Current Issues and Prospects of Brazil's Emerging Market - Report Example

Current issues and prospects of Brazils emerging market Table of Contents Table of Contents 2 Cross Cultural Management 4 The Iceberg model of Culture (Source: Centre for Intercultural Learning, 2011) 4 Importance of Cross Cultural Management 5 “Cultural Diversity”- Important aspect of Cultural Management 5 Effects of Cultural factors on an Organization 6 Individualism-Collectivism 6 Cultural approach 6 Brazil –An Introduction 6 Analysis of Brazilian markets 7 Future of Brazilian markets 8 Cultural Impact on Brazil 9 The Emerging Market of Brazil: Tourism Industry 9 Problems for the Brazilian Emerging Markets 10 Solutions for the Brazilian Emerging Markets 10 Conclusion 11 References 12 Globalization The markets and production processes of companies in different countries are becoming interdependent on each other. This is due to increased trade in goods and services, technology, flow of capital, exchange of production materials etc. The world becomes unified due to the effects of Globalization. (Piepenburg, 2011, p. 01). Cross Cultural Management The rapid change in manufacturing process and consumers’ demand arouses the need for “Cross cultural management”. Managing employees has not been an easy task but the dependence of a country on another country has paved the way of Cross Cultural Management (Weber, 2010, p. 02). The development of cultural awareness among employees and managers is very much necessary. This improves the interactive skill, leads to a smooth relationship between the managers of the different countries and identifies the cultural differences (Ellis and Carlson, 2012, p. 13). The Iceberg model of Culture (Source: Centre for Intercultural Learning, 2011) S (Source: (for Intercultural Learning, 2011). [Type a quote from the document or the summary of an interesting point. You can position the text box anywhere in the document. Use the Text Box Tools tab to chHJahhhnge the formatting of the The above model depicts the visibility and invisibility of employee feelings in an organization. The visible part of the diagram includes appearances, dressing style, habits, culture and ethics of employees in an organization. These are practised on a daily basis in the company and are very prominent. The invisible part includes desires, wishes, norms, values, and beliefs, styles, thought process etc., of an employee. These are suppressed by the employees and may take a revolting form in the future. The culture that is maintained in the office may be called “Superficial culture” (Centre for Intercultural Learning, 2011). Importance of Cross Cultural Management 1. The global competition is very intense and it requires the employees to be highly efficient and productive (Tjosvold and Leung, 2003, p. 01). 2. Knowledge sharing becomes a utility to the organizations. 3. Cross cultural teamwork is highly productive and innovative. 4. It brings clarity and coherence to organizations. “Cultural Diversity”- Important aspect of Cultural Management The diverse opinions and perspectives of the employees help in enhancing the knowledge and productivity of the employees. It influences the organizations’ effective decision making quality (Cox, 1994). It helps in exploration of views and ideas. Management principles are universally applicable in all organizations. The cultural diversity will help the organization improve its decision making and strengthen the relationships and commitment among employees. Tolerance and respecting cultural differences has become a necessity in today’s world. To make it self contained, the managers of an organisation need to imbibe the “cultural research” theory which focuses on resolving differences among employees and employers. (Tjosvold and Leung, 2003, p. 06). Effects of Cultural factors on an Organization Communications holds a pivotal role in organization. The development of an organization depends upon the effective communication among employers and employees. (Goodman, 1994, p. 01). Facilitating communication among employees is a hard task for the managers (Adair, 2011, p. 07), but it appears to be a promising tool and concept to eradicate confusions and conflicts among employees (Hofstede, 1984, p. 275). Individualism-Collectivism Organizations which follow collectivist cultures perceive effective communication with great deal of importance than those which follow individualistic culture. This means that organizations which have a higher degree of individualism cannot perceive cultural management, more than the way an organization with a higher degree of collective culture can perceive it (Tran and Skitmore, 2002, p. 04). Cultural approach Successful communication can be initiated