Beruflich Dokumente
Kultur Dokumente
Table of Contents
PART 1 Main Report 1. Executive Summary..2 1.1 Introduction..4 1.2 Background.4 2 Aims and Objectives6 2.1 Aims..6 2.2 Objectives7 3 Literature Review..8 3.1Reuters- Study of Skagen.8 3.2 Renault-Nissan Brazil Expansion11 3.3 Terre Marks Expansion of Data Centres13 3.4 General Motors Brazilian Expansions.15 3.5 Siemens Brazil Portfolio Expansion16 4 Relevant Case Studies.19 4.1 Capgemini in Brazil.19 4.2 Alliance Data1 Loyalty One Expand in Brazil..21 5 Conclusion..23 5.1 Analysing the case studies used to examine the Brazilian market23 5.2 Evaluation of Discussions and Findings....28 5.3 Resultant and influence on other Investors in Similar Business Model...30 6 Recommendations....32 6.1 A Joint Venture in Brazil32 6.2 Initiating a Joint Venture in Brazil....33 6.3 Benefits to the company with joint ventures..35 7 References.36
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1 Executive Summary
Multinational and enterprise organisations tackle many difficulties in expansion when planning to expand overseas. International expansion is affected by multiple factors like market, capital, environment, production and resource availability in the respective country planned for expansion. Many a times the multinational companies find it hard to expand overseas because lack of capital and resource it is only the large scale organisations which make it through without any hustle. Expansion mode and the planned strategy may vary for the business model; the expansion may range from the export entry model to the investment entry model, amongst both the export model is with least risk model for a new organisation to enter foreign market, in such model the company is not bonded to any limitations nor is in under any contract to abide the market rules and protocols followed in the host country. In such model the production cost is saved as the entities are produced at home or the root country and the final product or services are exported abroad. Along with active participation In the foreign market also increases the risk. As most of the times these Cross Border Merger and Acquisitions require to invest a large sum of money and high active participation In the market therefore the market involvement is directly proportional to risk. Other risks may include the cross country variances like culture, political and economic environment, national laws and jurisdictions, tax rules. Still the figures of the foreign business expansion have been increased at a constant rate in the past. As the value of the total overseas merger acquisitions boomed from USD 200 billion in 2000 to USD 1637 billion in 2007 (Sudarsanam 2010), the high increase in the foreign business activities through the business owners in the past have shown that that the overseas expansion for any company is helpful and profitable to its economy. This report is a reflection of a business expansion of a UK based company in Latin America which will be either a success or a failure in its process will be discussed in the thesis. Also the effects of the merger and acquisitions on the revenue and economy of the company will be discussed in detail in the thesis. Still the wealth effects of the foreign expansion are either positive or negative which are still a question for many business scholars as the negative effects on economic balance of the company may be cited from (Andrade et al., 2001; Mulherin and Boone, 2000; Franks et al., 1991 and Walker, 2000), and the positive effects may be seen from (Asquith et al., 1983; Loderer and Martin, 1990; Schliemann, 2004;
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The sustainability and rise in the prices of commodities have raised substantially which hs resulted in the change and rise of GDP of Brazil over time which could be clearly seen from the graph shown below
(Source:http://www.forexblog.org/2010/05/brazil-is-booming-but-real-is-in-trouble.html) Fig 1: Brazil GDP growth rate This report focuses on the Eurozone crisis which led to the foreign investment or expansion of many business owners along with the business expansion of Marconi
Telecommunications which is a UK London based company planning expansion to Brazil. The report will highlight complete strategy for expansion along with the challenges the company might have to face during the process change. The factors which will be discussed in the report will be business entry model, budget, and scope of the company in this expansion. Also the success or the failure factors are also discussed in this report using the macroeconomic factors because these are useful in explaining the wealth effects of the company.
1.1 Introduction
Marconi Telecommunications a subsidiary of Marconi is a London based company providing solutions to the business process on the basis of IT requirements outsourcing business 3|Page
process and work and also the services in IT telecom department. The company also provides the network services to the methodologies like that of CISCO and Net link which provide products, devices and services in IT to other multinational corporations. This report will highlight the plans of Marconi to expand its business in Brazil; this report will mainly focus on the entry methodology which would be the best for the company to take an action into settling up its business in the country. also this report will highlighting the expansion of the companies in the past into Brazil and their outcome along with their impact on the market and any influence on our company. This report also redefines the benefits that the company might get along with the study description in the literature review of the case studies of other companies and their strategies which have been used in making their plan success and the following influence on the market.
