3. Brazil’s Geographic Factors
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Largest country in South America and fifth largest country in the world per
area and population
Contains Amazon River and Central Highlands
The largest river in the world, the Amazon River contains over 4,000,000 sq.
meters and takes up over half of Brazil’s coastline
Amazon rainforest contains as many as 3,000 different species in 1 sq. mile
and occupies roughly 40% of Brazil’s total geographical area
Rains 250 days per year
Rainforest contains 11 of 12 mammals that inhabit Western Hemisphere
1,600 species of birds, 100,000 invertebrates, and 70,000 species of insects
Iron Ore is Brazil’s most occupied mineral
Steel, automotive, petrochemical, and utilities are leading industries
Leading exports: processed meat, electrical
equipment, tobacco, oil, shoes, iron ore raw sugar, and poultry
Leading imports: milk and dairy products, beef, cars, electric integrated
circuits, car parts and accessories
4. Economy
• Slightly worse then average economy as ranked by The Heritage
Foundation
• Due to absence of successful functioning legal and regulatory
framework
• Plagued by corruption and lack of protection of intellectual property
rights
• 6% unemployment rate
• 6.6% inflation rate
• High inflation rates have been a problem in Brazil for the past
decade
• Government believes increases interest rates to abnormally high
rates will lower inflation and fix economic problem in Brazil
• “Plano Real” changed currency to the “real” to try and make fixed
exchange rate with the American dollar of 1:1
5. Recommendations
• Companies should ship products rather
then build factories in Brazil
• Poor regulatory structure makes it hard
introduce new companies in Brazil
• Reduce costs to make product to make
product cheaper for consumers
• Brazilian consumers have fewer
disposable income due to high interest
rates
7. Overview of demographic
Trends
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Brazil is the 5th most populated country in the world, with a current population of
200,674,130.
However, population growth rates are slowly declining as the country’s wealth
increases and as it becomes more urbanized.
Brazil is currently the 6th largest economy in the world and it is 107th fastest growing
country, which generates more consumer spending and growth opportunity for firms
from all around the world. In a country this big, there are great chances that different
industries will succeed if they can make their products desirable.
Brazil’s population is also very young. 27% of the population is under the age of 15,
62% are 29 years old or younger, and only 7% of the population is older than 65.
With a better economy comes a larger middle-class and a significant growth in "new
money”. Families who couldn’t afford basic necessities such as kitchen appliances
and cell phones, now have enough money to buy not only that, but a second car and
private schools.
The number of women entering the workforce and attaining an education has
increased significantly. Today, two-thirds of women have a job.They stay longer in
school than men, and represent three-fifths of graduates.
8. Cultural factors, Social institutions,
and Informal trade barriers
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Brazilians really like imported goods. Since having such items is a “status” and
“power” symbol, Brazilian consumers are more than willing to pay high prices for
them.
They also enjoy celebrating their culture at all times. Not only on Fridays after work,
but basically everyday there is a reason to drink and celebrate.
Brazil has one of the world’s first sustainable biofuels economies and is the biofuel
industry leader. They have “flex-fuel” vehicles that run on 100% ethanol or 25%/75%
ethanol/gasoline blend, or any combination of the two.
Brazilians are used to flex-fuel cars and like the way they work, so some consumers
may be a little reluctant to switch to a Hybrid since they have been using flex-fuel
cars for so long.
Some informal trade barriers that may affect the company are for instance the way
the company will negotiate with Brazil.
Shipping can become a problem. If products aren’t delivered on time or are damaged
upon arrival, the company’s image can be hurt.
The government may also impose informal measures to favor domestic products over
imports by requiring costly testing, standards, and certifications requirements for
international products, in order to favor the domestic industry.
9. Recommendation
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The first step to ensure the company succeeds in Brazil is to have satellite or
corporate offices in Brazil and to hire local talent and business school graduates to
work in these offices. This will help the company understand the needs of the market
and will minimize the cultural differences of having an American company move into a
new country.
Even though Brazil isn’t a conservative country and there are few chances of cultural
blunders where someone actually ends up offended by an advertisement, the
company still needs to be careful
When it comes to food and beverages, costumers are more likely to buy products or
services they are familiar with, because they know what to expect.
