2. Global Economic
Interdependence
• Ripples in economic markets
felt worldwide
• Economic status:
global race to develop
sustained economies
• Development strategies:
~Foreign direct investment
~Trade agreements
~Outsourcing
~Localization
3. Economic History
Depression of 1913
Increased government debt
Depressed pricing on rubber and coffee
Looked to Rothschilds bankers of England
Reorganization of debt
Rothschilds to control paper currency
Currency valuation dependent on coffee
Rothschilds deal cancelled at commencement of WWI
(Lyndon-King, 1915)
4. Economic History
…economic rebound
Increased trade with United States
Increased issuance of paper currency
Facing the challenge of meeting loan obligations
Gold held domestically
Forced to send to England to cover
debt interest payments
Seeking new loans to pay old debt
(Lyndon-King, 1915).
5. ~By the 1980’s Brazil
had become responsible
for 1/3 world’s debt (UN, n.d.)
~High Interest Rates + Negative Growth = Inflation
~Fixed interest rates and weeks banks contribute to crisis
Economic reforms
~Relaxed trade barriers ~Privatization of business
Currency change: Real introduced as fixed rate to dollar (Economist, 2015).
Economic History:
…decades of struggle
6. Improved
Economic
Policies
• By 2008 had reached progressive levels of economic growth.
• Low tariffs and no quantitative restrictions on imports (Economist, 2015).
• Abundant natural resources and markets of 200 million consumers.
• Brazil became #1 destination foreign/corporate investment (Alonso, 2015).
7. • Negative growth and trade deficit followed in 2009.
• Brazil’s public banks lowered rates and subsidized loans.
• Brazil’s emerging-market struggled with rebounding of inflation.
• Brazilian government challenged with debt obligations (Economist, 2015).
• Currency fluctuations caused fluctuations in import/export levels (WTO, 2011).
• Less restrictions increased Brazilian outsourcing opportunities (Zieminski, 2010).
8. Future Potential Impacts
on Brazilian Economy
National
Currency fluctuations
Shifts in trade utilization
Government controls
Fiscal responsibility
Taxation rates
Energy industry
Banking industry
Increasing inflation
Global
Currency fluctuations
Shifts in trade utilization
Maximization of resources
Customer service
Technology
Advertising
Research & Development
Economic growth &
recovery rates
9. Current State of the Economy
Longest recession of the past century.
Inflation at highest rate in the past decade.
Currency at 1/3 value and bond prices downgrade to junk.
Commodities prices on main exports down (Sambo, 2015).
Rates high and disposable income low (Economist, 2015).
Government strongholds on banks (Murphy, 2015).
Failed to fund debt obligations = national deficit for 2015.
Increases in unemployment (Economist, 2015).
10. Increased unemployment
(Economist, 2015)
Declining corporate sales
performance: 6% 2014 - 2015
(Alonso, 2015)
Risk taking cultures (Yoon,
2012)
Global Capital Markets vs.
National Sovereignty
(Economist, 2008)
Mitigating risks
______________________________________________
Multilateral economic system
Crisis management
Increase cross-border financial flows
Regulation and oversight
(Economist, 2008)
11. Tools for
Economic Recovery
___________________________
Brazilian Trade and Investment
Promotion Agency
• 2014 US investors commit $12 billion to
Brazilian Private Equity & Venture Capital
• Accounts for 53% Latin American venture
capital deals (Business Wire, 2015).
Virtual Technology
• Cloud computing
• Supply chain management
• Reducing cost & risk
• Virtual conferencing
• Promoting diversity
• Team bonding
(Dretzin & Rushkoff, 2010).
Employment Training
• Localized support
• Business English training
• Cross-cultural communication
12. Mindbenders Business
English School
Opened 2014 offering courses for students and current
business professionals
Goals:
• Enhance English fluency
• Relevant application to global business environment
• Competitive advantage with national and transnational
companies (Mindbenders, 2015).
13. Mindbenders Business
English School
Humberto Pieroni, CEO
“Hire the best people and inspire them to do their best” (Pieroni, 2015).
22+ years executive and senior management experience PricewaterhouseCoopers
Professional expertise
• Auditing
• Risk management
• Outsourcing implementation
• Financial reporting consolidation (Pieroni, 2015).
14. Mindbenders Business
English School
Millennial market expected to grow
All geographic regions
18-30 year-old students and
professionals
• Firm foundation of
business knowledge
• Basic English skills
(Pieroni, 2015).
Value-added service provides
transnational businesses with
opportunity for local support
Convergence of advanced teaching
methods paired with technology
Support staff from diverse and varied
cultures able to identify with regional
operational and market needs
(Pieroni, 2015).
15. Mindbenders Business
English School
Within next five years expand
current program
Focus of regional expansion of
operations within Brazil
Yearly target growth rate of 25%
student enrollment
course offerings
(Pieroni, 2015).
Global economy
Competing internet schools
Securing funds for continued operations
Protectionism
High socioeconomic regions
South & SW Regions
Primary businesses
Tech companies, start-ups,
entrepreneurs & family-run
businesses (Pieroni, 2015).
16. Globalization vs. Protectionism
The collectivist society is one where "everyone [is] supposed to look after the interest
of [the] collective" (Hill, 2014, p.111).
_________________________________________________________________________
“Society is a means by where we jointly achieve our object” (Friedman, 1980).
Protection of immediate environment vs.
ability for all to achieve growth
Create level playing field
Reduced incentive for innovation
Subsidies cause overproduction of product
(Hill, 2014).