1.2 Background
The pace of growth in the Brazil is an issue of debate In the foreign market all around the world, its rate of progression and the development that is going on in the country is being counted and analysed by most of the industrial powers and multinational corporates. This report will focus in finding out the efficient approach for expanding business into Brazil. The opportunities for the Brazil in hosting some of the major and worlds most favourite sporting events is the biggest that the nation has at this point of time and is investing a huge amount of money on its infrastructure development and globalisation of the country. The status of Brazils debt crisis in the BRIC group of countries is shown below in form of a graph
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Fig 2: Debt Crisis Moreover, this report will deface the economic crisis which stroked European economy and the business. This report will bring forward the boom in the economy of Latin America relatively Brazil which is amongst the fastest growing economies of the world and is investing heavily in its infrastructure and globalisation for the next 2016 Olympic games and the FIFA world cup in 2014. This report highlights the scope of investing in such a developing and prosperous nation along with the abundance of natural resources available in the country with the benefit to my company expansion. As conclusion the report will highlight the success factor of the expansion through the mode of entry chosen for expansion and how successful or unsuccessful the company would be in Brazil. The report will also show the share market effects from the entry of the company. The report also provides comparative review of the different market entry options for the company and their expected outcomes possible.
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This report will contrast the scope available in Brazil for the foreign investors and traders to invest or export their products with ease in the country and the imports that Brazil does from the rest of the world. The exposure of the companys entry will be limited to the Brazilian market and not the whole Latin American markets as the company itself a small scale company. Therefore this report will contrast only the Brazilian economy and not the whole Latin American Region however the complete region In a state of booming economy but as limitations of the project this report will be limited to the Brazilian market. The main aim of the project which is to find an efficient methodology of entry of the company in the Brazilian market which is from amongst the FDI, Joint Venture, Merger and Acquisitions, Franchise, contractual entry or just an export entry will be concluded from the assessment of the case studies of the similar business models from the different parts of the world which have invested in Brazil and have succeeded in reaching their goals and expectations.
2.2 Objectives
The objective that would be used in finding the efficient methodology for the entry In the Brazilian market would be following: Information gathering about the business models that have invested in Brazil In the past from the other parts of the world and analysing their success ratio. Research on the Brazilian market the rules and the strategies that are carried out in the market without the law and accounting policies. Critical examination of the business expansions in the past years and the business that have official plans to expand to Brazil of different models and analysing their importance and any affects if there on the economy of Brazil and ultimately on the expansion of our company. Research on the relevant companies that have expanded companies of similar type, their business process, expansion strategies and Critical consideration of the political and cultural differences between the two environments of the company along the methodology most popular in the region for carrying out the business in the country with most profitable ratio.
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Feasibility of the resources available in a certain entry model along with the government policies and ease of law and tax options best for the company. Providing a research of case studies of other companies that have expanded their business over to Brazil from several distinct parts of the world. Providing conclusions for the company wherever possible along with the relevant literature as supportive text. Offering recommendation for the company to move and in taking the first step of expansion of the companys profit. Illustrating with the help of a figure where statistics or report needs to be shown for bringing the past experiences of the companies that have invested in Brazil. Finally, providing the company with a feasible and efficient way to enter Brazil as a respectful organisation unbiased of the social differences between the environments of the working of the company and proposing market strategies that will help increase productivity and revenue generation of the company.
