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Developed Country Analysis

Diahann L. Coleman

Colorado State University Global

MIM500: Business Strategy in the Global Economy

Dr. David Pritchard

December 6, 2020
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Developed Country Analysis

The purpose of this paper is to provide an analysis of the developed country of Brazil, in

this paper the continued research will attempt to explain the external forces from a general

perspective countrywide utilizing the PESTLE analysis measure, it will describe and evaluate

any political barriers to the country’s economic success. The paper will then address the internal

forces that are necessary for success strategically from a general perspective countrywide. Will

compare the country’s overall Industrial Perspective and the Resourced -Based view of strategy.

Lastly based on the presented findings and overall synopsis provided on whether the country has

the strong potential for economic growth and potential.

External Forces

A PESTLE analysis is used to evaluate the external forces , this provides correlation to

determine the strengths and weaknesses of different production pathways and provides a broad

view of political, economic, social, technological, legal and environmental factors for the country

(Achinas, Horjus, Achinas, & Euverink, 2019). Built on a strong federal republic , its final

authority lies within its federal government, at the forefront of international politics and founding

member of the Southern Common Market (Mercour), the country is successful in the promoting

of increased trade its country men and the rest of the world (MarketLine, 2020). Brazil was

instrumental in the formation of the Union of South American Nations (UNASUL)whose aim is

promoting regional integration, the formation of both coalitions demonstrates the pioneering

efforts of the country’s efforts toward integration of economics and building the cooperation of

other countries (MarketLine,2020)

Brazil has a strong macroeconomic framework and agricultural base, its prudent

economy, flexible currency, responsible fiscal legislation, and inflation targeting policies all of

these protective measures have reduced the inflation from previous double digits

(MarketLine,2020). Its credible policies have attracted foreign investors and have enabled Brazil

to become a large exporter of commodities in the world, the country is efficient in the

supervision of its financial institutions and this has helped in minimizing global damage crisis, in

March 2020 the government injected $30 billion into its economy to assist in cushioning the

blow of the coronavirus pandemic (MarketLine,2020).

One of the principal bases of the country is the agriculture, Brazil accounts for 7.3% of

the worlds agricultural exports and is expected to become the leading exporter of food and

agricultural products worldwide (MarketLine,2020). Socially Brazil is the most influential and

biggest democracies, the former President instituted a Zero Hunger campaign and unified social

programs under the Family Grant which transfers money to indigent families expected to reduce

poverty from generation to generation (MarketLine,2020). There is a positive trend in the

working population as it has grown significantly in comparison to previous years, a higher

working age population would be an asset to its economy if necessary, skills and education are

provided (MarketLine,2020). Urban living has improved through programs to provide housing,

establish water treatment plants, pumping stations and distribution networks, there is access to

healthcare for everyone and measure to totally eradicate hunger and poverty (MarketLine,2020).

In the analysis of technology the country has a National Innovation policy which was

established to develop new technologies and build a competitive edge , it aims to promote

creation and development of startups providing advanced knowledge and increased opportunities

in strategic areas (MarketLine,2020). The legal structure is codified as state and federal
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governments issue the laws , the courts decisions are based on the application of prevailing laws

correctly, the federal government, states and districts legislate in matters such as taxes, prison,

financial, social security and protection of health (MarketLine,2020). Environmentally, Brazil is

known for its rich natural resource base, with the Amazon region home the world’s largest

rainforest with a diverse range of plants and animals , much of the energy from hydroelectricity

which helps in containing greenhouse emissions (MarketLine,2020)/

Political Barriers

Brazilian law comes from its civil law tradition, the laws of the country are codified with

specific codes and statutes with little room for interpretation anti-racism laws bean with its

country’s 1988 constitution (Johnson,2015). Expression that is free is under threat as several

journalist and human rights activist have been murdered for statements made in public

(MarketLine,2020). Brazil is a country where criminals face the highest impurities and

imprisonment for speaking offensive remarks about government, clearly lacking freedom of

speech within this country it ranks 107 out of 180 countries (MarketLine.2020).

The country has a poor enforcement of regulations and ranks 31.4 on the political

stability, absence of violence and the numbers of murders in low income areas are cause for

alarm (MarketLine,2020). The economy is relatively closed, trade protectionism increased as

policymakers attempted to promote technological upgrades, boost competitiveness in

manufacturing goods, & reinforce the contribution of manufacturing in production (Araujo &

Flaig, 2017).
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Internal Forces

In Brazil, travel and tourism, banking, and environmental are some internal forces that

have impact on the country. A strength in the travel and tourism is that Brazil remains a popular

tourist attraction and the ministry of tourism provides strong support to the development of the

industry (BMI, 2020), weaknesses of the industry the hotel industry is broken with many

operating below the level of scales , also many legal, environmental and other obstacles block

the building of new hotels, opportunities in the effort to build new infrastructures and attract

tourist , threats currently the coronavirus in the first quarter of 2020 and shutdown of flights

provided a major downturn for the tourism industry (BMI,2020).

