign markets is due to: 1) reduction in unit investment resources and entrepreneurial risk; 2) the development of entrepreneurial capacity of a particular business entity; 3) implementation of the benefits at the cost of the basic factors of production and, mainly, the ability to activate the marketing and use of new distribution channels of the goods, as well as the penetration of the new territorial segment of the domestic and world markets. Motivation immediate partners is based on the coordination of production and economic, marketing, environmental interests and image.

Preliminary talks on the creation of SMEs, as a rule, completed the signing partners of intent, which must be marked with: a) the total volume of production and supply of products to the domestic and foreign markets; b) the size of the authorized capital with the release of the share of partners in it; the ratio between equity and debt; potential creditor bank; c) the availability of local skilled labor and the need to attract foreign personnel; g) the organization of sales of products, after-sales service with an indication of the length of the latter; d) the procedure for transfer (repatriation) profits of the foreign partner.

partners agreement on the establishment of SMEs necessarily detailed in the process of drawing up a feasibility study, the template of which is shown in the Table. 2.3.

Table. 2.3.

The main constituent document to create a SME can serve its charter, which usually determines: the object and purpose of the activity, the location, the founders; Capital stock and shares of partners in it, the order of its formation; composition and competence of the management bodies, decision-making procedures; termination of the procedure of activity (liquidation).

After the completion of negotiations and signing of constituent documents carried SME registration in the relevant national authority control. To register for SMEs presented the following documents: 1) a written application; 2) the consent of the regional (city) state administration and the governing body of the national party on the creation of SMEs; 3) notarized copies of the constituent documents; 4) evaluation of the effectiveness and monetary payback of the new SMEs; 5) documents confirming the registration of the foreign partner as a legal entity.

In Ukraine, already there have been certain trends in the development of SMEs. must be regarded as the main ones:

• activation of the quantitative development of different profiles joint venture with a partial or full foreign capital;
• prevalence of partners from the industrialized countries, due to, first of all, the strategic orientation of these countries, as well as the adequacy of capital and the mobility of their export destinations;
• the creation of SMEs mainly on a bilateral basis and for industrial activities;
• too cautious attitude of foreign partners to invest large-sized investments in joint ventures because of the lack of reliable guarantees of legal protection;
• relatively more involved in the establishment of the SME small foreign companies (companies), preferring a quick impact small investment and commercial risk of one-off transactions;
• concentration of SMEs especially in the scientific, technical and production and industrial centers (regions) of Ukraine.

Regulation of International Business. Regulation of International Business is carried out mainly by the proper organization of foreign business entities, it has the following multiple purpose: 1) promotion of progressive structural and Changes in the economy, foreign economic relations of the subjects of entrepreneurial activity; 2) creation of favorable conditions for integration of the Ukrainian economy in the global division of labor and its maximum possible approximation to the market structure of developed countries; 3) implementation of the protection of economic interests of Ukraine in general and specific economic agents in particular; 4) to provide the same opportunities for effectively managing all business entities.

Individual functions regulation of international business activity is carried out practically state legislative and executive power.

Verkhovna Rada of Ukraine adopts laws concerning foreign economic activity of business entities, according to the legislative and normative acts regulating the individual areas of foreign trade, ratify international treaties of Ukraine.

The Cabinet of Ministers of Ukraine:

1) coordinates the foreign activities of the relevant ministries and state committees, coordinates the work of trade

missions of Ukraine abroad;

2) conducts negotiations and signs the intergovernmental treaties (agreements) on foreign and joint activities and ensures their implementation;

3) Sorganizuet registration of international joint ventures, drawing up the balance of payments and managing the State Monetary Fund of Ukraine.

National Bank of Ukraine has the authority to:

1) provides storage and rational use in the international business of the gold reserve of Ukraine;

2) to represent the interests of Ukraine in relations with the central banks of other countries and to conclude appropriate inter-bank agreements;

3) to carry out accounting and settlement of credit operations with valyutnymiresursami provided by the State Monetary Fund of Ukraine.

Ministry of Economy performs the following functions: implementation of a unified foreign economic policy in the process of emerging economic entities to foreign markets, coordination of their activities in the field of international business; monitoring compliance by all subjects of foreign economic activity of the relevant laws and international treaties of Ukraine; non-tariff regulation of the activities of the joint enterprises.

The process of internationalization of the companies and countries takes place with the assistance of various international organizations. The main international organizations, financial and economic nature, to perform certain functions on regulation of joint business activities include:

• Bank for International Settlements - BIS (to promote cooperation of the central banks of the world and the implementation of international financial transactions);
• International Bank for Reconstruction and Development - IBRD (UN specialized agency, the main purpose of which is to provide loans and credits to countries - members of the United Nations);
• International Monetary Fund - IMF (the promotion of international trade and foreign exchange operations, the provision of funds in a foreign currency);
• International Finance Corporation - IFC (a branch of the International Bank for Reconstruction and Development for the investment of the private sector);
• The Industrial Development Board ODN - UNIDO (all-round promotion of the production sector of the UN member countries);
• The European Bank for Reconstruction and Development - EBRD (an international organization that was created to support the development of a market economy in Central and Eastern Europe and the CIS countries).

Regulation of international business at three levels: national, international and supranational.

The control system of the international business activities at the national level includes the following components: 1) the form of foreign investments (cash in foreign currency, a variety of property and intellectual property, securities, trademarks, etc.).. 2) the results of the activities of the foreign partner requirements (scope of activities, untapped segment of the market, the level of imported technology, vocational training); 3) the transfer of profits of a foreign investor (the mandatory creation of a reserve fund from its storage in the bank of the host country; fixing the size of transfer of capital and profits under the rules of currency regulation and currency cooperation agreements); 4) investment incentives and constraints (subsidies, preferential loans, tax exemption and a partial return, the use of accelerated depreciation); 5) guarantees the rights of the foreign partner (involvement in the domestic legal framework, the preservation of existing benefits over the investment cycle; the rejection of measures confiscatory).

usually regulated at the international level: 1) identification of the investment and the investor (the definition of not only traditional forms of investment, but also those that may arise after the conclusion of the agreement or signing the contract, the definition of legal persons considered by national economic entities of countries - parties to the relevant agreements); 2) conditions for the import and promotion of foreign capital (the policy of "open doors" partner countries joint ventures; the obligation of the host country to encourage foreign investment); 3) the transfer of funds (fixation guarantees home country relatively smooth transfer of funds in a timely manner); 4) the resolution of disputes of the economic and financial nature (minor - a competent judicial or administrative authority of the host country principle - International Investment Disputes Settlement Centre); 5) foreign partners norms of behavior (general concepts, principles and rules that must be followed and foreign entrepreneurs who contribute to the creation of a positive image of the foreign partner).

At the supranational level, in the framework of integration structures to regulate international business activity is carried out according to the agreements (contracts), fixing the relationship between a number of countries. This current regulation occurs when the free movement of capital and the harmonization of economic policies of the Member States agreements.

Questions for self-depth study

1. As is common in the business entity definition and business and signs, the differences between them.

2. Economic and social importance of entrepreneurship for the formation of an effective system of management.

3. Choice of the legal form of entrepreneurial activity, taking into account its advantages and disadvantages.

4. The main parameters of the formation of an appropriate business environment in Ukraine.

5. Modern problems of revitalization of business in Ukraine.

6. Classification and essential-substantial characteristics of various business contracts.

7. Specific forms of partnerships in certain areas of business activity.

8. Levels of internationalization and forms of international business activity.

9. Problems of creation and effective functioning of international joint ventures in Ukraine.

10. National, international and supra levels of regulation of international business activities.