3 Literature Review
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is scaring the investors to come to Brazil and invest in business. Falnes continued with saying that they are the not the amongst who have been affected by the sudden changes of the policies by the Brazilian government but many others also have been affected from the same over a period of time because of the Rousseff amendments in the in the business policies which is meant for the betterment of the country but as a resultant the economy along with the major stalk holder companies of the nation are suffering a loss so as the government and the growing economy. According to the report released on 27th of October in Sao Paulo through Reuters the confusion between the companies and the government resulting the loss of the stakeholders of the country in the form of heavy tax obligations to the companies. Also the reported survey by Reuters predicted that the Investment in the Brazilian economy have been declined by a one fifth straight quarter in the session of July to September resulting the economy to a foreign expansion of just 0.6 per cent during this period which is almost the half of the statistic predicted by the financial market experts. This drop down is even expected to fall down during the next couple of months in this year and the debt rising of the Brazilian economy can be clearly seen from the graph shown below,
(Source: Thomson Reuters) Fig 3: Brazils GDP growth Brazil is considered as the biggest economy in the Latin America which was expected to be accountable for the one quarter of the revenue generation for the whole region itself is 8|Page
recorded to be growing at the rate of 1.3% this year which is the worst performance ever shown by this economy amongst the BRICS group of emerging market holders. At a glance even the average developing nations and the economies are expected to grow faster and a comparatively more GDP than the Brazilian economy. So as concluding, the government thus Rousseff and their financial team do have only one agenda to speak about which is the global economic crisis, thus stating the country which has been the topic off the discussion for this country is now the agenda which the country is trying to eradicate at the top priority. Also a misplaced government activism is stated as a reason for the decline of the foreign investment in the country, also the president states that the recovery for the countrys state for preparing for the global outrage is on its way for the2014 FIFA games and the 2016 Olympic games and thus all these law implications and the amendments are the resultant are the effects of the investment in the infrastructure development of the nation. Thus from analysing the report and the discussion, as according to the report been published by Reuters Brazilian economy which was growing at the rate of 7.3% GDP rate two years ago for the global reformation and the preparation of the games is now experiencing a major outback leaning to a GDP rate of only 1.3% this year which is a major decline in the countrys economic status, also the report summarises that the continues reforms and policies by the President Rousseff in the law and financial matters of the country is decreasing the business expansion and foreign investment. Statically this has been recorded as only 0.6% in the spring session of the political assembly in 2012 and has been expected to even decline in the coming months till the end of this year.
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The company Marconi Telecommunications has a huge scope in the countrys economy because the infrastructure development of the country can provide more work and involvement to the company or outsourcing the communication role in the companys favour.
The main finding which is analysed from this report by the Reuters is that the more the involvement in the countrys economy the more the expectations of the loss are because as per the scenario of the nation before the games and the global outrage is such that the GDP is declining along with the foreign investments but once the games date gets closer the countrys economy will start booming and so for stakeholders, but right after finishing of the games the country could suffer a debt crisis which it has not seen yet because of the excessive investment in the infrastructure and the loan from the world bank, and thus all the relative stakeholders might suffer a great loss because of the direct exposure to the business and relativity in the economy.
Therefore it concludes that Marconi Telecommunications should not directly invest in the country for starting the business but along with any merger so as to minimize the risks and its factors.
state and thus the country. The company announced to make an investment of R$2.6 Billion to begin with the production and manufacturing and later of R$1.5 Billion which will be used to increase the current production of the cars in the country from the current rate as most of the models of Nissan are imported from the parts of Mexico and only four of the models are manufactured within the country this expansion will outrage the production of the cars in the region. In the case above of the Reuters in which we saw the negative impact on the company and the economic condition in the region led to many outbreaks for the country and the sudden change of the policies in the region which was creating a difficult situation for the foreign investors to come to Brazil. The government made certain changes in its policies in late2011 on tax implication for increasing the productivity in manufacturing and productivity in car. The expansion will also be benefited to other investors in a manner that it will increase the scope of involvement and create more opportunities for other business models to be a part of such a great business setup. Also as stated by the company that the expansion will not only decrease the number of imports but will also lessen the cost of the car comparatively from the ones which are produced outside Mexico or are imported in the country. The
manufacturing expansion of Renault-Nissan has already inspired the car giants of China as JAC Motors of China has also announced the expansion of their plant in the Rio de Janeiro in the year 2013 as a result of the feasibility in the law and the policies of the government because of the expansion of such a massive company in the country which will create most many opportunities for different types of business models and the affected stakeholders. The CEO of the company Mr Ghosn has many expectations from the countrys booming economy in the following years as for the development in infrastructure. The Ghosn expects the Brazilian car market to be booming at a very good rate which is a good option for the country and thinks that the Brazilian car market will overtake the Japanese car market in the coming years and will be coming out to be the third largest automobile market after U.S and China. The company has also announced its future plans to harness the growth of the Brazilian market in this outrage of the country until 2016 as Renault has announced to launch 13 new models.
