...Doing Business in Brazil Transfer Paper: International Management Project: Investing in Real Estate Florent Carayon 1 1 – What is the Business Environment in Brazil? a) Over all idea about the country: The word "Brazil" comes from Brazil wood, a tree that once grew plentifully along the Brazilian coast. * Brazil, officially the Federative Republic of Brazil, is the largest country in both South America and the Latin American region. It is the world's fifth largest country, both by geographical area and by population. • • • • • • • • • • • • Capital: Brasília Dialling code: +55 Currency: Brazilian real President: Dilma Rousseff Official language: Portuguese Life expectancy: 74 Over All Idea about the Country Currency: Brazilian real (BRL, R$) Population Total: 200.4 Million Fiscal year: Calendar year Trade organisations: Unasul, WTO, Mercosur, G-20 and others GDP: $ 2.246 Trillion (2013), rank: 7th GDP growth: 2.3%. b) Business environment: The Federal Republic of Brazil is the fifth largest country in the world in terms of population (196 million) and size. It is the 8th largest economy (by GDP – purchasing power parity) in the world. Already the 8th largest economy in the world, Brazil has undoubtedly arrived at an important crossroads. Not only is its population rising by approximately two million people a year, but the inexorable shift towards mass urbanisation continues unabated. UN estimates predict that by 2015, 33...
Words: 3203 - Pages: 13
...INSTRUCTORS MANUAL: MULTINATIONAL FINANCIAL MANAGEMENT, 9TH ED. CHAPTER 15 SUGGESTED ANSWERS TO CHAPTER 15 QUESTIONS 1. As seen in Exhibit 15.2, Hong Kong stocks are over twice as volatile as U.S. stocks. Does that mean that risk-averse American investors should avoid Hong Kong equities? Explain. ANSWER. No. Although Hong Stock stocks are much more volatile /than U.S. stocks, their systematic component of risk is relatively low because of the low correlation with the U.S. market. The net result is that the systematic risk (beta) of the average Hong Kong stock from a U.S. perspective is only 0.85, compared with a beta of 1.0 for the average U.S. stock. In other words, diversifying into Hong Kong stocks will reduce the riskiness of a portfolio currently concentrated in U.S. stocks. 2. What characteristics of foreign securities lead to diversification benefits for American investors? ANSWER. The two basic characteristics are: a) Many foreign securities are issued by companies that produce goods and services not available from U.S. companies. b) All U.S. companies are more or less subject to the same cyclical economic fluctuations. Foreign securities by contrast involve claims on economies whose cycles are not perfectly in phase with the U.S. economic cycle. Thus, just as movements in different stocks partially offset one another in an all-U.S. portfolio, so also movements in U.S. and non-U.S. stocks cancel out each other somewhat. 3. Will increasing...
Words: 6684 - Pages: 27
...Introduction In a global scenario, the investments are not restricted to one’s own country. People look for opportunities across the globe. The return generated on investments changes from country to country. In a top down approach of investing, investors look for countries with high growth and then look for specific sectors in that country. When we make investments in a foreign company, we first have to evaluate all the parameters. Why Brazil and India? Brazil and India are one of the fastest growing economies in the world. They are now on the heat map for the investors. Also they are now making its mark in the world politically as well as financially. They are a part of BRIC which is one of the most powerful associations. Hence we selected Brazil and India for comparative study. Objective of Study The objective of our study is to look at various factors which an Investor looks at before investing in a country. Here we have analysed specific sectors and the problems in these countries. Structural Issues in Brazil: Since the mid 1990s, Brazil has enjoyed improved economic and financial stability largely owing to a strengthening of its macroeconomic framework. In order to quickly catch up with other countries, sustainable growth is required. To obtain this Brazil has to identify and deal with the structural problems it faces. Structural Issues Basic Logistic Infrastructure Competitive advantages in the modern world do not only depend on the supply of assets accumulated...
Words: 862 - Pages: 4
...Introduction Brazil is the economic leader in South America. It is located in eastern South America bordering the Atlantic Ocean. Almost 85% of South American countries border Brazil. Most of the country is located below the equator and it has a total area of 8,511,965 square kilometers (Brazil Facts) making it the fifth largest country in the world behind the U.S. Brazil has a distinctive topography, in the north and west you can find the Amazon Basin with tropical-like weathers. Brazil is also facing deforestation losing about 52,000 square miles of amazon each year. In the south east of the country you will find its highlands and plateaus. Brazil also has a distinctive climate. The climate is generally classified into five subtypes: equatorial, tropical, semiarid, highland tropical and subtropical but 90% of the country is mostly considered tropical. (Climates of Brazil) Social Economic and Cultural Factors As for being the fifth largest country in the world land wise, Brazil is also the fifth largest country when it comes to population. According to the CIA Brazil’s population in 2012 was over two hundred million. 26.2% of the population in 2011 is between 0-14 years of age, 67% of the population in 2011 is between 15-64 years of age, and 6.7% of the population in 2011 is 65+ years of age.(CIA Fact book) Because Brazil was colonized by the Portuguese the primary language in this country is surprisingly Portuguese! Other slightly common languages you might also hear are...
