Brazil Bom Dia

Bem-vindo ao Brasil!

Presented By: Zoe Bergin, Yu Tao Chen, Muneera Al Fadhel, Nensi

Cukalla, and Grace Chandler

Brazil Overview

Officially known as Federative Republic of Brazil.

One of the largest countries in Latin America

Population-190 million inhabitants

Tourism-5.1 million visitors in 2010, revenue reached 5.9 billion

Its natural resources have increased per capita income and gross domestic product Agriculture Sector Industrial Sector

Current Economic

Performance and

Competitiveness

GDP/capita (PPP) GDP growth rate

• GDP is growing at a steady pace, increasing every year.

• Ranks #8 in GDP (PPP).

• GDP/capita is $11,600.

• In 2010, growth rate was 7.5%. Currently, it is 2.8%.

Inflation Past 10 Years

Inflation Past 27 Years

1990: 6821.31 %

What Happened?

Since 1985 Brazil has seen the Cruzeiros, Cruzado, Cruzados Novos, Cruzeiros Reis and finally the Real

In 1994 the “Real Plan” was created which changed Brazilian currency to the Real and changed the fiscal measure.

 The new inflation goal was set to 4.5 % and the Central Banks were given independence.

1:1 relationship with the US originally, now 2:1

This greatly improved inflation rates which is shown in the previous graphs

INFLATION:

What to Expect

Central Bank has made worrisome cuts to its benchmark rate within the last 2 years that have lead people to lose credibility in the bank and cause inflation expectations to increase in the upcoming years.

This beings said inflation has been staying lower than many predictions which has lead to improvements in interest-rate sensitive companies stocks

INFLATION:

Unemployment Since 2001

Comparison

UnemploymentEconomic and Social

EffectBrazil was not as strongly affected

by the recent Global Financial CrisisLow unemployment rate kept

Brazil manufactured products in high demand

More people employed and therefore able to make purchases and keep the economy flowing

FDI INFLOWS

2010 FDI in Millions of US dollars: $48,438

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

22,457

16,590

10,144

18,146

15,066

18,822

34,585

45,058

25,449

48,438

FDI Performance Index

Amount of FDI inflows relative to the size of the country

Index rating: 90/144

ImplicationsBrazil’s FDI has not caught up with

its geographical sizeClose to breaking the top 50

Potential Index

Less quantifiable

Based upon several predetermined factors

Brazil: 67/144

ImplicationsLower score indicates lack of confidence

due to external factorsCorruption Inefficient business judiciary systemPolitical agendas

Potential Index Factors

GDP per capita

The rate of GDP growth over the previous 10 years

The share of exports in GDP

Average number of telephone lines per 1,000 inhabitants

Commercial energy use per capita

The share of R&D spending in GDP

The share of tertiary students in the population

Country risk

The world market share in exports of natural resources

The world market share of imports of parts and components for automobiles and electronic

The world market share of exports of services

Competitive IndexMarket size is larger than

normal transition countries.

Huge expansion opportunity

Still Efficiency driven, meaning tremendous potential in areas of innovation technology

Was rate 5.7/7(best) in terms of Domestic Market Size, giving Brazil a strong fundamental economic background for future expansion

Competitive Index (Key Stat)

Change in Economic Performance

and Competitiveness

Economic Freedom

99th freest economy in the world.

Regionally, Brazil ranks 20 out of 29.

Overall score is 57.9 – one of the most unfree economies.

Score increased indicating improvement.

Aspects of Economic Freedom

Aspects of Economic Freedom

Corruption Index

76/100 Corruption Index

Voting and Elections

Civil society

Privatization

Anti-corruption legal regulations

Whistle blowing protection

Brazilian Ombudsman office

Governance

Similar to U.S government President, Vice-President, House of Representatives,

and Senate.

1992-Country was run by Itamar Franco Very high inflation, misery, and unemployment

Fernando Henrique Cardoso-launched “Plano Real” Privatized public services, state-owned companies,

and importing goods

Changes in governance Government effectiveness indicator changed the

most Led to regulation of other indicators: political

stability, rule of law, and control of corruption

Hofstede’s FrameworkPower distance

Willingness to accept class disparity

Individualism To what extent the individual is valued over the group

Masculinity vs. femininity “male” values vs. “female” values

Uncertainty avoidance Extent to which society needs control

Long-term orientation To what extent a culture focuses on the success of

future generations vs. present success

Hofstede’s Analysis of Brazil

Power distance: High Acceptance of class disparity

Individualism: Low Prefer working in groups High family loyalty

Masculinity vs. femininity: Equal

Uncertainty avoidance: High Prefer more structured environment

Long-term orientation: High Highest of any Non-Asian country

Tropanaar Framework Analysis

Very similar to Hofstedes Cultural Index

Differences Emotional vs. Neutral

Display or hide emotions? Sequential vs. Synchronic

Do things one at a time or several things at once?

Internal vs. External control Control environment or

environmentally controlled?

Lewis Model AnalysisThree “hubs” of cultural behavior

Multi active (Brazil) Emotion/ relationship motivated Do not perceive time linearly but in terms of people Do several things at once

Reactive Listens/ Patient Focus on knowledge Indirect/non confrontational

Linear Task oriented Logic before emotions Importance on written language

Lewis Model

Lewis Model Type Characteristics

Managerial Implications

Understanding the local need

consider researching the market before entering

Geographical Location, must be safe and must be suitable for the type of business you are planning to do

Brazilian economy is very family orientated, creating tight bond is necessary

Must run the company differently from the West (or other countries)

(steven? What is this a chart of/about ?)