If they see a commercial that shows a cool drink they can make with Bacardi, using
ingredients they have at home, they will be excited to try it.
With the rising number of educated females in the workforce who need cars and want
to be up-to-date with the newest technology, offering “girly” iPad Mini covers and
accessories would be a good way to help sell more iPads to women.
Commercials where women are leaving work and getting in their Camry’s will make
many of these consumers relate and want to buy the car.
11. Regulations, trade barriers,
taxes
• Regulations
• INMETRO
• CONMETRO
• SINMETRO
• Trade Barriers
• Brazil ranked 130 out of 183 countries in the World Bank’s
2012 Doing Business Report International Agreements.
• High tariffs
• Uncertain customs system
• Brasil Maior showed a rise in trade protections
• Taxes
• Import Duty
• Ranges from 10% to 35%
• Industrialized Product tax (IPI
• Ranges from 0% to 15%
• Merchandise and Service Circulation tax (ICMS)
• Varies between states, around 7% to 18%
12. Intellectual Property Rights
• In the past, Brazil was very much against foreign intellectual
property but have slowly been reforming their laws.
• 1995, Brazil joined the world Trade Organization and finally
came to agreements with international intellectual property laws.
• Although the Brazilian intellectual rights are coming together,
trademarks are still taking too long to get registered which is
very displeasing to the foreign company.
• The president of the INPI, Brazil’s patent office, has realized that
they must protect their own intellectual property to encourage
innovation.
• the Brasil Maior (Greater Brazil) plan, we have seen a rise in
trade protections such as tax breaks to benefit local
manufacturers, increased tariffs, and local content requirements
13. Recommendations
• We need a strong local presence in Brazil
• A great way to do this is through building relations with
local distributors
• Though intellectual property rights and tariffs are
becoming more efficient, it is still difficult for a US
company to enter a public market in Brazil without the
help of a reputable partner
• Not only do tariffs pose a conflict, Brazil also holds
complex customs and corruption in the legal system
• We need to visit Brazil and make strong relations with
local partners and distributors.
16. Bacardi Gold Rum
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Product Description
Smooth & Mellow
Toasted oak barrels,
shaped through secret
blend of charcoals
By Ron Bacardí in 1862
“Original Cuba Libre”
Recommendations
• Adapt the price of the
rum but the flavor
should not change
• Continue to use social
media outlets to
promote the product
17. IPAD mini
Product Description
• 7.9 inch retina display
• Up to 4x CPU
performance, Up to 8x
graphics performance, up
to 10 hr. battery
• advanced wireless
• ios7
Recommendations
• Make sure product
meets standards to
comply with the
existing technology in
Brazil
18. 2014 Toyota Camry Hybrid
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Product Description
4 Door LE Sedan
Continuously variable
transmission
Fuel efficiency 39/43/41
(mpg hwy/city/combined)
6 Gallons of
Gas, Southeast Toyota
Distributor Plus
Recommendations
• Ensure its reliability to
get consumers from
point A to point B
• Promote eco-friendly
concept
• Additional financing
programs or
specialized prices
20. Economic Benefits
• Home Country
• Increase in overall sales volume and market share
• Increasing economies of scale
• Accessing inexpensive labor and cheaper production methods
• Rum: Build assembly operation in Brazil to have greater access to raw
materials
• Hybrid Car: Subsidies and tax concessions from government
• Host Country
• Jobs created, provided capital, tax revenue increases, new skills and
technologies learned
• Greater choice of products for consumers
• Opportunity's for other MNC’s to do business in Brazil
21. Social Costs and Benefits
• Rum
•Drinking in moderation can alleviate stress and be healthy for the heart
•Drinking and driving can adversely affect Brazil’s roadways
• Hybrid Vehicle
•Lower toxic emissions and release less carbon dioxide into the
environment
•Cheaper fuel costs
•Helps fight the growing global warming crisis, and creates cleaner air
• IPAD
•More efficiency in a smaller device
•Reduce amount of paper used in offices and schools
•Helps small businesses
