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Brazil PESTEL Analysis

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Presentation about BRAZIL PESTEL Analysis in Class Strategic Plan.

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  • Hi Larissa, I conducted on March 2013 and go back to advise that the analysis attends not decision process. Today, the Brazilin scenery is other and really chaotic. The Brazil will go through by serious adjustment process to new economic and political balance. Thank you for your interest. Regards, Aliomar
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  • Hi Aliomar,
    Can you inform me about the date this PESTEL analysis was conducted by you?
    Regards,
    Larissa
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Brazil PESTEL Analysis

  1. 1. BRAZIL PESTEL AnalysisBy Aliomar Galvao
  2. 2. POLITICS• Rely on monetary policy• Cut interest rate from 12% in August 2011 tocurrent 10.5% (expect to reduce further)• Inflationary present real value of capitalreduces• Detrimental to consumers and thereforedemand for firm’s products• Negative short term outlook for start-up• By Aliomar Galvao
  3. 3. POLITICS• Due to:- Shortages in food supply, increasing domesticdemand, and increases in produces prices are greatlyimpacting inflation;- - But with lower GDP growth, inflation rate isexpected to reduce to 4.32%- Important to note: with domestic consumptionincreasing and oil prices likely to be raised in thefuture, inflation will remain a challenge.• By Aliomar Galvao
  4. 4. POLITICS• Growth Acceleration Programme- USD 240 bn investment plan;- Focuses on energy, logistics, social and urban projects;- Many infrastructures under current construction areto facilitate the hosting of 2014 World Cup and 2016Olympic Games- Mind and long Term: improve the businessenvironment of the country ; ex, the efficiency oftransport; potentially attract even more foreigninvestors.• By Aliomar Galvao
  5. 5. POLITICS• Corruption- Widespread corruption: when business are seekinggovernment contract, and also occurring whenbusiness must deal with government regulatory bodies;- Lack of availability for government contracts turn awaynew entrepreneurs representing a barrier to entry;- New entrants may be forced to commit bribery toobtain contracts.• By Aliomar Galvao
  6. 6. ECONOMICS• Current state of the economy:- GDP USD 2,52 tn (2011)- Exports in 2012 totalled USD 201,9 bn- Main exports: manufactured goods, iron ore, coffee,orange and other agricultural produce- It’s main export partners are China, US and Argentina- Imports in 2010 of USD 181,6 bn- Government forecast growth of 3.5% in 2011,compared with 7.5% in 2010.• By Aliomar Galvao
  7. 7. ECONOMICS• FDI Ranking – Foreign Direct Investment• Ranking give below is based a country’s economicstability, economic risk, business and investmentclimate:Country Score FDI AmountBrazil 8 2009 USD 25.95 bnMalaysia 8.5 2010 USD48.5 bnGermany 9 – 9.5 2011 USD 55 bnUnited Kingdom 9USA 9 – 9.5 • By Aliomar Galvao
  8. 8. ECONOMICS• Composed of the Economy• Services 64%• Agriculture 8%• Industry 28%• By Aliomar Galvao
  9. 9. ECONOMICS• Current Credit Rating“We expect the government to pursue cautionfiscal and monetary policies that, combinedwith the country is growing economicresilience, should moderate the impact ofpotential external shocks and sustain long-term growth prospects.”Standard & Poors• By Aliomar Galvao
  10. 10. SOCIAL Issues• Increasing proportion of middle class willincrease consumer demand:High Class 11%Formal middle class 17%Informal middle class 50%Lower class 22%• By Aliomar Galvao
  11. 11. SOCIAL Issues• Education, current situation:- 20% of population is still illiterate- Fall behind other developing economies(China / Russia)- As a result many company are reluctant toinvest in Brazil’s economy- Free education: would be rectified in longterm.• By Aliomar Galvao
  12. 12. TECHNOLOGY• Spending on R&D is stable around 1% GDP. Ensures theconstant technological progress and advancement• Information Technology:750.000 new IT professional by 2010300.000 of those professional will be required to servethe technology export market.• Constant advancement and improvement un this area.• By Aliomar Galvao
  13. 13. TECHNOLOGY• Intercommunication and Global Communication:More communication between areas of Brazil developtrough the use of internetMore access to information technologies mean moreaccess to other area of the world.• Maturity of technology:Recently becoming up to date with use of technology;Only some specific areas in techonology advancing fastRate of adaption investing US$99• By Aliomar Galvao
  14. 14. TECHNOLOGY• Technological AccessibilityTechnological agreement: Ex, European Union –Agreement for Scientific and TechnologicalCooperative (2004)Patents: highest levels of patents application inSouth America.• By Aliomar Galvao
  15. 15. LEGAL• The Civil Code- Companies become corporate entities withseparate legal personality- Registration with the Trend Board- Creditors generally cannot seize the partner’sassets to pay the company debts.- Most common types of companies:The corporation (S.A.)Limit Liability Quotas Company (Ltda.)• By Aliomar Galvao
  16. 16. LEGAL• Restriction on Foreign InvestmentOnly minority participation in: media, financialinstitution, insurance companies, PublicHealth, and othersRequisition of real state: same condition applyto foreign individual as to national individualsor entities.• By Aliomar Galvao
  17. 17. LEGAL• Taxation• Legislation varies across states and thereforeincreases complexity and compliance costs.Senate suggested a tax reform but yet to takesplace – a merger of taxes33% of GDP is tax• By Aliomar Galvao
  18. 18. LEGAL• RegulationStarting a business takes 120 daysComplete registration requires 18 procedurestaking nearly 119 days, compared withAmerican Latin.• By Aliomar Galvao
  19. 19. ENVIRONMENT• Policies for protecting the environment stoppingdeforestation (in 2010 reduced by 70%) and drasticallyreducing emission.• Compelled industries to initiate eco-friendly combustiontechnique• Signed pacts with developed countries to jointly develop theAmazon basin and alleviate deforestation by unwantedsetters.• Emission from deforestation – Brazil is one of the largestemitters of greenhouse gases; according to the guidelines setout in the Kyoto Protocol.• By Aliomar Galvao
  20. 20. Thank You!

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