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countrys economy and thus all the relative businesses may be affected as a result the affects that this expansion may be the following: This expansion will involve very big investment in the region that will increase the opportunities in the region and all the relative business models will be affected through this expansion as far as the communication business model are concerned as like the company Marconi Telecommunications which is a business model which deals with the communications infrastructures and telecom business process outsourcing. Such expansion will increase the opportunities in the region and also will attract other foreign investors to come to Brazil as an example it has already done through announcement of the Chinese car manufacturing company JAC motors to set up a plant in Brazil, thus opening more barriers for the opportunities in the country. Through analysing of the report of expansion of a manufacturing company it is clear that that the country is at a verge of booming up its economy again and will set up positive impacts on the markets of the rest of the world. Also this will increase the chances of the outsourcing companies like one ours is to be involve more in the process of booming of the economy and will set up the links for the global outrage of development in Brazil for the next couple of years until 2016 as preparing for the FIFA and Olympic games.
would be hosting in the coming years as FIFA in 2014 and Olympics in 2016. Thus this expansion will make the region abundant with the largest multicentre data centre yet to be existing in the region. Also as part of the expansion the company has already taken over the data facility of185,000 sq.foot of space with an addition of 15,000 raised floor space which will result in making an availability to atleast 100,000 servers in the region far more than any recorded yet in the surroundings. The company announces its this operation to be a part of its strategy to provide improvements and standardisation in the IT services around the world and also through its 50 connected and distinctly located data centres around the world. Also the company states that this expansion will provide the local users in Sao Paulo with a secure, reliable hosting environment for their applications as stated by the General manager of Brazilian Terremark operations Mr Hugo Zanon. The expanded data centre in Sao Paulo is composed and built with multiple redundancies to ensure the highest possible International standard available for the Data Centres efficient working and reliability. Even the power supply for the company is through two different power stations and is redundant to one over the other to avoid a single point of failure and ensuring the power required to walk through with the demand and supply of the connectivity. The company is also making efforts in advancing its standard in IT on a global verge as the head of the Latin American Verizons Terremark operation head Rodolfo Garcia stated that the company is dedicated in bringing the best and latest technology available in securing the enterprise models such as Cloud Computing, IT Cloud security solutions to patch up with the demands of the worldwide and international companies in the fast growing economies. The largest network carriers of the entire Latin American region are located in the Terremarks Sao Paulo exchange point. This data centre delivers the internet exchange facility for other neighbouring states as well like in Columbia and the Dominician Republic. This company would be playing a major part amongst the contractors of the games which the Brazilian republic is hosting in the next recent years.
summarizing the report of expansion of Terremark following conclusion could be taken out from the market as: The business model and the scenario of the company as discussed and out company is somewhat similar, and from the fact that Terremark has invested such a huge amount in the infrastructure shows that the law implications are not very tough in the country and the IT industries have a solid boom and are going to be in demand in the next couple of coming years. The expansion also saw the benefits for the neighbouring regions such as Columbia and Dominican Republic through the investments that the company has made in the Sao Paulo data centre thus the region is ready for the growth and the globalisation with the rest of the parts of the world along with attracting the business owners from the surrounding regions for the investment in Brazil. With the increase in such type of companies in the market the opportunity for the outsourcing of the work increases thus making a chance for the company to grow and show its colours in the region as there would be more demand for the customer support services and the backend offices work that would might not be carried forward by the same company. Therefore, from this report scenario of the expansion of the IT company in the region highlights the opportunity available to such companies in the future and also it determine the business entry model which would be efficient for our company to enter Brazilian market.
by the BBC correspondent Gary Duffy from Sao Paulo. Also Brazilian motor industry has seen many new inventions in the models in the recent years which made it an attractive spot for the manufacturing industries investment worldwide. The next couple of years until 2016 will see the major investments in the manufacturing industry sector in the country because of the tax break policy by Rousseff the President of Brazilian economy.
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Brazil is hosting the FIFA world cup in 2014 and the summer Olympic Games in 2016 therefore for the preparation of the games there is an outrage in the country as the government is investing heavily in the infrastructure development within the country.
Fig 4: Public sector Debt Peter Y. Solmssen, a member of the managing board of Siemens AG stated at the press conference in 2011 that their Siemens have been operational in business in Brazil for over a century and this is the time when the company has complete faith in the economy that it is at a verge of great growth and rise in business revenue generation because of the development in the infrastructure and the globalisation of the country. Brazil is also set to see the major sporting events which are considered to be the most watched and as a token of honour to be hosting one of those games which Brazil is going to host in the next recent years. This is considered to be the most promising factor for the investment of the foreign business holders in the country. The CEO of the Siemens Corporation Paulo Stark continued with stating of maximising its revenue generation in Brazil to be almost double by the end of 2017 as they say that their business model is completely equipped with the requirements the economy is seeking from a developing and that as well with such a progressive rate. Siemens states Brazil to one of the worlds fastest growing major economies and is even 16 | P a g e
coming out to be a powerhouse of the Latin American region as it owns most of the profitable and usable resources. As the country continues to grow it will require various distinct range of products for the efficient working and steady growth of the Brazilian economy. This is one of the reasons why the company is increasing its involvement in the business and expanding its range in products over time. The company is tend to invest a huge amount in the country which can be seen from the fact that it will invest a major part of its investment over the oil and gas industry, also in 2012 itself the company is tend to open a research and development centre in Rio de Janeiro which would be accountable for the energy production In the respective region. This expansion will provide the opportunity to about 200 highly skilled researchers to harness the natural resources available in the Rio state for the conversion into Energy.
