Business Expanding into the International Market - Term Paper Example

?International Business Expanding into the International Market Century link, headquartered in Monroe, Louisiana, is the third largest telecommunication company in United States of America in terms of lines served. (“Welcome to century link”). The company serves its customers with different types of products such as broadband, voice and wireless services. Apart from that they also deliver data and voices managed services to the local and the international markets as they posses “high-quality fiber optic networks and multiple data centers” (“Welcome to century link”, n. d.). To diversify their product and to establish their market in Brazil, Century Link need to set up their operations in Brazil in accordance with the political, economic and the social environments that prevail in Brazil. Thus, they can expand their business and set up the perfect environment in selling their products. Political Environment One could view that favorable political environment was actualiizng, when Luiz Inacio Lula da Silva was elected as the president for the second time in the year 2006, followed by the election of his protege Dilma Rousseff in 2011. da Silva established a stable government and also activated many pro-business activities which paved the way for a positive progress for business climate. Immediately after being elected as the president, the da Silva government came out with number of programs which yielded maximum benefits to the people. One among them is the Growth Acceleration Programme called the Programa de Aceleracao de Crescimento, or PAC. To enhance the growth of the business and to establish optimum infrastructures, the Brazilian government is investing quiet large amount of money in this program. Some of the vital areas focused under PAC would include developing better infrastructures for transportation, communication and energy generation. Rousseff followed his footsteps and increased business opportunities in Brazil in various industrial sectors. Thus, the political environment of Brazil extends a helping hand to the expansion and other development plans of Century Link. The telecommunication companies are granted with the telecommunication service license, mainly based on factors such as the location of their business and other administrative activities that may take place in Brazil. (Campbell, 2007). Hence it becomes compulsory for the major companies such as the Century Link to establish a local subsidiary. According to the Brazil’s labor laws, there is a strong hindrance in hiring the workers and managing them. The labor law supports the employees by allowing them to initiate legal actions against the employers in case of any disputes among them. In addition, involving the part-time workers is also restricted. As part of PAC, tax system for business as been further simplified and reduced. “The measures include investment in the creation and repair of roads and railways, simplification and reduction of taxation.” (“The President”, 2011) Economic Environment Brazil follows the mixed type of economy, where capitalism and socialism are implemented simultaneously. Because of such leanings, Brazil was able to encourage the entry of foreign business, even while protecting indigenous businesses. Apart from United States, Brazil is said to have the largest Gross domestic Production of all the American countries. The recent financial crisis which occurred globally had a negative impact on the Brazil’s economy as well. However, positively, the Brazil’s economy was one among the first economies which recovered sooner than expected. Due to its positive GDP growth, it reached the positive levels much faster. Moreover Brazilian Federal government under Rousseff also played key role in the quick recovery by creating an amicable environment for more business growth. One of the major features that facilitates good economic growth in Brazil is the lower interest rates ranging around 6.75 percent, and for the middle-class producers they offer even more subsidized interest rates at 6.25 percent. (Hrapsky and Ming, 2010). These favorable interest rates and the economic boom are the key reasons for Brazil’s good economic growth. Currency exchange rate used is US$1=R$1.85, and this augurs favorably for all US companies including Century Link. (“Background”, 2011). Also, with the Brazilian currency maintaining a stable path, without major fluctuations, it is aiding all foreign firms including American ones like Century Link. As mentioned above the favorable positive economy and the vibrant government can be considered as the great driving forces for the mobile companies such as Century Link to expand their business activities. Socio-cultural Environment Most of the people who live in Brazil follow Christianity and therefore they involve themselves in all Christian functions and other related events. During Christmas season, people as part of celebrations, tend to purchase more products in various product categories, which also include mobile phones. “The competition among the mobile phone operators will heat up this Christmas in Brazil - 38mil cellular users. The expectation is of a 40% growth on sales.” (“Cell phone operators”, 2003). With the stable Brazilian government and efficient economy, the people have more employment opportunities and as a result their life style and their purchasing capacity increases proportionally. This also has led to the rapid expansion of the Brazilian middle-class population segments, who are one of the key target segments for telecommunication companies like Century Link. Corruption is assimilated to a sizable extent into the government’s functioning as well as part of bureaucracy. Thus, it also got imbibed as part of socio-cultural fabric of the country. Hence, the foreign firms which are planning to set up their business in Brazil need have a constant check on the corruption issues. Importantly, larger sections of the Brazilian population are adopting modern way of life, “Brazil is generally classified into the Third World according to its economy and infrastructure, but Brazilian levels of cultural sophistication differ very much with the region.” (Hosokawa, 2003). The Western culture and the life style followed by the Brazilians are expanding into various spheres, and that includes the use of modern gadgets including mobile phones or even smartphones by the Brazilians. As the sizable sections of the Brazil’s population are economically sound, have changed their life style in tune with the modern times, and importantly have an optimized standard of living, they had increased their purchasing capacity or buying power. As mobile phones have become one of the essential tools for communication and also as a tool to exhibit one’s status, most of the people wish to purchase the latest and modern mobile phone irrespective of their cost. These cultural aspects specific to Brazil, can be monitored by the Century Link to make an optimum entry Conclusions Century Link can make effective entry into Brazil, as the Brazilian government provides a healthy business environment, for it to set their mobile handsets manufacturing business as well as act has the provider of various telecommunication services. Though they have not expanded maximally, Brazil’s alluring factors act as an enticing force for it to study about the markets and then make the entry. With the effective HRM system in place, they will be able to easily solve any employee issues. With regard to the corruption issues, they should be in a position to handle them ethically. Century Link can capture sizable sections of the Brazil’s market by providing the customers with the best quality and efficient services. With increase in their purchasing capacity, the Brazilians could buy more cell phones as a part of their modern lifestyles, and also as the gift items for the festive seasons. Century Link can establish their market by providing the people with the Next Generation Gadgets. They also can enter in the telecom industry providing independent product, service or with a set of products thereby attracting the customers. It is evident from the above analysis, that Brazil has the ability to provide the optimal business environment, where Century Link can make the favorable entry and expand their business. References “Background Note: Brazil.” (2011). US Department of State. Retrieved from: http://www.state.gov/r/pa/ei/bgn/35640.htm Campbell, D. (2007). International Telecommunications Law, Raleigh, N.C: Lulu.com. “Cell phone operators bet on Christmas.” (2003). Jornal do Brasil/SABI via COMTEX, South American Business Information. Retrieved from: http://www.allbusiness.com/media-telecommunications/9668294-1.html Hosokawa, T. (2003). “Food Culture in Brazil – A Wealthy Supply Due to Bountiful Nature and Human Creativity.” Foods Food Ingredients 208 (9): 749-758. Hrapsky, A. D. and Ming, P. (2010). Brazil Dairy and Products Annual Diary Report. Retrieved from: http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Dairy%20and% 20Products%20Annual_Brasilia_Brazil_11-22-2010.pdf. “The President of Brazil.” (2011). Retrieved from: http://www.brazilriodejaneiro.com/president- brazil.htm “Welcome to Century Link.” (n. d). Century Link. Retrieved from. http://www.centurylink.com/Pages/AboutUs/CompanyInformation/ Read More