Brazil country and PESTLE analysis

2. Brazil’s History
• In 1500, Portuguese explorer
Pedro Alvaras Cabral was the first
person to discover Brazil.
• It remained a colony of Portugal
until September 7, 1822. Brazil
declared it’s independence from
Portugal.
• Brazil was of little interest to
Portugal because of the profitable
trade with India, China, and
Indonesia.
• The land was given to Portuguese noblemen who were followers of the crown.
• The Dutch attempted invading Brazil and for a long period inhabited a large portion of
the coast. After constantly being under siege, the Dutch finally withdrew.

3. Brazil’s History
• Slavery fueled the Brazilian
economy and was essential in their
sugar cane production and mining.
• 35% of all slaves exported in the
Atlantic slave trade were brought to
Brazil.
• After becoming an independent
nation, Brazil elected it’s first
president Deodoro da Fonseca.
• Brazil became a military
dictatorship in 1964.
• It wasn’t until 1985 that Brazil
returned to civilian rule and elected
Tancredo Neves as president who
died and was replaced by vice
president Jose Sarney.

4. Geography
• Brazil is the largest country in
South America and is over 3 million
square miles in size.
• The capital of Brazil is Brasilia and
contains other large well known
states including Rio de Janero, San
Paulo, and Salvador.
• Climates in Brazil vary. There are
the dense and tropical Amazon
basins in the northern region, the
semi arid coastline, large grassland
areas, and dense wetlands with
extensive river systems.

5. • The Amazon River is the largest
river system in Brazil.
• The river extends 2,243 miles
and descends only 100 meters
before letting out.
• Agriculture productivity is usually
pretty poor because of high
acidity and aluminum levels in the
soil.
• 90% of the country is in tropical
zone
• The country is divided into 5
sections with different ecosystems. This includes the
North, Northeast, South, Southea
st, and central west.

6. The People of Brazil
• Approximately 190 million people inhabit
Brazil.
• Most of the people live in the Southeastern
and Northeastern regions.
• Most inhabitants are descendants of the
indigenous people, Portuguese settlers, or
African slaves.
• Primary language of Brazilian is
Portuguese.
• Brazil is a highly diverse country made up
of multiple ethnic backgrounds.
• 70% of all immigrants who came to Brazil
were either Portuguese or Italian.
• White Brazilian (brancos) make up 48% of
the population, blacks (negros) is
7%, brown or mixed (pardos) makes up
44%, asian (amarelos) is 1%, and the
Amerindian (indios) makes up <1% of the
population.

7. Culture
• The Portuguese introduced the language, catholic
religion, and architectural styles.
• Carnival- A large festival held 46 days before Easter
which celebrates the farewell to bad things prior to
Christ’s death and resurrection.
• Carnival is the largest celebrated holiday in the country
and the festivities vary from region to region.
• Football (soccer) is the most popular sport in Brazil.
They have a record of 5 word cup titles.
• Brazilian folklore which includes
dances, stories, legends and religious rituals
demonstrates the countries rich and diverse culture. The
folklore can be depicted in the countries Carnival
celebration.
• The music of Brazil is internationally respected and it
conveys a nation rich in art and culture. Some music
styles that Brazil has mad famous include Samba (Afrobahian rhythms- largely seen during Carnival), Bossa
Nova (jazzy rock similar to Samba), and Choro
(classical/ballroom).

8. PESTLE ANALYSIS

9. POLITICS
• Rely on monetary policy
• Cut interest rate from 12% in August 2011 to
current 10.5% (expect to reduce further)
• Inflationary present real value of capital
reduces
• Detrimental to consumers and therefore
demand for firm’s products
• Negative short term outlook for start-up

10. POLITICS
• Due to:
-
Shortages in food supply, increasing domestic demand, and
increases in produces prices are greatly impacting inflation;
- But with lower GDP growth, inflation rate is expected to reduce to
4.32%
-
Important to note: with domestic consumption increasing and oil
prices likely to be raised in the future, inflation will remain a
challenge.

11. POLITICS
• Growth Acceleration Programme
-
USD 240 bn investment plan;
Focuses on energy, logistics, social and urban projects;
Many infrastructures under current construction are to facilitate the
hosting of 2014 World Cup and 2016 Olympic Games
- Mind and long Term: improve the business environment of the
country ; ex, the efficiency of transport; potentially attract even more
foreign investors.