“Persistent environment of global supply”
(Levisohn, 2015).
Organic growth
Free Enterprise provides atmosphere for
innovation to thrive
Issues: wage rates, degradation of
environment, cultural imperialism (Hill, 2014).
17. Senior management recalls economic crises of the past
“We need to start thinking differently, and we need to do it fast …
to maintain the same level of growth that we saw during the last decade.”
Reassess value proposition for key customer segments to adjust for recession:
~changes in pricing, product formulation, package size, and services
~value-added services such as product installation, maintenance, and repair,
allowing prices to maintain and to protect margins
~multinationals pay in local currency, depreciation of the real advantage to
those reporting both revenues and costs in US dollars
Capitalize on currency depreciation and localize their business operations:
~localiztion (production/suppliers/acquisitions) combates depreciation
~valuations continue to fall offer acquisition opportunities (Alonso, 2015).
18. Opportunities for Brazil reinvest in American companies by
buying distressed properties and businesses. (Zieminski, 2010).
~Brazilian production costs rising as labor costs outpace productivity gains
and industrial electricity prices rise over 50% in 2015.
~Brazil encountering reduced availability of raw materials needed for
production in high-tech industries (Alonso, 2015).
Investments in financial firms and manufacturing allow opportunities for jobs
to return to the US (Zieminski, 2010).
~5.3 million US manufacturing jobs outsourced since 1979, half being within
July 2000 and July 2003”
~US has lost competitive advantage to developed countries with more grads
and higher populations at lower cost of labor (Johnson & Kasarda, 2008).
19. Global Operations Management
Mitigating risks
• Financial, operational, and personnel
Diversity challenges
• Within workplace and supply chain
Cultural challenges
• Understanding societal, business and market hierarchy and motivations
Challenges for market entry
• Government restrictions, cultural opposition, varied skill levels of workers
Operational challenges outside of parent company country
• Quality control of intellectual property, personnel, production, and distribution
20. Contract Negotiation
• Research local laws and practices
• Understand how laws and practices relate to contracts and free trade agreements
• Identify potential issues
• Set timeline for resolution of issues
• Acknowledgement of accountability by all parties involved (Sibbel, 2010).
21. Driven by capitalism
Global finance remains vulnerable
Economic crises ripple through
global economy
Currency valuations and foreign
direct investments have volatile
effect on markets
High-risk countries now considered
sub-prime borrowers
Global economies should look to
serve better good of all involved
(Ferguson, 2009)
Global Finance
22. References
Alonso, P. (2015, November 19). Strategies for succeeding in today’s Brazil. Harvard Business
Review. Retrieved from https://hbr.org
Business Wire. (2015). Brazil’s Start-Ups Attracting Investments from U.S. Investors; Apex-Brasil
Announces Second International Demo Day in San Francisco. Retrieved from
http://www.businesswire.com/news/home
Dretzin, R. & Rushkoff, D. (2010, February 2). Frontline: Digital Nation. Retrieved from
http://www.thirteen.org
Economist. (2008, November 13). Redesigning global finance. The Economist. Retrieved from
http://www.economist.com
Economist. (2015, June27). Learning the lessons of stagnation. The Economist. Retrieved from
http://www.economist.com
Economist. (2015, October 14). Waxing and Waning. The Economist.
Retrieved from http://www.economist.com
Economist. (2015, October 30). Brazilian waxing and waning. The Economist. Retrieved from
http://www.economist.com
Friedman, M. (1980). Free to Choose: Free Trade v. Protectionism. Retrieved from
http://www.youtube.com
Hill, C. (2014). Global Business Today, (8th ed.). New York, NY: McGraw-Hill
Levisohn, B. (2015, November 10). US Steel & AK Steeel: Tariffs are not enough. Barrons.
Retrieved from http://www.barrons.com
23. References
Ferguson, N. (2009), July 8). The Ascent of Money. Retrieved from http://www.pbs.org
Johnson, J., & Kasarda, J. (2008). Jobs on the move implications for U.S. higher education.
Society for College and University Planning, (3)36. Retrieved from
https://brandman.blackboard.com
Lyndon-King, C. (Ed.). (1915). The Annals of the American Academy of Political and Social
Science (Vols. 60-61). Retrieved from https://books.google.com
Minbenders. (2015). Who We Are. Retrieved from http://mindbenders.com
Murphy, M. (2015, September 21). For multinational firms Brazil becomes a pain in the
prudential wallet. Wall Street Journal. Retrieved from http://www.wsj.com
Pieroni, Humberto. (2015, December). Interview: Brazil. Retrieved via email.
Sambo, P. (2015, September 10). Brazil's Real Leads World Declines as Bonds Tumble After S&P
Cut. Retrieved from http://www.bloomberg.com/
Sibbel, L. (2010, April 26). The Labour Provisions in the U.S.-Jordan Free trade Agreement.
Retrieved from http://apps.americanbar.org/
United Nations. (n.d.). Our Common Future: Report of the World Commission on Environment
and Development. Retrieved from http://www.un-documents.net/ocf-03.htm
World Trade Organization. (2011, September 20). The Relationship Between Exchange Rates
and International Trade. Retrieved from http://docs.wto.org
Yoon, A. (2012, October 1). Total Global Losses From Financial Crisis: $15 Trillion.
The Wall Street Journal. Retrieved from http://blogs.wsj.com/economics/
Zieminski, N. (2010, August 11). Analysis: Outsourcing reversed as Brazil companies target U.S.
Reuters. Retrieved from http://www.reuters.com
