Summary

The Brazilian market is one of the world’s emerging markets, which is attracting a large number of investors and companies that wish to increase their revenue.

From the market opportunities’ point of view, the fundamental data are important to gain a first outlook of the GDP‘s distribution in the society. The Brazilian market is aiming to become the 6th largest economy in terms of Gross domestic product with a population of 200 millions people.

According to the GINI coefficient, the analysis has found that in spite of Brazil’s GDP being ranked 73rd, it has one of the widest gap in the world for social inequality.

The graph shows the uneven growth of the Brazilian GDP - the lowest trend is during the break out of the global crisis in 2009 whereas the highest peak is during the 2010 FIFA Cup.

The research illustrates that is possible using the analytical approach of the Global Market Opportunities Assessment and following the six tasks to screen out the potential opportunities and risks of investors and companies which desire to penetrate the Brazilian market (SWOT analysis).

Those companies approaching a new emerging market must be aware of the potential risks, ‘unpredictable events’ (Black Swans), tricky legal and security issues that could rise their production and starting up costs.

Finally, the research shows examples of successful companies in four different market sectors – telecommunications, energy, automotive and retail.

In the detail, we selected five companies belonging to each sector and described strategies they adopted to be flexible to the local consuming taste and market risks.

What we can further see that all had to diversify after they gained entry in the market.

Discussion

During the discussion emered several issues on 3 main topics.

SOCIETY

Large part of the Brazilian population are low-income consumers however tend not to buy the cheapest products and they also spend more on consumer goods than those in wealthier segments.

In the future, the rising and predominant middle class will be educated, aware of market’s brands (due to a higher education and access to multi- forms of information) attracted to value, quality and more sophisticated consumer of non-food items.

The Brazilian aging population will determine also investor’s choices as younger generations have different taste than those belonging to an older society.

Large part of the population still live in a state of semi-illiteracy which lead to massive migration-flow to the country’s biggest cities along the coast and the formation of the slums (favelas), violence, criminality and further social tensions.

ECONOMIC

The regressive taxation is the main fiscal burden for the poorest class, which has to pay the same taxes as the wealthiest class.

From an investor perspective, it also frightens potential companies to penetrate the market, as they would suffer major sunk cost.

Brazilian banks have a very high interest rate, which does not allow the majority of the population to request a mortgage and increase the money flow in the Brazilian economy.

POLITICS

The general lack of faith in the institutions and trustworthy governance has lead to a thick bureaucracy and corruption.

The waste money in the construction of ‘White Elephants’ arose a state of discontent among the population that broke out with the protests occurred during the FIFA World Cup.

Conclusion

The imperative need of a fiscal reform, bureaucracy annihilation and the social inequality curbing and a wiser administration of public money spent on useless infrastructure are a government priority. By doing so, the government corruption and banks’ rate will decrease as well as government faith and social stability will inevitably rise dramatically.

References

Bank of Brazil Economic Indicators, Available at: http://www.bcb.gov.br/?INDICATORS, Last accessed 12/11/14

Carrefour doubling up in Brazil, Available at: http://blogs.ft.com/beyond-brics/2011/05/23/carrefour-doubling-up-in-brazil/, Last accessed 12/11/14

Carrefour stores worldwide, Available at: http://www.carrefour.com/content/carrefour-stores-worldwide, Last accessed 12/11/14

First Carrefour Express, Available at: http://www.carrefour.com/current-news/carrefour-opens-its-first-carrefour-express-brazil, Last accessed 12/11/14

Why Wal-Mart failed in Brazil, Available at, http://www.cbsnews.com/news/why-wal-mart-failed-in-brazil/, Last accessed 12/11/14

Journal - Court, David & Narasimhan, Laxman (2010). Capturing the World's Emerging Middle Class. McKinsey Quarterly, Issue 3: 12-17

Journal- D'Andrea, G., Stengel, E.A., & Goebel-Krstelj, A. (2004). Six Truths about Emerging-Market Consumers. Strategy-Business, 34: 2-12

World Bank Brazil Data, Avaialble at: http://databank.worldbank.org/data/views/reports/chart.aspx, Last accessed 10/11/14

Ease of doing business, Available at: http://www.doingbusiness.org/rankings, Last accessed 10/11/14

Volkswagen History in Brazil, Available at: http://www.dw.de/volkswagen-looks-back-on-six-decades-in-brazil/a-16688436, Last accessed 12/11/14

Journal- Feduzi, A., and Runde, J. (2014) “Uncovering unknown unknowns: Towards a Baconian approach to management decision-making”, Organizational Behavior and Human Decision Processes, 124: 268-283.

Journal- Henisz, Witold J. & Zelner, Bennet A. (2010). The Hidden Risks in Emerging Markets. Harvard Business Review, 88(4): 88-95

Journal- Shapiro. H (1991) Determinants of Firm Entry into the Brazilian Automobile Manufacturing Industry, The Business History Review, Vol. 65, No. 4, The Automobile Industry 876-947

Telefonica History, Available at: http://www.telefonica.com/en/about_telefonica/html/geographic_spread/brasil.shtml, Last accessed 12/11/14