12. POLITICS
Corruption
-Widespread corruption: when business are seeking government
contract, and also occurring when business must deal with
government regulatory bodies;
-Lack of availability for government contracts turn away new
entrepreneurs representing a barrier to entry;
-New entrants may be forced to commit bribery to obtain contracts.

13. ECONOMICS
• Current state of the economy:
-
GDP USD 2,52 tn (2011)
Exports in 2012 totalled USD 201,9 bn
Main exports: manufactured goods, iron ore, coffee, orange and
other agricultural produce
-
It’s main export partners are China, US and Argentina
-
-
Imports in 2010 of USD 181,6 bn
Government forecast growth of 3.5% in 2011, compared with
7.5% in 2010.

14. ECONOMICS
• FDI Ranking – Foreign Direct Investment
• Ranking give below is based a country’s
economic stability, economic risk, business and
investment climate:
Country
Score
FDI
Amount
Brazil
8
2009 USD
25.95 bn
Malaysia
8.5
2010 USD 48.5 bn
Germany
9 – 9.5
2011 USD 55 bn
United Kingdom
9

15. ECONOMICS
• Composed of the Economy
• Services
• Agriculture
• Industry
64%
8%
28%

16. ECONOMICS
• Current Credit Rating
“We expect the government to pursue caution fiscal
and monetary policies that, combined with the
country is growing economic resilience, should
moderate the impact of potential external shocks and
sustain long-term growth prospects.”
Standard & Poors

17. SOCIAL ISSUES
• Increasing proportion of middle class will increase
consumer demand:
High Class
11%
Formal middle class
17%
Informal middle class
50%
Lower class
22%

18. SOCIAL ISSUES
• Education, current situation:
-
20% of population is still illiterate
Fall behind other developing economies (China / Russia)
As a result many company are reluctant to invest in Brazil’s
economy
-
Free education: would be rectified in long term.

19. TECHNOLOGY
• Spending on R&D is stable around 1% GDP. Ensures the constant
technological progress and advancement
• Information Technology:
750.000 new IT professional by 2010
300.000 of those professional will be required to serve the technology
export market.
• Constant advancement and improvement un this area.

20. TECHNOLOGY
• Intercommunication and Global Communication:
More communication between areas of Brazil develop trough the
use of internet
More access to information technologies mean more access to
other area of the world.
• Maturity of technology:
Recently becoming up to date with use of technology;
Only some specific areas in techonology advancing fast
Rate of adaption investing US$99

21. TECHNOLOGY
• Technological Accessibility
Technological agreement: Ex, European Union – Agreement for
Scientific and Technological Cooperative (2004)
Patents: highest levels of patents application in South America.

22. ENVIRONMENT
• Policies for protecting the environment
stopping deforestation (in 2010 reduced by
70%) and drastically reducing emission.
• Compelled industries to initiate eco-friendly
combustion technique
• Signed pacts with developed countries to
jointly develop the Amazon basin and
alleviate deforestation by unwanted setters.
• Emission from deforestation – Brazil is one of
the largest emitters of greenhouse gases;
according to the guidelines set out in the
Kyoto Protocol.

23. LEGAL
• The Civil Code
-
Companies become corporate entities with separate legal
personality
-
-
Registration with the Trend Board
Creditors generally cannot seize the partner’s assets to pay the
company debts.
-
Most common types of companies:
The corporation (S.A.)
Limit Liability Quotas Company (Ltda.)

24. LEGAL
• Restriction on Foreign Investment
Only minority participation in: media, financial
institution, insurance companies, Public Health, and others
Requisition of real state: same condition apply to foreign individual
as to national individuals or entities.

25. LEGAL
• Taxation
• Legislation varies across states and therefore increases
complexity and compliance costs. Senate suggested a tax
reform but yet to takes place – a merger of taxes
33% of GDP is tax

26. LEGAL
• Regulation
Starting a business takes 120 days
Complete registration requires 18 procedures taking nearly 119
days, compared with American Latin.

27. THANK YOU!
Presented by:
Sheryl Mehra
Div-C