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and grow in different sectors such as finance, human resource, supply chain and procurement. Thus the company has a positive expectation from this expansion as well. Although Capgemini is a worldwide known Name and Brand image which is preferable through many of the multinational corporations but the expansion of similar model company as like outs will also be benefitted from the outrage and the demand that is growing in the country.
http://www.big4.com/capgemini/capgemini-brazil-operations-expanded/
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to the company. This merging of the company with a new partner shows the opportunity available in the Brazilian market, thus being a developing nation it is a home to endless opportunities which are increasing day per day with the time being closer towards the events that Brazil is holding in the next coming years which has created a lot of demands in the market is opportunity that any company which wants to be globally operational should set its journey start from this region.
5 Conclusions
5.1 Analysing the case studies used to examine the Brazilian market The studies that have been used in referring the growth and development in the Brazilian economy states multiple factors which bring the positive and negative sides of investment in the Brazilian economy. The conclusions of those studies have been highlighted in this section.
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Fig 5: Rio in recent years As we initiate with the case study of Skagen which is a Norway based energy producing company as it stated that the constant amendments in the policies of Brazilian government is bringing the economic instability in the country is causing huge to losses to the similar companies as Skagen talks about its loss of $100 Million in past recent years, the company makes the President Rousseff responsible for the troublesome that is causing the industrial sector to get feared off the government and are scaring the reports of such companies are scaring the foreign investors from coming in the country and investing in business. Skagen states that such plans like slashing the electricity bills by the industrial organisations is bringing a change in their work methodology and thus resulting them in experiencing a loss in their respective fields that constant policy change of the government in the recent years have also decreased the foreign investment rate and thus the economic growth GDP of the nation. But finally as the company concludes as the global outrage and the infrastructure development is the main reason behind the high tax impositions in the country and they will come to an end by the end of this year as the plans of some major companies to expand in to Brazil has made the President announce the changes in the policies and feasibility in the law for doing business in Brazil and help and support that would be given by the government during the process.
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From Renault-Nissan Expansion The Expansion of the company like Renault and Nissan in the Brazilian market will explore the opportunities for many business models and will affect the economic growth rate of the country as this manufacturing unit plans to invest a very huge sum of money in the market and announces to launch some of the new models in its scale to attract the business owners from the surrounding region to make business with the company and contracting with the local sub-contractors for different purposes. An expansion like this in the Brazilian economy and the investment of such a huge amount states that the country is liable of change and growth in the next couple of years creating a strong profit and hold in the world market providing the best services and resources available to the industrialists, also the plans of the government which gets affected by such operations will be an advantage for the emerging companies and the foreign investors because the expansion of such a huge company will create new opportunities of work like production, maintenance and outsourcing of work in which our company Marconi Telecommunication is an expert. Also this identifies the approach for the entry in the Brazilian market along with any similar company contractor investor as the company expands in the nation so will be its operations and its demand to provide different services to it such as its IT and technical management to which most of the companies have a different departments or do outsource the work. From Terre marks outbreak The plans of Terre mark to expand its business and data centres within Brazil along with already existing operations present in the country states that there is a demand for the IT advancement and the companies that are available to provide services in the similar sector as there is lack of technology advancement in this country and most of the IT related work is outsourced from the countries like India and China therefore the coming and settling of the similar companies will make the tasks easier and cheaper services for the business owners and will provide better expansion rate. Also the expansion of teremark saw the demands of the corporate organisations from neighbouring regions like Columbia and other countries for either outsourcing work or just for leasing the internet exchange point which is the biggest the Latin American region. Thus this illustrates the growth of the I-T related companies in the Brazilian market. The opportunity for the similar model based companies as like of ours is that it may join any such company for handling a government or a private project in the industrial sector to merge or join a
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venture along and enter the Brazilian market and get the hold of the tactics that are vital and functioned in the Brazilian global market. The GM expansion From the expansion of GM in the Brazilian market show that the strategies of the Brazilian government are becoming favourable towards the manufacturing companies for over a prolonged period of time which will not only help their business economy to grow but also the respect and global outreach in the world. The expansion of General motors and along with other announcements of similar manufacturing company owners states that there is a boom in the market that is through a Chinese company announcing the expansion which will bring the emerging of new opportunities and the relations with the other Chinese companies to come to Brazil and will increase in the change of Technology and outsourcing of work between Brazil and China, ultimately benefiting the growth rate of the BRIC group of nations. The figure that has been most highlighted during the expansion of the General Motors in Brazil was the availability of loans and other funding options available in the country for the foreign and the local investors to come to business easily and the methodologies for minimising the risks to be undertaken by theses lenders in doing the business or investing in a certain type of business in this period and in the coming years in Brazil.
