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"Brazil" - Final Paper

"Brazil" - Final Paper - Brazil Examining...

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Brazil: Examining Potential Investment Opportunities An Extensive Report By: Matthew Alongi, Jackie Cavanaugh, Steve Ciucci and Aaron Conley
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Brazil is the largest country in South America, and its population alone is greater than all other countries in South America combined. With the fifth largest population in the world of just over 190 million people, Brazil is one of many countries looked at by investors as a possibility for future business. However, we must first analyze the advantages and disadvantages of entering the Brazilian market in order to properly decide whether or not a good investment opportunity is present. Cultural Disadvantages Brazil’s diverse society and large population naturally create a wide range of cultural disadvantages within the country. The first disadvantage deals with the social aspect, as Brazil “has a well-developed economy and large resource base, but has had major problems solving deep-seated social problems like poverty and income inequality.” (Ribando 20) Another disadvantage that has seemingly created poverty is the discrimination factor of Brazil’s culture. Human Rights Reports have shown “frequent discrimination against Afro-Brazilians, including abuse by police officials, and limited access to justice.” (23) These facts “challenged the notion that Brazil was a racial democracy, and confirmed the perception that specific public policies were needed to improve the socioeconomic status of Afro-Brazilians.” (23) In terms of Brazil’s population, a disadvantage is naturally created because of how large it is. A vast amount of people means that the markets are culturally diverse, and finding a target market to provide us with profits will become increasingly difficult as the population increases. Finally, the last cultural disadvantage is created through the fact that within the labor 2
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market, it is estimated that approximately 40% of all workers are not formally registered, pay no income taxes, and do not enjoy full protection under the law.” (Political Risk Yearbook 11) This creates a disadvantage for our company, as well as a legal concern, since we want to ensure that all rules and regulations are properly followed while at the same time supporting cultural diversity. As a company entering a foreign market, cultural data like this allows us to examine whether or not the advantages outweigh the disadvantages within Brazil’s society. Cultural Advantages In terms of cultural advantages, the population of Brazil shows great potential for incoming businesses that clearly outweigh the disadvantages. Large populations within countries tend to be attractive because the market for various products is exposed to a greater number of people. Despite the social disadvantages stated earlier, recent studies “have provided concrete evidence that socioeconomic inequality has diminished during Lula’s first term.” (1) Another study conducted by the Institute of Applied Economic Research (IPEA), revealed that “between 2001 and 2004, the
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