Adventure Tours Australias Operations in Brazil - Research Paper Example

Management Table of Contents 0 Introduction 4 2.0 PESTEL Analysis 6 2 Political Environment 6 2 1 Government Stability 6 2 2 Government and Contribution 7 2.1.3 Analysis 7 3.1 Legal Environment 8 3.1.1 Regulatory framework 8 3.1.2 Business Laws 8 3.1.3. Labor Laws 8 3.1.4 Taxation Laws 9 3.1.5 Analysis 9 4.1 Economic Environment 9 4.1.1 Interest Rates 9 4.1.2 Inflation Rates 9 4.1.3 Currency Exchange Rate 10 4.1.4 Free Market 10 4.1.5 Economic Trends 10 4.1.6 Tax Policies 10 4.1.7 Analysis 11 5.1 Socio-Cultural Environment 11 5.1.1 Hofstede Cultural Dimension 11 5.1.1. A Collectivism Vs Individualism 11 5.1.1. B Power Distance 11 5.1.1. C Uncertainty Avoidance 11 5.1.1. D Time Orientation 11 5.1.1. E Quality Vs Quantity of Life 12 5.1.2 Analysis 12 6.1 Technological Environment 12 6.1.1 Technological Infrastructure 12 6.1.2 Communication Network 12 6.1.3 Logistics Network 12 6.1.4 Analysis 13 7.0 SWOT analysis 14 7.1 Strength 14 7.2 Weakness 14 7.3 Opportunities 14 7.4 Threat 15 8.0 Recommendations 15 9.0 References 16 1.0 Introduction Adventure Tours Australia is one of the leading nature-based small group tour companies. The company tries to cater to the needs of various people especially active budget travelers along with private charters (Adventure Tours n.d.). The company was established in the year 1993 and it has been evident that in the year 2010 the company had been successful in providing 90000 passengers which was the biggest achievement for the company. It has wide range of tours that explore highlights along with hidden delights of Western Australia, South Australia, Victoria, Tasmania, New South Wales, Northern Territory and Queensland for its travelers at budget price. Adventure Tours Australia has won several awards for delivering quality services to travelers. It tries to focus on unique scenery, aboriginal culture of each area and wildlife. The tour normally ranges from one to eighteen days with regular assured departures. For those travelers who want an ‘extended value for money travel options’, several tours are combined into tour packages. The top management of the company is actively involved in day-to-day operations of the company and has been trying to make the company large enough so that it can render professional services and supports. It further engages in providing enough care to each passenger (Adventure Tours n.d.). The company is extremely concerned about climatic changes and negative impacts on unique Central Australian environment. In lieu of this fact, the company has tried to introduce certain climate friendly initiatives into its every day operations and upon its future planning (Adventure Tours 2011). The aim of the company is to provide best services to its customers so that the prospective customers can be turned into loyal customers. Through this report it has been intended to expand Adventure Tours Australia’s operations in Brazil. The services will be rendered by Brazilian nationals, however training of the staffs in Brazil will be provided by Australians in order to make the employees aware of the potential organizational values and norms. In this report, a thorough situational analysis of Brazil will be conducted in order to understand the scope for Adventure Tours Australia in the country. Therefore, it will try to conduct a PESTEL analysis of Brazil along with a SWOT analysis. Finally, based upon the results from two analytical tools, recommendations will be provided to the Adventure Tours Australia as to whether it would be viable for the company to expand its operation to Brazil. 2.0 PESTEL Analysis A PESTEL analysis is an analytical tool through which an organization can make strategies by understanding the external environment in which it operates or will operate in near future (Renewal Associates 2011). In order to expand operation in Brazil it is important to analyze Brazilians overall environment. 2.1 Political Environment 2.1.1 Government Stability The type of government that Brazil has is Federal Republic (U.S. Department of State 2011). The present president of Brazil is Dilma Rousseff (Infoplease 2011). According to the information it can be expected that Dilma Rousseff’s government will try to reduce inequality in the country. It has also been the aim of the current president to eradicate poverty to a great extent (Phillips 2010). The country has one of the most stable governments. It is to be remembered that presidents are elected by direct votes for a term of four years, where the re-election is permissible. 