Global Business Analysis of Brazil
Global Business Analysis of Brazil
$11. Abstract/Introduction
Brazil is considered an emerging economy. The GDP of over 2 trillion and an average GDP of over $8,000 makes Brazil the largest economy in South America. This paper presents an analysis of the Brazilian business environment. The paper reveals that Brazil is endowed with rich natural resources including; land, forest, freshwater, iron, manganese, oil, bauxite and many others. These natural resources present immense investment opportunities. The Brazilian society is extremely diversified. The society is made up of a blend of various cultures. This has enhanced the quality of the human resources. Brazilians are also well educated with literacy level being over the 85% mark. The political environment in Brazil also favors investment. The country has had a stable democratic government in the last 20 years. This has formed an atmosphere that favors the growth of business. The improved economy has also enabled the majority of Brazilians to transit into the middle income status. The improved economic power of citizens also presents economic opportunities for international businesses. However, Brazil, as an investment destination, is not without problem. The most significant problem is the high rate of crime within the major cities. High crime rates are making the country least appealing to investors.
$12. What are the major elements and dimensions of culture in Brazil?
$12.1. Brazilian Culture
$12.1.1. Background History and Identification
Brazil was originally a colony of Portugal. The Portuguese fleet arrived in the South American country in the year 1500 under the command of Pedro Alvares Cabral (US Library of Congress, 2010). The Portuguese found the native inhabitants who were divided into several tribes. The Portuguese took over the land and divided it into twelve regions. The Portuguese royal family moved to Rio after the Napoleon army invaded Portugal. The king returned to Portugal after Napoleon was defeated leaving his son Prince Pedro in charge of the colony. Prince Pedro led a revolt against the colonial masters leading to the nation’s independence 1822.
Brazil is identified as a land of diversity. Brazil has got a vast land mass that comprises of a diversity of culture (East Midland, 2011). The country is divided into five administrative regions. These regions include; the North, the Northeast, the Central-West, the Southeast and, the South (US Library of Congress, 2010). The North regions consist of a large population of African dissent. Members of Brazilians of African descent community were introduced into the region as slaves to work in the agricultural plantation. The Southeast and South region consist of a large population of European and Japanese decent (Ernst & Young Terco, 2011). The North and Central West comprise of a large population of indigenous people. Immigration in recent years has led to entry of other groups of people.
$12.1.1.1. Location and Geography
Brazil is located in the South American continent. The country is neighbored by Suriname, Guyana, Venezuela, Bolivia, Paraguay, Argentina, Peru and Bolivia. It is the largest country in South America and the 5th largest country in the world (The US Library of Congress, 2010). The large section of the Brazilian landscape is made up by the Brazilian plateau and the Amazon basin. The Amazon basis covers 25% of the country’s land mass (US Library of Congress, 2010). The Amazon presents the country with vast natural resources including; fresh water, wildlife, timber and many others. Brazil also has vast reserves of natural resources including oil, gemstones, gold, uranium, nickel, manganese, bauxite and iron ore. The country is characterized by wet climatic conditions making the land agriculturally productive. Sugarcane and coffee are among the most cultivated crops in the country.
$12.1.2. Demography
Brazil is fifth most populous country in the world with the country population estimated at 190 million in 2010 (Ernst & Young Terco, 2011). However, the population density is fairly low due to the vast land mass. However, a huge section of the Brazilian population (about 80%) lives two hundred miles of the Atlantic coast. Fertility rates have declined in the recent years leading to a reduction in the population growth. About 47% of the Brazilian population comprises of the whites, 43.13 is made up of the multiracial people while 7.61 is made up of the black population (US Library of Congress, 2010).
$12.1.3. Ethnic Relations
The Brazilian population is made up of diverse ethnic groups, just like the US population. However, in Brazil there is great racial mix within the population. The country population largely made up by three main ethnic groups (East Midland, 2011). These include; the white population of Portuguese origin, the black population of African origin, and the native population. The interaction between the three races has led to the development of the multiracial group, which makes up 43% of the country’s population (US Library of Congress, 2010). Racial democracy is well established within the country. There is relative equity between the members of different races.
$12.1.4. Religious Beliefs
Close to 75% of the Brazilians are Catholics. This makes Brazil the state with the highest number of Catholics in the world (East Midland, 2011). Citizens have the freedom to associate with any religion. However, there is a close relationship between the Catholic faith and the country’s governance. Catholicism has coexisted harmoniously with other religious faiths.