Siemens Plans of huge investments in Brazil The plans of Siemens to increase its operations in business in various of its sectors and portfolio in the country highlights the coming of the business openings and opportunities for the local people of the country and the neighbouring nations to find options available for them which could benefit their business models in future. As Siemens plans to invest in various sectors such as Healthcare, industry, energy, mining and other manufacturing units operational in the country it brings the government to bring changes to the policies that have been implemented so everyone can take the advantage of the feasibility in this market, making it the most favourable nation to invest in after India and China, Brazil do has much more capabilities than it has today but standing between the giants in the world business markets like India, China and USA which are considered as the land of opportunities because the availability of resources and potential in them to carry out a business process
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which they have successfully proven to be managing through their knowledge and experience that these countries have in the market. Brazil can have a availability to these through education and increasing the number of people depending on the work based on knowledge and education based, but not only in the manufacturing and industrial sectors, though that is true that Brazil can provide with the best and the less expensive workforce in the world than any other nation but along with this the nation fails to meet the technology demands of the country and thus the work needs to be outsourced to other countries or corporations around the world. The rise of the IT companies could be also examined from the fact that it has shown tremendous growth and market around the world in providing services to many multinational corporations the operations and the opportunities created by them or available to them could be analysed from the fact that they have expanded in Brazil over time and have more operations coming over in the next few years.
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cities, the figure shown below shows the statistic comparison of the currency between Brazil and GBP.
Fig 6: GBP and BRL comparison Furthermore the stock market in Brazil is also in a verge climbing up to the highest it has gone ever before in the history of the country. The Brazilian stock equity is measured by ishares MSCI Brazil index which monitors and maintains the growth in the stock market according to statistics given by the ishare it states that Brazilian market has shown a tremendous growth between the period of 2003 to 2008 and will further rise in the future. The rise and fall of the stock equity market can be examined from the graph below which states the share of the stock market and its rise and falls during the recent years.
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Brazil is in the risk off rut situation as when there is a financial crisis going on in the world and the investors know that the commodities like gold, stocks and Brazilian stock would be driven into the market to sell in a rush to keep the cast flowing there would be only the stable markets which could provide stability to the business preventing them from huge losses and gaining financial assets from investments. The BRIC group of nations are trusted as the most by the investors in moving or expanding up their business to so as to get comparatively better services than the others developed like Japan and USA, however the projects like the manufacturing, mining, energy and agriculture based always have a risk in investment and expansion still however the investors are planning to move to Brazil because the policies and the strategies of the government being lenient and feasible to the foreign investors to come and invest in Brazil making its economy grow better. However with the known fact that Brazil is going to host some of the major sporting events in the world as FIFA world cup in 2014 and the summer Olympics in 2016 which is bringing a lot of opportunities in the country is flowing at a steady rate but not as it did in the other countries already hosted the major sporting events as like Britain who hosted the recent London 2012 Olympic and Paralympic games, the country was successful to make use of the opportunity in making relations and expansion business in their country through the opportunity of investors coming to their country during the preparation and the functioning of 28 | P a g e
the games. Also as in the Brazil this communication between the government and the private sector business is communicating slowly but steadily. Moreover tourism which will create a lot of opportunities in the country as the people will come here as spectators of the sporting games or just on holiday to celebrate some of the greatest shows on earth. For just the stock brokers and investors ishares of Brazil is the easiest and fastest way of making money from Brazil
5.3 Resultant and Influence on the other Investors in Similar Business Model
As from the above case studies of the various international companies who have expanded their business to Brazil the resultant which can be analysed is of course the economy of this region is booming at a very high rate but so along is the tax implications and policies at this point of time, generally the developing countries have a very low rate of operation for the international investors in their country but this is not as far as Brazil is concerned. Although the BRIC group of nations are known for their feasibility and simplicity in the business rules and policies for any new business either expanding or starting in these nations but this statistics does not belong to Brazil any more at least not at the moment the President of Brazil Mr Dilma Rousseff has announced that the foreign investment and business policies have been taken into consideration by the government this year and will be brought to an ease very quickly to again bring economic stability in the country as the nation is going through tremendous