2.1.2 Government and Contribution Commercial relationship of Brazil and Australia has been cordial. Brazil offers a major market for the Australian businesses (Australian Government n.d.). Besides Australia, the country also has a close relation with Canada and United States of America. The country provides endless business opportunities for both domestic as well as foreign investors since it has huge economic potential. Its enormous domestic market has been expanded because of several international trade agreements entered into with economic blocs and countries worldwide. In Brazil, Central Bank is entitled with registering, monitoring and following up of foreign investments (Consulate General of Brazil in Los Angeles 2011). 2.1.3 Analysis It can therefore be analyzed that the political environment of Brazil is pleasant for conducting business. Moreover, it has been found that there is good relation between Brazil and Australia. This will help Adventure Tours Australia to successfully expand its operation in this country. 3.1 Legal Environment 3.1.1 Regulatory framework The country consists of commercial legal system, which encompasses the Commercial Code that governs nearly all aspects of commercial associations. Foreign companies can engage themselves in business in Brazil by means of acquiring a present company or by forming a local subsidiary in Brazil. A branch can also be set up in Brazil by foreign companies. However, it needs an authorization from the President of the Republic (FDI 2011). 3.1.2 Business Laws The country has multifarious laws, regulations as well as penalties in order to combat corruption. It is signatory to the Organization for Economic Cooperation and Development Anti-bribery Convention (US Department of State 2010). 3.1.3. Labor Laws Rights and duties of employers as well as employees had been mentioned in the 1943 Consolidated Labor Laws. It takes into account collective bargaining agreement and collective labor conventions. According to the rule for all employees, the maximum workday is to be 8 hours with one break for meal and rest. The basic minimum age for work in Brazil is 14 according to the Article 227 of 1988 Constitution (Rosen 1997). 3.1.4 Taxation Laws Federal Government and States of Federation have the power to collect taxes in Brazil. Since these organizations are always seeking new funds, they tend to change the tax laws and compete among themselves for tax revenues (Johnson 2005). As per the Brazilian regulations, the taxes and their respective rates depend upon the size of the company irrespective of corporate entity. 3.1.5 Analysis It can be analyzed that Adventure Tours Australia can easily set up its branch or form a local subsidiary in Brazil. This is a positive sign for Adventure Tours Australia. However, labor laws and taxation laws may affect the successful operation of a new company. 4.1 Economic Environment 4.1.1 Interest Rates The interest rate of Brazil has been 11.25% in the year 2010 (Trading Economics 2010). 4.1.2 Inflation Rates The inflation rate of the country has been 6.01% in the year 2010 (Trading Economics 2010). 4.1.3 Currency Exchange Rate The currency exchange rate has been 1.6500 in the year 2010 (Trading Economics 2010). 4.1.4 Free Market Brazil has ‘moderately free markets’ as well as an ‘inward-oriented economy’. 4.1.5 Economic Trends Economic activity seemed to strengthen in the first quarter of 2010. The global crisis has created little slack in Brazil labor market. Moreover, even that slack has been controlled in recent times (ITAU Conference 2010). 4.1.6 Tax Policies Tax policies were reformed after the appointment of new president Dilma Rousseff in Brazil in 2010. 4.1.7 Analysis The economic condition of the country is quite stable which is going to have a positive impact upon the company. 5.1 Socio-Cultural Environment 5.1.1 Hofstede Cultural Dimension It can be depicted that Brazil is quite similar to other Latin American countries. 5.1.1. A Collectivism Vs Individualism The country has somewhat higher Individualism rank of 38 in comparison to average score of Latin population which was 21. 5.1.1. B Power Distance The country has a higher power distance culture which implies that they accept a greater amount of inequality. 5.1.1. C Uncertainty Avoidance Brazil has scored the highest in Uncertainty Avoidance which is 76 that indicates society’s ‘low level of tolerance for uncertainty’. 5.1.1. D Time Orientation Brazil scored 65 for long term orientation. 5.1.1. E Quality Vs Quantity of Life The country places high value on people, quality of life and nurturing. Moreover, it places greater value on cooperative efforts as well as services (ITIM International 2010) 5.1.2 Analysis It can be analyzed that Brazil has low level of tolerance for uncertainty. If any changes are brought up in a country, it becomes difficult for the nation to cope up with them. However, it has been analyzed that the country values its people to a greater extent and focuses upon nurturing the individual. This seems to have a positive effect upon the tourism sector. 