Words: 1944 - Pages: 8
...Jeff Garcia 10 AM Product/Service of Business: Petrobras is the fourth largest company in the world and the largest in the Southern Hemisphere. It has control over significant oil and energy assets in 18 countries in Africa, North America, South America, Europe and Asia. It carries 11.7 billion barrels of oil making it the fourth biggest oil reserves among petrochemical companies. This is before the recent discoveries in four new locations. Petrobras sponsors a few things: The Ministry of Mines and Energy's National Program for the Oil Products and Natural Gas Use Rationalization. These programs promote the development of a no waste culture in the use of nonrenewable natural resources and encourage efficiency in energy use in many sectors. These programs have developed environmental education actions but they emphasized on the efficiency on transport, residencies, and industries. One of the major companies of Petrobras is Petrobras Transporte S.A. which is the largest oil and gas transportation company of Brazil. History of Business: Petrobras was founded in 1953 by Getúlio Vargas because of the economic crisis created by pro-US Dutra. The way this was fixed was by creating a nationalist policy. This policy caused the usage and increase in the country natural resources and to stray away from foreign dependency. Vargas served as Brazil’s president and later dictator from 1930 to 1945. The company was founded when Vargas was democratically elected...
Words: 1224 - Pages: 5
...order to find a suitable job, and where do you find the information you need? This careers profile provides you with practical advice about returning to work in Brazil to help you make a successful start in your career in the Brazilian labour market. Included are key facts about current trends and jobs in Brazilian industry, advice about seeking employment in Brazil, hints and tips for making a successful application, and helpful information sources. Country profile Benefits Main routes to employment Where will your career take you? Current career prospects Where to find more information Appendix 1: sample CV Country profile In the past two decades Brazil’s economy has seen a growth spurt, with an average growth of GDP of 4.5% between 2004 and 2007. Before the credit crunch which affected the global economy in 2008 – 2009, an estimated average GDP growth for 2008 to 2010 had been predicted at 5%. For 2010, the finance minister of Brazil has predicted the GDP growth to be 5.2%. This shows that the Brazilian economy is still one of the fastest growing economies of the world, together with the other BRIC countries: (Russia, India and China), of which India and China have rapidly expanding economies. KEY FACTS: The Brazilian economy 5.2% (2010) US$10,200 (2009) 95.21 million (2009) 7.3% (2010) Services (67.7%); Industry (25.8%); Agriculture (6.5%) the United States, China, Argentina, the Netherlands, Germany. GDP real growth: GDP...
Words: 4693 - Pages: 19
...predominantly urban, market. The country has the possibility to overcome the situation of exclusion from the digital world for a large portion of its population (approximately 28 million Brazilians have internet access, the highest rate in Latin America), due to an increase in telephone services, particularly in the case of prepaid mobile telephones. In addition, the development of a specific model of digital television makes the Brazilian market a gigantic laboratory for the use of applied technology. Furthermore, Brazil has the largest and most diversified system of science, technology and innovation in Latin America, a result of the accrual of accomplishments in the last 50 years, which include the capacity for oil prospection in deep waters and the ability to build aircrafts. Furthermore, the country invests in space and nuclear programs, as well as in new areas currently at the border of knowledge, such as nanoscience, nanotechnology and biotechnology. Infrastructure and partnerships Within the area of infrastructure, due to the urgency in the social agenda, the demand for modernization is shared between the State and capital from the private sector, in initiatives known as Public-Private Partnerships (PPP). In the Transport sector, the country is improving a multi-modal model and investing in the extension and modernization of passageways integrating airports, ports, railways and waterways. In addition, R$1.3 billion is being invested in 65 airports with the sole intention...
Words: 1445 - Pages: 6
...paper shall also attempt to analyze the business and social culture of Brazil from an American point of view. In addition my purpose is to help achieve the most success when participating in a leadership activity with Pontonet. By having a better grasp of the cultural norms I believe that it will greater help me to have an advantage as a leader for this 3rd party management role I have accepted as part of my responsibilities. It is my understanding through research that Brazil’s business culture is much more stringent than the United States. In this paper it will be my intent to provide analysis and review the current business culture and relations that take place between the U.S. and Brazil. Although there is already a significant oil trading relationship that exists, the question is, can there be any other successful global business dealings between the two countries. In addition as I am in dealings with Brazil on a daily basis and will travel to visit multiple times during the year I am providing perspective and research...
