Doing Business in Brazil - Case Study Example

Doing Business in Brazil Contents Doing Business in Brazil 1 Introduction 2 International Business 2 Country Analysis 2 The best venture among these 6 References 7 Bibliography 8 Introduction Our project involves analyzing the various business opportunities in Brazil & then choosing the best alternative from those. Brazil is the largest country of South America. The full name of Brazil is Federative republic of Brazil, its located in the eastern part of South America bordering the Atlantic Ocean. Its capital is Brasilia. The major countries surrounding it are Argentina, French Guiana, Bolivia, Columbia, Guyana, Peru, Paraguay, Suriname & Venezuela. Its well known for the Amazon rainforests & the renowned footballers. (Morrison, 2011,p.4) International Business In simple terms, it is the exchange of goods & services that crosses national boundaries. It can be of four types namely foreign trade, trade in services, direct investment & portfolio investment. Foreign trade involves flow of tangible goods from one country to another. The “trade in services” is quite understandable that it involves the trading of services from one country to another. Direct investment involves investing in a business with full or partial control which can happen by either employing own resources, expertise or personnel. Portfolio investment means financial investment in a foreign country & is only related to equity & debt purchase. (Goddard, 2006, p.4) Country Analysis When people think of carrying out any sort of international trade with a foreign country then they tend to compare the alternative markets available at other places & then they select the most profitable place to do business with. Similarly when someone sets up a business in their own country & they decide to make that business profitable worldwide, then they start evaluating their alternate resources available & then ultimately they choose the most profitable business opportunity. Here we will focus on analyzing Brazil. For this analysis, we need to consider several factors which are discussed below. 1. Socio cultural Forces &Religion- The Ethnic groups of the country includes 3 groups which are people having European ancestors (forming 55% of the population), having African ancestors (forming 6% percent) & a mixed group having both European & African roots (form 38%) of the population. Today lesser than 2,00,000 native Brazilian stays at the country around the Amazon region on government reserves. Portuguese is the official language of Brazil. Around 90% of the citizens are Roman Catholics & therefore the society & culture of the country is highly influenced by this Religion. This religion is a combination of African religious belief & catholic faith. About 5% Brazilians practice Macumba & Candomble. The country is full of colorful festivals & carnivals. Brazil also has around 4lacs Buddhist & 1,50,000 Jews. (Boraas, 2001, p.44) 2. Political - The country is a democracy & the powers are distributed equally within the three wings of the administration, namely executive, legislative & judicial. (Oliveira ,2009)The country has a federal form of government. Its constitution was formed in 1988. Previously in 1964 the military seized power & governed until 1985. Death squads were used to kill or torture opponents. In 1980 mass demonstrations by people gave rise to new elections & Fernando Collor was elected as president in 1990. He was reelected in 2006. The country faced several years of political unrest & discrimination even slavery. But now with the introduction of democracy, people have learnt to select their leaders through elections.(cia.gov, 2013) 3. Economy & Foreign Trade Forces - The country’s economy mainly comprises agriculture,mining,manufacturing & the economy outweighs every other country of South America in terms of economy. $ 2.362trillion is the GDP of the country & the per capita income amounts to $ 12000. It makes money mostly from the service sector (67.2%), the industry (27.4%) & agriculture(5.4%). Here the income tax rate is 37.6% of GDP . ( By building up foreign reserves & reducing the debt profiles Brazil has constantly improved their economic conditions. The Global Crisis of 2008 hit Brazil but however it was one of the first economies to start the recovery process very soon. The labor force of the country is 107.1 million & the unemployment rate is 6.2%. Here 21.4% people live below poverty level. The most significant industries of this country includes Steel,Iron ore,Aircrafts & ships,textiles petroleum’s,soyabeans,cotton,coffee,fertilizers,minerals,tourism,footwear,cement etc. It exports its good mainly to China,USA,Germany,Netherlands & Argetina. It imports goods from these places too as well from Japan. It’s a member of the WTO & its government is continuously making efforts to reduce the dependence of the country on oil generating countries. It puts a lot of importance in the hydroelectricity production. It is considered as one of the promising economies of the world. 4. Demographic Forces- The current population of the country is 201,009,622 & the population growth rate is .83% as per records of 2013. The sex ratio at birth is 1.05 male/ female. The birth rate is 14.97 births per 1000 & the death rate is 6.51 deaths per 1000. 