$12.1.5. Cultural Patterns and Symbolism
The Brazilian culture is extremely diverse reflecting the cultural mix of the population. Brazilians exhibit a collective culture where the Family is considered the basic unit of society (East Midland, 2011). The families are usually large and closely tied together. The close tie between members of the same family and community has encouraged nepotism.
$12.1.6. National Identity
The mixed racial heritage serves as Brazilian national identity. The Brazilian society blends in the world largest cultures including European, Indian, African and Asian (US Library of Congress, 2010). This has made the culture of Brazil unique. The Brazilians share a common culture that has been established through the interaction of numerous cultures.
$12.1.7. Food
Brazilians survive on a variety of diets. However, manioc, beans and rice are the most popular foods in the country (East Midland, 2011). Fish, poultry and meat are also popular foods among Brazilians. Dinner is often taken after midday. Dinner is usually characterized by a multicourse meal. Eating in restaurants is growing trend in the urban centers.
$12.2. Communication
2.2.1 Language Affiliation
One essential element of culture is language. A large section of the Brazilian uses the Portuguese language to communicate (East Midland, 2011). Only a small section of the population has not learnt this language (US Library of Congress, 2010). Brazilians like to know the people they are communicating with in order to communicate effectively. Thus, the always prefer face to face communication. Communication is conducted informally as strict rules are not followed. Brazilian prefers oral communication over written communication.
2.2.2. Non-verbal
Brazilians like to take time in communication (East Midland, 2011). This is because they love to know the other party before they could start to engage in serious conversations (US Library of Congress, 2010). They are also keen on details. Interrupting people in the middle of their speech is a common habit among the Brazilians. Brazilians avoid confrontations during communications.
$12.3. Ethics, Values, and Attitudes
$12.3.1. Marriage, Family, and Kinship
$12.3.1.1. Marriage
Marriage and family are essential institutions within the Brazilian society. Religious and civil marriages are accepted within the society (US Library of Congress, 2010). Many people from the low social economic groups cohabit without entering into legal unions. A large section of the population does not support same sex marriages.
$12.3.1.2. Domestic Unit
“ The family is considered as the basic unit of the society (East Midland, 2011). A Brazilian family often consists of the mother, the father and a few children. There is a strong association between the nuclear and the extended family. Brazilians interact with members of the extended family on a regular basis.
$12.3.1.3. Inheritance
Brazilian inherits from parents, the father and mother. They usually have two surnames, representing both spouses in the family (East Midland, 2011). The surnames indicate patrilineal slant. When a woman gets married, she drops her mother’s surname and takes her husband’s.
$12.3.1.4. Kin Groups
Brazilians use the world family to refer to the extended family rather than the nuclear family. This implies that relationships with extended members of the family are valued (East Midland, 2011). The extended family usually consists of paternal and maternal relatives, as well as, in laws. The kinship relationships are also extended by selecting friends to act as protectors or godparents to the children. The kinships perform multiple functions within the society.
$12.4. Socialization
$12.4.1. Social Stratification
The Brazilian society is highly stratified. The country is ranked among the top 5 most unequal society in the world (East Midland, 2011). The country has a lot of disparities when it comes to income, education and health status. Members from the high socioeconomic groups live in their own neighborhoods, work in given occupations and take their children to private schools. On the other hand, low income groups take their children to public schools and live in poor neighborhoods.
$12.4.2. Child Rearing and Education
The Brazilian education system is closely linked with the social class. There are significant disparities between the rich and the poor when it comes to education attainment and achievement (East Midland, 2011). However, the literacy levels in Brazil have risen in recent years with the country recording a literacy rate of 82% in the year 2000.
$12.4.3. Gender Roles and Statuses
Gender role and status in Brazil varies from one social class to the other. Women from the high social classes enjoy substantial flexibility and occupational choices (Bourcier, 2012). In general, men are viewed as the bread winner for their families. Women are responsible for coordinating the domestic functions. Income earned by women is considered supplemental.
$12.4.4. Status of Men vs. Women
The Brazilian society associates men with strength and authority. Women are associated with weaknesses and subservience. This traditional has laid the foundation for the creation of male dominated society (Bourcier, 2012). Women did not have the right to vote before 1932. Women right movements have been slow in advocating for women
$12.4.5. Role of Education
Education has played a significant role in reducing disparity between men and women. The literacy rate in Brazil is over 80%, meaning that a large proportion of women have basic education. This has served to empower women.