when the sender composes the message from the view point of the receiver. The style and format of the message should be as per the requirements of the receiver (Tran and Skitmore, 2002, p. 05) the message should be adapted as per the culture, customs and practices of the organization. This will make the organization more social than task oriented. Brazil –An Introduction It is one of the largest and highly populous economies of South America. It is the fifth largest populous country of the world. The per capita income of the country is $9.700 and the Gross Domestic Product (GDP) rate is $1.838 million in 2008 (Deari, Kimmel and Lopez, 2008, p. 09).The ratio of population to the GDP value is satisfactory. The current economy looks prospective from an investor’s point of view and is witnessing a low inflation rate. It has been enjoying the status of one of the rising economic powers of the world. Let us now look at the graph which depicts Brazil’s trade in goods and services as a percentage of GDP. (X axis : Years ;Y axis : GDP %) (Source : Brainard and Martinez-Diaz, 2009, p. 03) Brazil is one of the rising economic powers because of its external forces and internal resources (Brainard and Martinez-Diaz, 2009, p. 01). It benefits not only from its optimum utilization of resources but also from its newly found oil reserve and low emission of carbon which helps in sustaining the environment (Brainard and Martinez-Diaz, 2009, p. 04). The government had invested heavily in hydroelectric power and has reaped benefits from it, the sugarcane harvesting doubled. Analysis of Brazilian markets The Current market scenario is very good in Brazil. There is a strong demand of consumer and producer goods in the USA and other advanced economies. Brazil has emerged to be one of the major exporters in the world. The major commodities exported by Brazil are as follows: Soy Global market share of 40 % Chicken Global market share of 30 % Coffee Global market share of 30 % Beef Global market share of 20 % Orange juice Global market share of 80 % Tobacco Global market share of 20 % (Source: Brainard and Martinez-Diaz, 2009, p. 04) Brazil also gets benefitted by rising energy, iron and steel prices and tourism industry. Future of Brazilian markets Brazil looks well positioned in the global market. This is mainly due to the favourable natural resource mix of the country, where there is a wide range of biodiversity and largest reserves of freshwater (Brainard and Martinez-Diaz, 2009, p. 04). The varied climate allows livestock farming and agricultural growth on a large scale. The recently discovered offshore and gas fields are icing on the cake. The stable macroeconomic policies of the country also attracted investors of other countries. The retail industry and healthcare industry are booming (Reuters, 2013). Some of the major policies imposed by the government are as follows: Infrastructure Policy: The “Growth Acceleration Plan” proposed by President Rousseff was an umbrella policy, under which thousands of infrastructure projects emerged. The program started with an initial investment of $4.2 billion. The key focus of this plan is to improvise the infrastructure of the company which has created a pattern of social divide in the country. The plan focuses to improve sanitation facilities, sewage system and roads (Williams, 2011). Openness to the Foreign Investors: Brazil welcomes the foreign investors with open arms. Brazil has lowered its tariff rates since the mid 1990s and is improvising its import policies which include customs, inspection policy etc. The Sao Paulo stock exchange emerged to be the largest stock exchange in Latin America and fourth largest in the world (Williams, 2011). Improved Institutional Reform: The government has improved its institutional reforms for local Brazil and foreign investors. Its economic growth is marvellous, with an average Gross Domestic Product (GDP) of 4.5% annually, since 2001-2002 (Williams, 2011). Technological Capacity: Since 1975, The Brazilian agricultural business revenue has doubled. The dependence of technology on foreign countries has also lessened (Brainard and Martinez-Diaz, 2009, p. 07). Cultural Impact on Brazil Culture is varied and differs from other countries. Culture influences the personal and profession interaction between human beings. The Brazilian cultural environment is affected by history, religion, learning, education, lifestyle, language, class structure and economics (Adekola and Sergi, 2007, p. 181). The Brazilian people give a high place to the family: their family size ranges from nuclear to independent families (Adekola and Sergi, 2007, p. 185).The Income inequality among different families creates a social divide among the Brazilian