Words: 2714 - Pages: 11
...How did coffee effect on Latin America? Coffee is increasingly becoming a part of Western culture for many it has become a daily routine and coffee shops are now a common social meeting place. Since coffee shops are getting popular and built at every half block in many downtowns, it may not be surprising that coffee has become the second largest traded commodity next to oil (Watson and Achinelli 2008). As the consumer steps up to the register and orders their four-dollar latte, “it is most likely that they will not think of the more than 25 million people around the world who base their livelihoods on its production” (Watson and Achinelli 2008). The producers of these coffee beans are often small-scale farmers who are reliant on faceless consumers, large corporations. Coffee is now one of the world’s most traded goods, it is important for both consumers and producers to understand the impact the production of coffee is having on the farmers at a local level. The western culture of coffee is rapidly expanding. As the globalization of coffee spreads to consumers, corporations are becoming more and more disconnected from the coffee producers. The research will look at specific case studies of how the coffee impacts on Latin America. In addition, I’ll be also looking at the specific effects of economic change of coffee production on farmers and children in Brazil. Through the introduction of the crop into the Caribbean in the early 1700’s, became of economic importance in the mid-1800s...
Words: 1220 - Pages: 5
...(a)Forces that exist in the business and cultural environment of the country: Economic, Socioeconomic, Political, Legal, Financial and Labor. ECONOMIC FORCE: Economic Indicators | 2013 | 2014 | GNI, PPP | 3,163,865,194,242 | 3,212,749,599,240 | GNI/per capita, PPP | 15,490 | 15,590 | GDP | 2,392,094,501,287 | 2,346,118,175,194 | GDP growth (%) | | 0.1 | Inflation, GDP deflation (%) | | 6.9 | Agriculture/ value added (% of GDP) | 5.6 | 5.6 | Industry/ value added (% of GDP) | 24.4 | 23.4 | Service/ value added (% of GDP) | 70.0 | 71.0 | Exports of goods and services (% of GDP) | 12.0 | 11.5 | Imports of goods and services (% of GDP) | 14.4 | 14.3 | GDP Forecast Inflation Forecast Level of development: Developing Top industry: Textile, Cement, Shoes, Chemicals SOCIOECONOMIC FORCE: Socioeconomic indicators | 2013 | 2014 | Total population (million) | 204,259,377 | 206,077,898 | Population growth (%) | | 0.9 | Population density (people per square) | 24.4 | 24.7 | Fertility rate (children born per woman) | 1.8 | 1.79 | Life expectancy (years) | 73.9 | 73.28 | Income level: upper-middle income Below Poverty Lines: 8.5% of population Population distribution: The population is divided mainly in big cities like Sao Paulo ( 19.924 million); Rio de Janeiro (11.96 million); Belo Horizonte (5.487 million); Porto Alegre (3.933 million); Recife (3.733 million); Brasilia (3.813 million) Sex ratio: At birth: 1.05 male(s)/female ...
Words: 1883 - Pages: 8
...Rio's recipe of sun, sea and sam ba is still free. Even Hollywood seems to be on Rio's side: an eponymous animation, w ith its lush depictions of rain forest a nd carni val, is one of the year's highest-grossing fi lms. Rio's mayor, Eduardo Paes, has big plans for capitalising on the city's magic moment. He has set up a business-developm ent agency, Rio Negocios, to ma rket the city, h elp businesspeop le find inve stm ent opportunities, and advise on pap erwork and tax breaks. It concentrates on sec to rs where it reckons Rio has an edge: ~~ T AST year Paulo Rezende, a Brazilian privL ate-equity investor, and two partners decided to set up a fund investing in suppliers to oil a nd gas companies. Although this industry is centred on Rio de Janeiro, Brazil's second-larges t city, with its huge offshore oilfields- and fabu lous beache s, dramatic scen ery and outdoor lifestylethey inste ad established the Brasil oil and Gas Fund 430km (270 miles) away, in Sao Paulo's conc rete sprawl. Even though it means flying to Rio on ce or twice a week, Mr Rezende, like many othe r businesspeople, decided that Sao Paulo 's economic heft outweighed Rio's charms. But the choice...