$12.5. Political System of Brazil
$12.5.1. Political Structure
Brazil is a democratic government, which means that people get to elect their representatives (Araujo, 2003). The Brazilian government combines three distinctive political systems; the federal districts, the municipalities and the state. The union is referred to as the federation. It consists of three arms of governance; the legislature, the judiciary and the executive. The legislative and executive consist of elected members.
$12.5.2. Leadership and Political Officials
Brazil has grappled with the problem of poor leadership. In the past, the country had to contend with the military rule (Bourcier, 2012). A lot of improvements have been experienced since a civilian government was installed in the country. However, cases of corruption and bad governance are still rampart. This is having an impact of the Brazilian economy and the business environment.
$12.5.3. Stability of Government
Brazil has a stable political environment. The country has enjoyed relative calm in the last few decades and has established a stable democratic process (Bourcier, 2012). The Brazilian democratic system has created confidence in international investors. The country has no political enemies thus reducing the threat for attacks. The country also has minimal cultural and ethnic conflicts that may result in ethnic violence.
$12.5.4. Role of Local Government
The local government is an essential component of the Brazilian political system (Souza, 2010). The local government is made up of the councils headed by mayors. All local governments within the country possess similar legal status (Souza, 2010). The local government enhances the representation of the people at the grass root level. It enables the local to direct their developmental efforts by selecting representative. Decentralization has empowered local community to own and direct resources.
$12.5.5. Social Problems
Crime and insecurity are the most significant social problems facing Brazil (Bitencourt, 2010). The rates of crime in Brazil’s major cities have been on the increase since 1980. Homicides and other forms of violence have become a key component of life in the urban centers. The rise of criminal incidents has casted doubt concerning the ability of the law enforcement agency to provide adequate protection to the citizen (Bitencourt, 2010). This social problem is affecting the business environment of the country.
$13. How are these elements and dimensions integrated by locals conducting business in Brazil?
$13.1. Brazilian Economy
$13.1.1. Basic Economy
The economy of Brazil has remained stable of the last two decades (Investment International, 2009). Brazil has experienced improvements in the business policies, as well as, in the microeconomic conditions. The microeconomic conditions have become conducive for trade (Investment International, 2009). The economy of the country has experienced significant growth over the last two decade. The rate of unemployment is on the decline.
$13.1.2. Major Industries
Brazil has a sophisticated economy that comprises of numerous industries. Manufacturing is one of the significant pillars of the Brazilian economy (Bourcier, 2012). This sector comprises of numerous industries including; steal production, petrochemical, cement production, electronic and automobile. Technology, telecommunication and transport, are also significant economic sectors in Brazil (Bourcier, 2012). Agriculture is also a main stay of the Brazilian economy. Sugarcane and coffee are the most cultivated crops. Tourism is also a significant industry
$13.1.3. Natural Resources
Brazil is endowed with vast natural resources. One of these resources is land. The country occupies close to 50% of the South American landmass. A significant section of this land receives regular precipitation making it suitable for agricultural production (Bourcier, 2012). The country also has a vast forest cover which makes timber a significant natural resource. The Amazon forest is also home to millions of liters of fresh waters and thousand of species of animals. Brazil is also rich in minerals such as oil, gold, iron, bauxite, uranium, gemstones, nickel and manganese
$13.1.4. Imports and Exports
Import and export trade a significant part of the Brazilian economy. In 2010, the value of Brazilian’s total exports stood at US $ 199.7 billion (Klaven & Tijedens, 2009). The export commodities include; automotive, coffee, footwear, soybeans, iron ore and transport. The largest recipients’ of Brazilian exports include China, the US, Argentina and the Netherland. The value of the Brazilian imports was valued at 187. 7 (Klaven & Tijedens, 2009). Brazilian import commodities include; transport equipments, electronics and machinery.
$14. How do both the above items compare with United States culture and business?
$14.1. The U.S. Business Environment
$14.1.1. Business Structures
Brazilian companies tend to exhibit a vertical organizational structure. The companies are organized in hierarchical line with top bottom flow of information (Klaven & Tijedens, 2009). Key decisions are made at the top management positions and communicated to other employees through the hierarchical structures. Low level employees are responsible for implementing decisions and are hardly involved in making decisions.
$14.1.2. Management Style
Personal attributes are essential consideration when it comes to leadership n Brazilian business. The ability to establish a strong personality determines the success of a business leader in Brazil (Klaven & Tijedens, 2009). Managers who are deemed to have superior personalities command large support from subordinates. Relationships are essential in the Brazilian culture. Thus, managers seek to create trusting relationships with the follower in order to foster productivity. Respect for authority is emphasized (Klaven & Tijedens, 2009). Managers are expected to give directions while subordinate are expected to follow these directives.