change and development the development at this point of time is majorly because of the upcoming events that the world would be coming through to view in Brazil and these events will outclass the world the resources and the power of Brazil, probably this might be one of the reasons why the development is growing at the fastest rate than ever before in both the government and the private sector and the government is unable to do anything in managing the balance between the demand and supply resulting in being a debtor of the World Bank and the other financial organisations. Also as the discussion on the future plans of some of the major companies which have been highlighted above clearly shows the opportunities and the scope of investment and business in Brazil, it is slightly difficult and expensive for the companies than ever before as the nation is going through major changes and globalisation but for the companies to get settled in the country and get stabled before the sporting events that the country is hosting starts they have to take the risk because the financial experts know that this investment will repay them with the best and loads of profit for their company but will also increase their approach and reach to the world through the outrage of this nation.
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Thus it can be concluded from the above findings that the initial investment for expansion and moving to this country at this time can be a bit more then general but if any company is looking forward to expand in any of the Latin American nation no other option is better and more profitable for them other than Brazil. Because a major change and development process which has come to its final finish for preparing for the events that are going to take place in the next couple of years. Also the fact that the business policies and the foreign business protocols would be changing in the coming time as that could be seen from the above case study that as Renault-Nissan is expanding into the country which is a huge expansion and investment of billions will give opportunities to millions of people and the local residents of the nation. The self-dependency which is a big asset of Brazil will attract the investors from other countries in the recent years and as the government announced that the tax break which would available to the car manufacturers will bring a hope and attract other investors from around the world to come and set up their plants to Brazil which could bring a sudden increase and profit in their revenue.
6 Recommendations
As per analysing of the report and the case studies that have involved in making the resultant of the entry methodology which would be involved during the entry mechanism of the company Marconi Telecommunications is based on the experiences and the accountability of other similar business models which have successfully managed to grow in region and have made profits and increased the revenue generations of the company. As it has been clearly seen from the study that the Brazilian market is going through a rapid advancement and growth in the industrial sector in these years and the coming years also this performance will continue to grow till at very giant rate till the coming of the major sporting events that the country is about to host which is the FIFA world cup In 2014 and the summer Olympic Games in 2016. In these years the country is expected to be growing at the rate of 7.3% GDP rate which Is comparative to the other group of BRIC nations to which Brazil is a part. 30 | P a g e
During this enhancement in the growth and infrastructure development as the government is investing a huge amount of money in development and globalisation facilities it is yet to see it would be going to be more expensive for the companies to be a part of this change and growth as the government needs capital to spend on its national sources to bring them forward and available to the rest of the world during the highlighting events. So it could be concluded that any company which plans to move or expand its business into Brazil would have to invest a lot more money than it has to generally at this time which would be even increasing in the coming years due to globalisation in the region. Whereas the market strategies states that any company which has to invest a huge capital in initial investments in the starting of a new firms or expansion of business process is at a verge of risks and is prone to more towards the losses if the business environment is new to its economy. The entry options that have been analysed from the case studies above are most of the companies which are well recognised in the world and have a solid reputation and market hold though its multinational operations have availability of the capital required to move into the country where as far as the economic background of our company Marconi Telecommunications is concerned it is more of a subsidiary of a multinational brand Marconi which is recognised in most of the developing and developed nations but still cannot provide sufficient funds to the company to start a contractual entry in to Brazil, as well as deploy system and value of its own in the country. A option that may help the company Marconi Telecommunications to build a strong hold in the market and understand the tactics involved of doing business in Brazil may be understood through compelling the company on the least risk factor. Therefore the options for the company which it can undertake to move to Brazil may be amongst those which have been concluded to be the one who have seen tremendous success factor in the past for the similar business models in to foreign countries therefore the business entry option chosen by our company is through a Joint Venture. For undergoing a Joint Venture in Brazil Marconi Telecommunications has to undertake certain changes in its strategy such as investing a little less amount in physically settling down into the country also to understand basic requirements of doing business in Brazil and understand the risk factors and success factors involved while joining any company as the Joint Venture.