In banking capital adequacy, leading market position and improved non-interest income

are some key strengths sound management of capital and moderate risk weighted growth in

assets enables the bank to enhance its base, the Bank of Brazil has a leading market position

giving it a lead over its peers, and improvement in non-interest enhanced its revenue (Banco do

Brasil, 2020). A deterioration in cost efficiency affected profitability also decline in net revenue ,

an opportunity for the bank would be making a change into Fin Tech which is transforming the

way banking is carried out and it challenges the regulatory structure (Banco do Brasil, 2020). If

there is a prolonged low interest rate environment it could pose challenges and threats to

business models (Banco do Brasil, 2020).

Environmentally, the strengths of the Brazil is its rich natural source base, world’s

highest forest cover and the Amazon Basin covering 26% of the world’s tropical forest, it is also

one of the largest users of renewable energy and 75% of its energy needs being met with

hydropower, a weakness environmentally is that the country produces a huge amount of solid

waste the country produces 240k of waste daily and only 2% goes to landfills
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(MarketLine,2020). An opportunity in ecotourism can preserve the country’s heritage

environmentally but can assist the economy, a balanced ecotourism can provide employment to

rural populated areas and conserve the indigenous heritage (MarketLine,2020). Threats to the

environment over exploiting the Amazon region with multimillion-dollar construction projects

which compromises the ecosystem that absorbs global carbon emissions and threatening of

animal and plant species (MarketLine,2020).

Industrial Perspective & Resource-Based View of Strategy

The Brazilian food & grocery retail has experienced an extraordinarily strong growth

trend in recent years it was most lucrative in 2018 with equivalent to 70.9% in revenue growth

(MarketLine Industry, 2020). The industrial organization view of strategy implies that the food

and grocery retail markets would identify and seek out to operate where there are the best

opportunities for them to be competitive and profitable (MarketLine Industry, 2020). The

competition face negligible switching cost and retailers fight to secure consumers loyalty,

competition is fierce in grocery and food as there are a number of large competitors in the market

, a large number of competitors in this market will increase the rivalry significantly (MarketLine

Industry, 2020). Brazil had an 8.1% share of the grocery and retail market and is 2nd largest next

to the United States, the market had revenue growth rate of 5.7 % and cash and carry businesses

also expanded as consumer trends changed along with spending habits.

A resource-based view on strategy within the food and grocery market would focus on

the strengths and the weaknesses its strength being a leader among Latin American countries and

its weakness being challenges of having accessibility in the more rural underdeveloped areas of

the country in strategic planning accessibility is an opportunity to reach urban areas ( Oliveira,

Garcia & Pinto, 2020

Country Analysis Results

Brazil has a very strong potential for economic growth and potential, politically it will be

harder for the Brazilian government this year because of Covid-19, economic growth is expected

due to improved labor markets and strong consumption privately (MarketLine,2020). The

country still has some roadblocks in technology and innovation in order to provide a high-quality

IT educational base, and new forestation plans with the United States have potential to become

major in Brazil’s landscape (MarketLine,2020).

Conclusion

In this paper we have addressed both internal and external forces for strategic success

within the country of Brazil with use of PESTLE and SWOT analysis. Presented political

barriers to their economic success, compared the Industry Perspective and Resource based view

of Strategy using the food and grocery industry of the country and provided a reasoning for the

growth potential for this country which is highly favorable for their future.
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References

Achinas, S, Horjus, J , Achinas, V, & Euverink, Gerrit Jan Willem . (2019). A PESTLE

Analysis of Biofuels Energy Industry in Europe. Sustainability, 11(21), 5981.

https://doi.org/10.3390/su11215981

Araújo Sónia, & Flaig Dorothee. (2017). Trade Restrictions in Brazil: Who Pays the

Price? Journal of Economic Integration, 32(2), 283–323.

Banco do Brasil SA SWOT Analysis. (2020). Banco Do Brasil SA SWOT Analysis, 1–7.

Brazil Tourism Report: Includes 5-year forecasts to 2024. (2020). Brazil Tourism Report, 3, 3–

27.

Johnson, B. G. (2015). Prejudice Against Being Prejudiced: Racist Speech and the Specter of

Seditious Libel in Brazil. Communication Law & Policy, 20(1), 55–89.

https://doi.org/10.1080/10811680.2015.986414

MarketLine Country Profile: Brazil. (2020). In Brazil Country Profile (pp. 1–94).

MarketLine Industry Profile: Food & Grocery Retail in Brazil. (2020). Food Retail Industry

Profile: Brazil, 1–37.

Renata Lúcia Magalhães de Oliveira, Camila Soares Henrique Fontanele Garcia, & Paulo

Henrique Góes Pinto. (2020). Accessibility to Food Retailers: The Case of Belo

Horizonte, Brazil. Sustainability, 12(2654), 2654. https://doi.org/10.3390/su12072654