$14.1.3. Business Meetings
Brazilians are spirited and friendly people. Such an atmosphere must be created in the business mean in order to facilitate meaningful discussions (Klaven & Tijedens, 2009). People take time to meet and exchange greetings. Therefore, it is paramount to take times for these activities into consideration when arranging business meetings. One should be prepared for physical contact as this part of the Brazilian way of communication. Touching of arms, backs and elbows are acceptable gestures. Meetings are conducted in an unhurried way and using informal ways of communication.
$14.1.4. Business Customs and Etiquette
Brazilians require one to make appointments for meeting at least two weeks before showing up for the meeting (Ernst, 2010). Impromptu business calls are not highly appreciated. Business processes are based on relationships. Thus, individuals should be prepared in invest time and finances in establishing long term relationships. Dinner is taken at Midday and, therefore, organizations must take this into consideration. Brazilian use first names to refer to someone. However, titles are extremely important.
$14.1.5. Business Dress Code
Appearance matters in the Brazilian cultures. Clothing is used to pass impression concerning an individual or the company he represents (Ernst, 2010). Women dress elegantly in all circumstances including during business. Alien women need to avoid overly formal dressing in order to blend. Nails need to be manicured, and shoes should be stylish. Men often dress in suits. Three piece suits are associated with senior executive. Brazilians may dress casually at the work place but will always expect visitors to dress formally.
$14.1.6. Technology in Business
Technology is becoming a central part of business in Brazil. Companies are implementing technologies not only as operational tools but also as instruments for enhancing competitiveness (Ernst, 2010). Brazilian business technologies focus on areas such as information management, communication, computations, forecasting and assessments. Technology will have a significant impact on individuals, governments and business in the next few years. Individuals will need technological skills in order to remain competitive in the Brazilian market.
$14.2. Work Force
$14.2.1. Division of Labor
Division of labor varies significantly from industry to industry and from one organization to the next (Dinus, 2006). The manufacturing sector is characterized by the highest division of labor. Manufacturing plants conduct so many activities during production. The production process is divided into smaller tasks, which are assigned to individuals. The technological revolution within the Brazilian companies has also reinforced division labor (Dinus, 2006). Advancement in technology has introduced new ways of production, which require specialized skills. Many people have been trained to operate these technologies. Division of labor leads to specialization which enhances productivity. However, division of labor may result in bureaucracy.
$14.2.2. Division of Labor by Gender
There is still a significant difference in employment when it comes to gender. The income of women is still below what Brazilian men earn. In 2006, the Brazil’s average GDP was estimated at $ 8,949 (Klaven & Tijedens, 2009). However, there were huge disparities between what women and men earn. The average income for men was estimated at $ 11,521 while that of women was estimated at $6426 (Klaven & Tijedens, 2009). This is mainly due to gender related discrimination. However, the Brazil has undergone significant changes in the last decade. Additional women are getting into formal employment. However, the wage inequality between men and women still persist.
$14.2.3. Salaries and Employee Benefits
Salaries and benefits vary from one economic sector to another. The services sector is top in terms of providing high salaries and benefits (Ernst, 2010). This is because this sector consists of a highly skilled workforce. The technology industry also offers fair salaries and wages. This industry also consists of a highly skilled workforce thus warranting the high salaries. The manufacturing sector exhibits a lot of dualism in terms of skills and payment of salaries. A small portion of employees within this sector are highly skilled, thus commanding large salaries. The rest of the workforce work in least specialized occupations and thus commanding low wages (Ernst, 2010). The agricultural sector consists mainly of informal and self employment.
$14.2.4. Availability of Educated and Skilled Labor
Educated and skilled labor is readily available in the Brazilian market. Two factors have contributed to the growth of labor in Brazil (Ernst, 2010). Growth of working age population is one of these factors. The population structure of the Brazil comprises of a large section of youths who have attained the working age. Another factor that has contributed to the growth of skilled workforce is the improvement in education (Ernst, 2010). The level of education within the Brazilian workforce has risen significantly. Statistics indicate that the vast majority of Brazilians have at least 7 years of education.
$14.2.5. Labor Law
The Brazilian labor market is highly regulated. The labor market consists of various legal factors that affect businesses. One of the legal requirements is minimum wage (Ibre, 2010). The Brazilian government has imposed a minimum wage within the labor market. This law has protected the workers by ensuring they do not receive unreasonable pay. However, the law is affecting the competitiveness of Brazil as an investment destination (Ibre, 2010). Huge taxes on the wage bill also have a major implication on the competitiveness of businesses. The huge taxes are increasing the cost of labor thus affecting the competitiveness of the Brazilian firms. The Brazilian labor market also consists of firing penalties to employers (Ibre, 2010). These penalties were introduced to reduce the rate of firing employees.
