Answers and analysis to : 1. Is the prevailing international context (economic and social) beneficial or detrimental to BB’s foreign expansion plans? Justify your position. 2. BB has already internationalized to some extent. Was its internationalization strategy “emergent” or “deliberate?” Justify your response. 3. Let’s suppose that your team decides that the prevailing context is conducive to foreign expansion. Why should BB internationalize? Is foreign expansion in BB’s best interest…or in the best interest of Brazil (it is state owned)? Where should it expand (regionally)? What criteria should BB use in making decisions about where to expand internationally? 4. Choose two countries where you feel that foreign expansion would be successful and present the advantages and disadvantages of each. Recommend one of the two and justify. 5. In closing, BB has experienced a historical cycle of foreign expansion and contraction. How might it avoid the cycle in the future and how would avoiding it ultimately benefit BB and Brazil?

1. Alpha Omega Presents
A CASE STUDY ON BANCO DO BRASIL
SABAH HUSSAIN
HARSH KAGDA
ABISHEK MUNSHI
TOM YU

2. Prevailing International Context
Beneficial

3. Economic and Social Context
Economic Context:
◦ Trade Export – 340%, exceeding US$ 256 billion
◦ Brazilian Investment in Other Countries – 308%, US$ 203 billion
◦ Expenditure By Brazilian Travelers – 350%, US$ 25 billion
◦ International Reserve – 636%, US$ 352 billion
Social Context:
◦ Middle Class – 61.5%, 105.5 million individuals, since 2003 to 2011
◦ Stock of Capital Abroad – 43%, US$ 202 billion, since 2007 to 2011
◦ Residents Abroad – 3 million, as of 2011

4. Internationalization Strategy
Deliberate

5. Internationalization Strategy
1918 - Opened a branch in Argentina to support Brazil’s growing
trade
1944 - Opened branches in Italy to make payments to the Brazilian
troops during World War II
1993 - Opened a sub-branch in Japan to serve the immigrated
Brazilians in search of jobs
2007-11 – Strengthened its foreign expansion plan through
partnership and acquisitions

6. Why Internationalize?
Survival

7. Why Internationalize?
Emerging Brazil’s economy
◦ Take advantage of Brazil’s international momentum, as reflected in its
higher participation in international trade, increased foreign investments
by Brazilian multinationals, and escalating travel and spending by Brazilian
tourists abroad.
Follow the client approach - Defensive expansion approach
◦ Motivated by maintaining the existing client base
Autonomous international expansion
◦ Take advantage of their presence in foreign markets to learn about the
host country business environment, gain experience and identify new
business opportunities

8. Why Internationalize?
Debit Card: 8% of Indian adults, 41% of Brazilian and Chinese and 37% of Russian.
Bank Loans: In Nepal, 39% , while in Indonesia only 18%.
Formal Bank Account: Globally, 1 in 2 adults—some 2.5 billion people—does not
have an account.
Access to Financial Services & Credit: 200 million micro to medium enterprises in
developing economies lack access.
Bank Account : Only about 3 in 1000 adults in Central African Republic.
Opportunities Globally

9. Foreign Expansion
BB’s or Brazil’s interest
International expansion is focused on three main fronts:
◦ The existence of Brazilian communities abroad
◦ Transnational spread of Brazilian companies
◦ The increase in commercial interchange between Brazil and the rest of the
world.
Both
Benefited

10. CAGE Distance Analysis

11. Latin America Africa
Adding Volume Through Pan-Latin America Strategy With growing middle class
Differentiate With international tradition and reliability By targeting Latin American
population
Decrease Cost With geographic proximity With lower labor/material costs
Improve Industry
Attractiveness
by diversifying its service portfolio across
South America
By establish a Pan-Africa network
for Afro-Latin Americans
Neutralize Risk With lower cage distance By partnership/acquisition and
relationship building with African
Union
Generate
Knowledge
By utilizing existing competencies in Brazil and
adapt to other Latin American countries
Adapt its acquisition knowledge to
African culture and learn
ADDING Analysis

12. Real GDP per capita growth,
2010 – 2030 (%)

13. Entry Strategy into Africa
Brown-Field Expansion
Connect Latin American Businesses with
African Partners
Support Existing and New Latin American
Investment in Expand
Access for Latin American Businesses to
Finance Their Exports to Africa
Reduce Barriers to Trade and Investment
in Africa

14. Market
fluctuations
Need to
diversify
outside of Brazil
Avoid the Cycle

15. Internationalization
◦ Before considering new market, establish rates of
fixed entry and exit costs
◦ Greenfield
◦ Brownfield
◦ These costs dictate a minimum revenue before entry
◦ After meeting revenue goals, can exit to pursue
markets at different inflection points.