Now that we\'ve had a very strong, and rather unique, exposure to the importance
ID: 1223134 • Letter: N
Question
Now that we've had a very strong, and rather unique, exposure to the importance of the macro-environment as we've witnessed dramatic changes for the UK which might have far-reaching consequences for the international business arena, maybe we can look at another country. We learned about this as a BRIC nation, but there is now some uncertainty about the upcoming Olympics.
So, what is happening in Brazil? How attractive is Brazil for international business? Why would or would not companies be interested in Brazil? Would Brazil be a good option (this just serves as a thought experiment, you can imagine that a company had picked Brazil to invest and look at the latest news and look at what that would mean)
What can you learn from for example looking at Brazil and the UK about doing international business?
Explanation / Answer
Strong Points
- A large pool of raw materials and workers at all levels of education, a large domestic market and a diversified economy.
- Export sectors, particularly in industry, offers investment opportunities, as the weak real can make Brazilian products cheaper for foreign buyers.
- Post recent corruption scandals, there may be more interest at local and national levels in cracking down on corruption and crony capitalism, which could be beneficial to investment in the long-term.
Weak Points
- Despite being open to world trade, too many administrative barriers cripple international trade; labour laws are very onerous, comprising substantial costs to foreign companies and keeping a good part of the local business in the informal sector.
- Foreign investments are restricted in many sectors, like insurance, aviation and media.
- Few foreign investors have encountered issues engaging with regulatory agencies, underlining the high level of regulatory risk.
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