87% of the total population is already urbanized & therefore it can be considered as a sign of gradual development. The life expectancy of a male is 69 years while that of a female is 76 years. The medical facilities are yet to develop here, as the physician density at this place is 1.72 per 1000 people & the hospital bed density is 2.4 beds per 1000 population. Over 88.6% people here are literate, but still the country faces unemployment issues among the youths. (brasil.gov.br, n.d). 5. Geography & climate- The country mainly experiences Tropical Rainforest climate & Equatorial climate. Rainfall is expected every month of the year. Heavy rainfall supports dense vegetation. The Semi-Arid zones of the country receives lesser rainfall. Here the growth of shrubs & grasses takes place. The Highland Tropical zone faces a Maritime climate & is found near the coast of brazil & its pleasant. The subtropical zone is somewhat in between the Semi Arid climate & Highland Tropical climate & the climate is a mixture of both the zones.The overall climate of the Brazil supports the growth of forest,various animals & a huge sea life including corals. Its also a rich source for several vegetables & fruits. (brazil.org.za,2011) 6. Other famous things of Brazil- The country is famous for Football & it will be conducting the 2014 FIFA Worldcup. The famous footballers like Ronaldo,Kaka,Pele etc. hail from this country. After discussing all the relevant parameters of the country, we can conclude that this place is rich in natural resources & its weather & cheap standard of living makes life of the citizens’ stress-less. The probable ventures those are possible for this place- 1. Its pleasant weather & the presence of rainforest make it a great attraction for tourists; this can give rise to the travel & tourism business. 2. Its location near the sea coast makes export & import easier. 3. Availability of large number of trees offers a large opportunity for wood & log business. 4. Unique fruits & vegetables available throughout the state could also encourage the restaurant venture as well trade with other countries. 5. Large population of the place also paves the way for the bpo sector. 6. The lack of medical facilities here also opens up the opportunity for medicine centers & hospitals. 7. A great place for medical tourism where people would be offered therapies in the midst of the greeneries along with herbs available readily. 8. A bird sanctuary or a museum or a zoo is also a good option to be considered. The best venture among these After considering all the factors of the country & after going through the possible venture opportunities, its feasible to choose the Travel & Tourism business for Brazil, due to the following factors:- Availability of huge natural resources helps in producing all the daily needed products locally & hence cost of buying it from outside is saved Corals, Amazon river & Rainforest adds to the scenic beauty of the place Great location for film shooting Due to rapid urbanization, many cities are losing their green treasures which can be easily found here. Doctors recommend green & natural environment for a good health. Various vegetables & fruits makes awesome dishes for all The cheap transportation facilities & lower cost of living makes it easier for people to spend more days here A large number of the population could be utilized for providing services in the hotels & restaurants for looking after the guests, serving them food & guiding them for the city tour. Large availability of animals & birds makes it an attractive destination for kids too More & more people mean more & more trade, which is very much needed in a poor economy like Brazil. The huge landscape available makes it easier to carry on the travel & tourism business by making lots of guest houses for the tourists. As the literacy rate is higher here, therefore the people employed in the tourism business would be comfortable with computer & technology & hence the training cost would also be saved. (travel.state.gov, 2013) Brazil is basically a mixed economy. Its urbanized but still some of its population lives in slums below the poverty line. Also people here often suffer from diseases like Yellow Fever & they fail to cure it due to lack of proper medical facilities. (cdc.gov ,n.d) It has got lot of similarity with Philippines in terms of the climate, economy & culture. However Philippines has got a lot more literate people & Brazil has got a keen interest in sports. References cia.gov (2013). Central Intelligence Agency. Oliveira, G.A.S., (2009). THE POLITICAL ECONOMY OF BRAZILIAN TRADE POLICY: DOMESTIC DETERMINANTES, WORLD AND REGIONAL STRATEGIES. SOUTHERN CALIFORNIA. Goddard, G.J., (2006). International Business: Theory and Practice. USA: M.E Sharpe. Inc. Boraas, T., (2001). Brazil. Brazil: Juvenile Nonfiction Morrison, M., (2011). Brazil. UK:Raintree travel.state.gov (2013). Brazil Country Specific Information cdc.gov (n.d). Health Information for Travelers to Brazil brazil.org.za (2011). Brazil Sports brasil.gov.br (n.d). Brazil. Bibliography Halili, C.N., (2008). Philippine History. (1 ed.). Manila: Rex Book Store, Inc. Read More