6.1 Technological Environment 6.1.1 Technological Infrastructure The country contributes to more than 45% of IT market in Latin America. It has been found that the government has invested heavily in infrastructure for tourism. 6.1.2 Communication Network Internet has been one of the important means of communication for tourism sector. Brazil is the seventh country in terms of internet usage (Internet World Stats 2009) 6.1.3 Logistics Network It is because of the fact that Brazil is a vast country the best way of transport is by air. Even though the regular fares on domestic carriers are quite expensive, there is affordable way to travel by purchasing ‘Brazil Airpass’ for the foreigners. The country also has good facilities for rental cars and buses. 6.1.4 Analysis It can be revealed that the technological environment of Brazil is favorable for Adventure Tours Australia. The transportation and logistics facilities are quite good in the country. 7.0 SWOT analysis 7.1 Strength The major strength of Adventure Tours Australia is that it is an award winning small group Tour Company in Australia that caters to the needs of various groups of people. 7.2 Weakness The major weakness for Adventure Tours Australia is that the country has low level related to the tolerance for uncertainty. 7.3 Opportunities Regulatory framework seems to be quite favorable for the company providing an opportunity to Adventure Tours Australia to expand its operations successfully in Brazil. 7.4 Threat There are various threats for Adventure Tours in Brazil. The Labor Laws and The Business Laws may pose a severe threat to the company in Brazil. 8.0 Recommendations After conducting the SWOT analysis and the analysis of the external environment of Brazil, it can be recommended that the tourism sector is a booming sector in Brazil. The country is successful in providing its tourists various options in the form of natural beauty and a combination of ecotourism along with leisure and recreation. Adventure Tours Australia can enter into Brazil since the country’s political and technological environments are favorable for expansion of the operations. However, government needs to revise its policy in Brazil with the aim to achieve the first position in tourism. In light of the good commercial relation between Brazil and Australia, it can further be recommended that Adventure Tours Australia can enter into Brazil by setting up its branch. This will be more effective for the company. 9.0 References Adventure Tours. n.d. Small Groups, Big Adventure. http://www.adventuretours.com.au/about-us/ (accessed 2011/03/17). Adventure Tours. n.d. About Travelling with Adventure Tours. http://www.adventuretours.com.au/about-us/ (accessed 2011/03/17). Adventure Tours. 2011. News. http://www.adventuretours.com.au/news/ (accessed 2011/03/17). Australian Government. n.d. Doing Business In Brazil-An Introductory Guide. http://www.dfat.gov.au/publications/brazil_business/index.html (accessed 2011/03/17). Consulate General of Brazil in Los Angeles. 2011. Guide to Doing Business In Brazil. http://www.brazilian-consulate.org/secom/incs/DoingBusinessinBrazil.pdf (accessed 2011/03/17). FDI. 2011. The Federal Constitution. http://www.fdi.net/documents/WorldBank/databases/brazil/fdilaw_brazil.pdf (accessed 2011/03/17). Infoplease. 2011. Brazil. http://www.infoplease.com/world/leaders/brazil.html (accessed 2011/03/17). ITIM International. 2010. Geert Hofstede Cultural Dimensions. http://www.geert-hofstede.com/hofstede_brazil.shtml (accessed 2011/03/17). ITAU Conference. 2010. Brazil: Economic Trends. http://www.itauconference.com/downloads/Itau2010_Brazil_Economic_Trends.pdf (accessed 2011/03/17). Internet World Stats. 2009. Brazil. http://www.internetworldstats.com/sa/br.htm (accessed 2011/03/17). Johnson, A. D. 2005. Brazil Tax, Law and Business Briefing, 2005. US: World Trade Executive, Inc. Phillips, T. 2010. Dilma Rousseff Wins Brazil’s Presidential Election. http://www.guardian.co.uk/world/2010/nov/01/dilma-rousseff-wins-brazil-president (accessed 2011/03/17). Renewal Associates. 2011. PESTLE Analysis. www.renewal.eu.com/resources/Renewal_Pestle_Analysis.pdf (accessed 2011/03/17). Rosen, S. 1997. By the Sweat and Toil of Children. US: DIANE Publishing. Trading Economics. 2010. Brazil Interest Rates http://www.tradingeconomics.com/Economics/Interest-Rate.aspx?Symbol=BRL (accessed 2011/03/17). U.S. Department of State. 2011. Background Note: Brazil. http://www.state.gov/r/pa/ei/bgn/35640.htm (accessed 2011/03/17). US Department of State. 2010. 2010 Investment Climate Statement-Brazil. http://www.state.gov/e/eeb/rls/othr/ics/2010/138040.htm (accessed 2011/03/17). Read More