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Brazil country and PESTLE analysis

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  1. 1. Brazil’s History • In 1500, Portuguese explorer Pedro Alvaras Cabral was the first person to discover Brazil. • It remained a colony of Portugal until September 7, 1822. Brazil declared it’s independence from Portugal. • Brazil was of little interest to Portugal because of the profitable trade with India, China, and Indonesia. • The land was given to Portuguese noblemen who were followers of the crown. • The Dutch attempted invading Brazil and for a long period inhabited a large portion of the coast. After constantly being under siege, the Dutch finally withdrew.
  2. 2. Brazil’s History • Slavery fueled the Brazilian economy and was essential in their sugar cane production and mining. • 35% of all slaves exported in the Atlantic slave trade were brought to Brazil. • After becoming an independent nation, Brazil elected it’s first president Deodoro da Fonseca. • Brazil became a military dictatorship in 1964. • It wasn’t until 1985 that Brazil returned to civilian rule and elected Tancredo Neves as president who died and was replaced by vice president Jose Sarney.
  3. 3. Geography • Brazil is the largest country in South America and is over 3 million square miles in size. • The capital of Brazil is Brasilia and contains other large well known states including Rio de Janero, San Paulo, and Salvador. • Climates in Brazil vary. There are the dense and tropical Amazon basins in the northern region, the semi arid coastline, large grassland areas, and dense wetlands with extensive river systems.
  4. 4. • The Amazon River is the largest river system in Brazil. • The river extends 2,243 miles and descends only 100 meters before letting out. • Agriculture productivity is usually pretty poor because of high acidity and aluminum levels in the soil. • 90% of the country is in tropical zone • The country is divided into 5 sections with different ecosystems. This includes the North, Northeast, South, Southea st, and central west.
  5. 5. The People of Brazil • Approximately 190 million people inhabit Brazil. • Most of the people live in the Southeastern and Northeastern regions. • Most inhabitants are descendants of the indigenous people, Portuguese settlers, or African slaves. • Primary language of Brazilian is Portuguese. • Brazil is a highly diverse country made up of multiple ethnic backgrounds. • 70% of all immigrants who came to Brazil were either Portuguese or Italian. • White Brazilian (brancos) make up 48% of the population, blacks (negros) is 7%, brown or mixed (pardos) makes up 44%, asian (amarelos) is 1%, and the Amerindian (indios) makes up <1% of the population.
  6. 6. Culture • The Portuguese introduced the language, catholic religion, and architectural styles. • Carnival- A large festival held 46 days before Easter which celebrates the farewell to bad things prior to Christ’s death and resurrection. • Carnival is the largest celebrated holiday in the country and the festivities vary from region to region. • Football (soccer) is the most popular sport in Brazil. They have a record of 5 word cup titles. • Brazilian folklore which includes dances, stories, legends and religious rituals demonstrates the countries rich and diverse culture. The folklore can be depicted in the countries Carnival celebration. • The music of Brazil is internationally respected and it conveys a nation rich in art and culture. Some music styles that Brazil has mad famous include Samba (Afrobahian rhythms- largely seen during Carnival), Bossa Nova (jazzy rock similar to Samba), and Choro (classical/ballroom).
  8. 8. POLITICS • Rely on monetary policy • Cut interest rate from 12% in August 2011 to current 10.5% (expect to reduce further) • Inflationary present real value of capital reduces • Detrimental to consumers and therefore demand for firm’s products • Negative short term outlook for start-up
  9. 9. POLITICS • Due to: - Shortages in food supply, increasing domestic demand, and increases in produces prices are greatly impacting inflation; - But with lower GDP growth, inflation rate is expected to reduce to 4.32% - Important to note: with domestic consumption increasing and oil prices likely to be raised in the future, inflation will remain a challenge.
  10. 10. POLITICS • Growth Acceleration Programme - USD 240 bn investment plan; Focuses on energy, logistics, social and urban projects; Many infrastructures under current construction are to facilitate the hosting of 2014 World Cup and 2016 Olympic Games - Mind and long Term: improve the business environment of the country ; ex, the efficiency of transport; potentially attract even more foreign investors.
  11. 11. POLITICS Corruption -Widespread corruption: when business are seeking government contract, and also occurring when business must deal with government regulatory bodies; -Lack of availability for government contracts turn away new entrepreneurs representing a barrier to entry; -New entrants may be forced to commit bribery to obtain contracts.
  12. 12. 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.
  13. 13. ECONOMICS • FDI Ranking – Foreign Direct Investment • Ranking give below is based a country’s economic stability, economic risk, business and investment climate: Country Score FDI Amount Brazil 8 2009 USD 25.95 bn Malaysia 8.5 2010 USD 48.5 bn Germany 9 – 9.5 2011 USD 55 bn United Kingdom 9
  14. 14. ECONOMICS • Composed of the Economy • Services • Agriculture • Industry 64% 8% 28%
  15. 15. ECONOMICS • Current Credit Rating “We expect the government to pursue caution fiscal and monetary policies that, combined with the country is growing economic resilience, should moderate the impact of potential external shocks and sustain long-term growth prospects.” Standard & Poors
  16. 16. SOCIAL ISSUES • Increasing proportion of middle class will increase consumer demand: High Class 11% Formal middle class 17% Informal middle class 50% Lower class 22%
  17. 17. 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 to invest in Brazil’s economy - Free education: would be rectified in long term.
  18. 18. TECHNOLOGY • Spending on R&D is stable around 1% GDP. Ensures the constant technological progress and advancement • Information Technology: 750.000 new IT professional by 2010 300.000 of those professional will be required to serve the technology export market. • Constant advancement and improvement un this area.
  19. 19. TECHNOLOGY • Intercommunication and Global Communication: More communication between areas of Brazil develop trough the use of internet More access to information technologies mean more access 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 fast Rate of adaption investing US$99
  20. 20. TECHNOLOGY • Technological Accessibility Technological agreement: Ex, European Union – Agreement for Scientific and Technological Cooperative (2004) Patents: highest levels of patents application in South America.
  21. 21. ENVIRONMENT • Policies for protecting the environment stopping deforestation (in 2010 reduced by 70%) and drastically reducing emission. • Compelled industries to initiate eco-friendly combustion technique • Signed pacts with developed countries to jointly develop the Amazon basin and alleviate deforestation by unwanted setters. • Emission from deforestation – Brazil is one of the largest emitters of greenhouse gases; according to the guidelines set out in the Kyoto Protocol.
  22. 22. LEGAL • The Civil Code - Companies become corporate entities with separate legal personality - - Registration with the Trend Board Creditors generally cannot seize the partner’s assets to pay the company debts. - Most common types of companies: The corporation (S.A.) Limit Liability Quotas Company (Ltda.)
  23. 23. LEGAL • Restriction on Foreign Investment Only minority participation in: media, financial institution, insurance companies, Public Health, and others Requisition of real state: same condition apply to foreign individual as to national individuals or entities.
  24. 24. LEGAL • Taxation • Legislation varies across states and therefore increases complexity and compliance costs. Senate suggested a tax reform but yet to takes place – a merger of taxes 33% of GDP is tax
  25. 25. LEGAL • Regulation Starting a business takes 120 days Complete registration requires 18 procedures taking nearly 119 days, compared with American Latin.
  26. 26. THANK YOU! Presented by: Sheryl Mehra Div-C