Words: 801 - Pages: 4
...Brazil: An Investor’s Paradise A Proposal on Why Investors Should Be Considering Brazil Introduction Currently, there are four countries that are growing at rates much faster than the average, and will soon be poised to be major players in the world’s economy. Those countries are referred to as BRIC, which stands for Brazil, Russia, India, and China. There is much debate as to which will emerge on top as the dominant world force; however investors are starting to make their predictions clear. Every day, investors are pumping money into the Brazilian economy for a myriad of reasons. But before one can understand those reasons, it is essential to understand Brazil’s background. Part I: Country Background Brazil was originally colonized by Portugal during the early 1500’s. This is evident today, as the official language of Brazil is Portuguese. It is estimated to be approximately 8,514,877 square kilometers, and have a population of 199,321,413, making it the largest country in South America, and the fifth largest in the world in terms of both area and population. (https://international.ipums.org/international/enum_materials.shtml) The political system used is a Federal Republic, and the Head of State is Dilma Rousseff. (https://www.cia.gov/library/publications/the-world-factbook/geos/br.html) While there are several political parties in Brazil, none of them are technically in power. The strongest of the group though is the Worker’s Party. The current type of law practiced...
Words: 1642 - Pages: 7
...1.0 Introduction to Brazil Tourism Industry In Brazil, tourism is a key to the economy development of several regions of the country. This statement was further supported by Slob B. & Wilde J. (2006), in their published journal entitled ‘Tourism and Sustainability in Brazil’, regardless of anywhere in the world, tourism, indeed; is the fastest growing industry and it contributes the world economy with a gross output of over US$7 trillion, employing 11% of globe’s workforce, forming 11.5% of global GDP. While in Brazil, White (2006) found that the industry contributes 3.2% of the total country revenue in year 2005. According to World Tourism Organization (WTO), due to the devaluation of American Dollar against the Brazilian Real has made a favorable trend in International tourist arrival to Brazil to grow dramatically in 2007 and in early 2008. In spite of this, statistic in Table 1 shows that revenue had risen from USD 4.3 billion in 2006 to USD 5.7 billion in 2008. Table 1 Brazil International Tourism Arrivals 1995-2011 Year | International tourist arrivals (x1000) | Annual growth (%) | Total revenue (millions USD) | Annual growth (%) | 1995 | 1,991 | - | 972 | - | 2000 | 5,313 | - | 1,810 | - | 2003 | 4,133 | - | 2,479 | - | 2004 | 4,794 | 16.0 | 3,222 | 30.0 | 2005 | 5,358 | 11.8 | 3,861 | 19.8 | 2006 | 5,019 | -6.3 | 4,316 | 1.1 | 2007 | 5,025 | 0.1 | 4,953 | 14.8 | 2008 | 5,050 | 0.5 | 5,780 | 16.7 | 2009 | 4,802 | -4.9 | 5,305 | -8...
Words: 5336 - Pages: 22
...with fluctuating prices of gasoline at the pump. Why does this happen? There are many factors that go into the price of gasoline. A quick and easy breakdown of what makes up the gasoline price (Shipp,2010) is the cost of crude oil is about 50-70%, Federal and state taxes about 19-25%, reefing costs and profits about 20%, and distribution and marketing costs about 10-12%. (Rex, 2010) Another factor is the clean air act in metro areas due to the congestion so prices in these areas are a bit more as refineries are forced to upgrade their operations to sell a blend that includes ingredients to support cleaner fuel as required. Natural disasters do not help like hurricane Katrina ripped through the Gulf of Mexico and the southern states wiping out refineries and drilling operations making it fewer outfits for gasoline and with the demand remaining constant gas prices soared during that time. I have noticed that during the summer time gasoline prices rises nearly due to the demand increasing around 5% due to more people traveling on vacations (increase in demand). (Forbes, 2012) Raw material price is a major contributing factor to increasing of gas prices as (Oil Producing and Exporting Countries) OPEC sets the price for the crude oil making domestic oil suppliers keep less inventories so the refineries are not ready and are in short supply (shortage) when demand peaks. (Chevron, 2011) While the United States have seen gas prices double and triple in the last 5-10 years we pay...
Words: 1069 - Pages: 5
...Executive Summary Investing in Brazil, as with any country, entails exposure to a variety of political, social, economic, and other risks, but also entails potential benefits for multinationals corporations. Political Risk- Brazil has been a stable democracy for 25 years. Despite some unique risk as corruption, Brazil has been rating overall medium risk for dynamic risks, governance framework, political violence and business and macroeconomic environment. Financial Markets in the country & Sources of Capital for the multinational corporation Brazil is now the eighth-largest economy in the world and will continue to seek a growing international role. The country has also been considered a confident player on the world stage and also seat temporary at the UN Security Council. The Brazilian Bovespa index of the Sao Paulo Stock Exchange has been doing very well with several shares from different sectors which are providing steady growth to the Bovespa index. There are many financial service as the private multi-purpose commercial banks, universal banks, play the leading intermediary role in the country’s financial sector. Public financial institutions are also among the leading intermediaries, promoting rural economic activity and agricultural production through the provision of subsidized loans. Tax Structure & Investment Incentives for which foreign based companies are eligible Brazil’s Tax Laws and system, Brazil's corporate tax rate for 2010 around 34%...
Words: 2988 - Pages: 12