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for the business process to even be outsourced and inspired through its earlier and predetermined successful earlier operations.
7 References
Economic Growth in Brazil, Werner Baer (2001), The Brazilian Economy: Growth and development,Praeger Publications, United States of America. Ignacio Garcia Marin (2011), Brazil and China: Leadership, Economic Growth and Future, Research paper, Druck Books, Germany. ISBN: 978-3-656-04067-5 Economic Boom in Latin America, Werner Baer, David V. Fleischer (2011), The Economies of Argentina and Brazil: A Comparative Perspective, Edward Elgar Publishing Ltd, Cheltenham. Latin America Economy status, OECD (2011), Latin American Economic Outlook 2011, Oced publications. Economic Crisis, available on page21 Michael Cohen (2012), The Global Economic Crisis in Latin America: Impacts and Responses, Rutledge publications. Javier A Reyes, W Charles Sawyer (2011), Latin American Economic Development, Routledge publications.
Case Studies
Reuters Skagen Brail Expansion, available online at http://www.reuters.com/article/2012/12/03/usth brazil-economy-eletrobras-idUSBRE8B211220121203, accessed on 12 November 2012. Renault-Nissan Brazil Expansion, Rio Times, available online at http://riotimesonline.com/brazilth news/rio-business/renault-nissan-plans-for-expansion-in-brazil/#, accessed on 12 November 2012. Terre marks Data Centre Expansion, available online at http://www.verizonbusiness.com/about/news/pr-25793-enth Terremark+Completes+Major+Expansion+of+Brazilian+Data+Center.xml, retrieved on 14 November 2012. General Motors Brazil Expansion, BBC News http://news.bbc.co.uk/1/hi/business/8153097.stm, th accessed on 14 November 2012. Siemens Business Expansion in Brazil, available online at http://www.offshoreenergytoday.com/siemens-to-spend-usd-1-billion-on-business-expansion-in-brazil/ th accessed on 16 November 2012. Capgemini study, available online at http://www.big4.com/capgemini/capgemini-brazil-operationsth expanded/ accessed on 11 November 2012 Alliance Data1 Expansion, available online at th http://www.colloquy.com/press_release_view.asp?xd=106, accessed on 10 November 2012
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Cross Border and Acquisitions, available online at http://pure.au.dk/portal-asbth student/files/41992555/Master_Thesis_OY.pdf accessed on 9 November 2012. Concluding, Brazil Stock market analysis, available online at http://www.moneyweek.com/investments/stock-markets/emerging-markets/emerging-marketsth investing-in-brazil-20300, accessed on 27 November 2012 Barriers for business entry in Brazil, available online at http://www.tutor2u.net/blog/index.php/business-studies/comments/barriers-to-entry-for-businessth expansion-to-brazil accessed on 28 November 2012
Figures
Fig 1: Sustaining the Boom, available at http://www.forexblog.org/2010/05/brazil-is-booming-but-realth is-in-trouble.html, retrieved on 16 November, 2012. Fig 2 debt crisis, available at http://blogs.ft.com/beyond-brics/2012/07/02/chart-of-the-week-brazilianth corporate-debt/#axzz2EgDMbTge, retrieved on 16 November, 2012. Fig 3: Brazils GDP growth, available at http://brazilianbubble.com/chart-brazils-sluggish-gdp-growthth in-2011-though-pmi-suggests-a-pick-up/, retrieved on 17 November, 2012. Fig 4: Public sector Debt, available at http://seekingalpha.com/article/155269-charting-brazil-sth economy, retrieved on 16 November, 2012. Fig 5: Rio in recent years, available at http://hottelling.net/2012/09/14/str-global-brazils-key-citiesth gearing-up-for-the-2016-olympics/, retrieved on 19 November, 2012. Fig 6: GBP and BRL comparison, available at http://www.moneyweek.com/investments/stockth markets/emerging-markets/emerging-markets-investing-in-brazil-20300, retrieved on 19 November, 2012. Fig 7: iShares MSCI Brazil Index, available at http://www.moneyweek.com/investments/stockth markets/emerging-markets/emerging-markets-investing-in-brazil-20300, retrieved on 25 November, 2012.
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