population. Body language constitutes an important aspect of communication among the Brazilians; public display of affection and clarity of the language is given first priority (Adekola and Sergi, 2007, p. 189). They believe in promptness but not rudeness. Their language is simple to learn and understand. Their economy is a mixture of free market and government control. The Emerging Market of Brazil: Tourism Industry Tourism is one of the major attractions of Brazil; this is mainly because of its vast biodiversity and pleasant climate. The popular destinations are Sao Paulo, which attracts 7.5 percent of the total tourists in Brazil; Brasilia, which attracts 3.3 percent of the total tourists in Brazil and Rio de Janeiro, which attracts 32 percent of the total domestic and international tourists. Amazon is one of the treasured natural resource of Brazil, yet it attracts only a meagre population of 3 percent (Lohmann and Dredge, 2012, p. 126). The government has focused on mass tourism development in the south east region and coastal regions of the country. Problems for the Brazilian Emerging Markets a) The trade policy introduced by the government focuses on the trade deals with India and South Africa which does not make any sense from the economic point of view; since these are also developing countries (Williams, 2011). b) High regulatory and transportation costs imposed by the government increase the tariff rates which pose as a problem for the local competitors (Williams, 2011). c) The regulatory policies are confusing for the new investors as it takes an average of one hundred and fifty-two days to register a business in Brazil (Williams, 2011). This is due to lack of efficiency and promptness from government’s side. Solutions for the Brazilian Emerging Markets a) The trade policy should be modified and emphasis should be laid on relationships with the developed economies which can improve the market scenario of Brazil. b) Transportation cost should be lowered. c) The government should bring cultural awareness among the foreign countries. They should have local programs and invite delegates from other countries who will focus on the investment opportunities in Brazil. Conclusion Brazil has emerged as one of the rising and powerful economies in the world. The increase in GDP rates, declining poverty and good cultural environment has been the highlights for foreign investors (Forbes, 2013). The government policy regarding foreign investors needs to be further strengthened. References Adair, J., 2011. Effective communication: the most important management skill of all. London: Pan Macmillan. Adekola, A., and Sergi, B.S., 2007. Global business management: a cross-cultural perspective. Farnham: Ashgate Publishing. Brainard, L., and Martinez-Diaz, L., 2009. Brazil as an economic superpower? understanding brazils changing role in the global economy. Washington: Brookings Institution Press. Centre for Intercultural Learning, 2011. Iceberg model of culture [pdf] Available at: < [Accessed 19 February 2013]. Cox, T., 1994. Cultural diversity in organizations: theory, research and practice. California: Berrett-Koehler. Deari, H., Kimmel, V. and Lopez, P., 2008. Effects of cultural differences in international business and price negotiations. [pdf] Available at: [Accessed 19 February 2013]. Ellis, C.M., and Carlson, J., 2012. Cross cultural awareness and social justice in counseling. Abingdon: Taylor & Francis. Forbes, 2013. Brazils booming economy is creating 19 millionaires every day. [online] Available at: < http://www.forbes.com/sites/ivancastano/2011/11/28/brazils-booming-economy-is-creating-19-millionaires-every-day/> [Accessed 19 February 2013]. Goodman, M.B., 1994. Corporate communication: theory and practice. New York: SUNY Press. Hofstede, G., 1984. Culture & consequences. California: Sage. Lohmann, G., and Dredge, D., 2012. Tourism in brazil: environment, management and segments. London: Routledge. Piepenburg, K., 2011. Critical analysis of hofstedes model of cultural dimensions. Berlin: GRIN Verlag. Reuters, 2013. Brazil retail sales growth seen accelerating in december. [online] Available at: < http://www.reuters.com/article/2013/02/18/us-brazil-economy-retail-idUSBRE91H0KB20130218> [Accessed 19 February 2013]. Tjosvold, D., and Leung, K., 2003.Cross-cultural management: foundations and future. Farnham: Ashgate Publishing. Tran, D., and Skitmore, M., 2002. The impact of culture on international management [pdf] Available at : [Accessed 19 February 2013]. Weber, P., 2010. Critical analysis of hofstedes model of cultural dimensions. Berlin: GRIN Verlag. Williams, S., 2011. Why is brazil an emerging market economy? [pdf] Available at: < [Accessed 19 February 2013]. Read More