$15. What are the implications for U.S. businesses that wish to conduct business in Brazil?
$15.1. International Trade Statistics
$15.1.1. Major Exports
Brazil and the United States are significant trading partners. Trade between the US and Brazil has been on the increase in the last two decades. Currently, the US is Brazil second largest trading partner while Brazil is the US’s eighth largest trade partner (Ward, 2011). The balance of payment between the two countries favors Brazil. Brazilian exports to the US were worth $43 billion while US exported to commodities worth by $31.4 billion. The main commodities exported by the US to Brazil include; aircraft parts, coal, oil and machinery (Meyer, 2012). Brazilian exports to the US mainly comprise of; coffee, machinery, steel, iron and crude oil.
$15.1.2. Recent Trends
Recent trends indicate a growing trade relationship between the US and Brazil. The trade between the US and Brazil was valued at $74.3 billion in 2011 (Meyer, 2012). This is 25% increase over the 2011 figures. Trade in services between the US and Brazil is also on the increase. In 2011, the trade in services between the two countries was worth $29 billion. The US had a balance of payment of $15 billion (Ward, 2011). Foreign direct investment by the US and Brazil has also increased by 10.8% between 2010 and 2011.
$15.1.3. Exchange Rates
Exchange rates are significant determinants of trade between two countries. The Brazilian currency is known as the Real. In 2012, 1 US dollar was equivalent to 2.07 Brazilian Real (Ward, 2011). The exchange rate between the US and Brazil has been relatively stable in the last 10 years. During the 10 years, the Real reached a low of 3.0750 for 1 USD and a high of 1.83 for 1 USD. The stability of the currency has led to a relatively stable trade between the US and Brazil.
$15.1.4. International Trade Agreements
The US and Brazil were previously involved in continuous trade issues involving intellectual properties, agricultural exports, legal procedures and customs (Wilson International Center, 2008). The US and Brazil have entered into international trade agreements in order to iron out these issues. The trade agreements comprise of bilateral tax treaty that is designed to increase investment across the two countries. There is also an agreement that seek to eliminate tariffs on renewable energy products.
$15.2. Benefits of US & Brazil Trade Agreements
$15.2.1. Economic Impact on US
The trade agreements between the US and Brazil are bound to increase trade and investments between the two countries (Ward, 2011). Eliminating the barriers in the agricultural exports trade will enhance the US agricultural industry. The bilateral tax treaty will also enhance trade thus benefiting the US, as well as, the Brazilian economy. The trade agreement will also have a significant impact on investment opportunities for American companies. Brazil consists of numerous sectors that are under exploited (Ward, 2011). These include; agriculture, mining, building and construction, energy and many others. The agreement will enable the US to benefit from these opportunities.
$15.2.2. Employment Opportunities
The trade agreement between the US and Brazil will also create employment opportunities in the two country (Wilson International Center, 2008). Enhanced trade between the two countries means additional employment opportunities for the citizens. The US is going to benefit by expanding it key exports including; aircraft parts, machineries and coal. Brazil will also benefit by expanding the sale of; coffee, iron, steel and crude oil to the US (Wilson International Center, 2008). Both countries will also benefit from transfer of technology. Brazil is renowned from it well developed biofuel industry. The US can acquire skills in this area.
$16. Conclusion
Brazil is considered an emerging economy. The GDP of over 2 trillion and an average GDP of over $8,000 makes Brazil the largest economy in South America. This paper presents an analysis of the Brazilian business environment. The paper reveals that Brazil is endowed with rich natural resources including; land, forest, freshwater, iron, manganese, oil, bauxite and many others. These natural resources present immense investment opportunities. The Brazilian society is extremely diversified. The society is made up of a blend of various cultures. This has enhanced the quality of the human resources. Brazilians are also well educated with literacy level being over the 85% mark. The political environment in Brazil also favors investment. The country has had a stable democratic government in the last 20 years. This has formed an atmosphere that favors the growth of business. The improved economy has also enabled the majority of Brazilians to transit into the middle income status. The improved economic power of citizens also presents economic opportunities for international businesses. However, Brazil, as an investment destination, is not without problem. The most significant problem is the high rate of crime within the major cities. High crime rates are making the country least appealing to investors.
References
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