Brazil has become one of the most promising emerging countries besides China and India and counts a very large population, whereby extreme poverty and extreme wealth coexist. In this context Redgreen, a Danish company specializing in high end and high quality sportswear outfits considers exporting its product lines to this country. In order to explore the potential of this new market, we will first analyze the country's main features in terms of economic life, politics, etc, before considering the marketing keys to success while finally developing a specific distribution strategy. Brazil is quite interesting place for investment and many companies are entering this developing market. Its high GDP growth, large economy, developed infrastructure, liberalisation of public sector and many Foreign Direct Investments have turned this struggling country into developing nation that holds 2nd place (China is 1st) in amount of foreign capital invested into the economy. In last 5 years, Brazilian government has been quite stable and it seems that Brazil has a sound strategy when it comes to taking its economy into top performing ones. Government is introducing new, more liberal competition laws and it is introducing new forms of investments, such as PPP, or Private Public Property, where both the investor and government share the risks by holding equal stakes in the investments.
[...] (See Appendix Legal environment Unfortunately, Brazil is highly bureaucratic country. Opening any sort of business in Brazil involves large amounts of paperwork, there are still numerous regulations and it is a lengthy process. Brazil, represented by Sao Paulo as the largest business centre, ranks 119 out of 155 in ease of doing business. This is behind other major emerging markets. For example, South Africa ranks 29, Mexico 73, Russia 79, and India 116. In Latin America, only Venezuela and Haiti regulate business more heavily than Brazil. [...]
[...] In the strategy of the company, a key element is the choice of investment (direct or indirect) options will be presented to weight pros and cons from 6 alternatives presented in the text book quoted in the text book: Licensing, franchising, management contracts, Turnkey operations, joint ventures and equity alliances. Franchising According to a comparative study (Franchising, joint venture and Corner) present in appendix C the choice of Redgreen for its business in Brazil is to set up a franchise. “Franchising is a specialized form of licensing in which the franchisor not only sells an independent franchisee the use of the intangible property essential to the franchisee's business but also operationally assists the business on a continuing basis, such as through sales promotion and training” (Text book). [...]
[...] Business conditions that change rapidly and social extremes that exist don't add to country's attractiveness. Corruption is still a big issue in Brazil. Opening an operation in Brazil may require additional payments to government officials, which can present a big obstacle to entering a market. According to Transparency International, Brazil holds 70th place in level of corruption among 180 countries, higher then such economies as Cuba, Turkey and Bulgaria. Economic environment Due to large population and inflow of FDI, Brazil has extremely high potential for growth. [...]
[...] Bibliography Interview with Felipe Toledo, Brazilian International Business on 2nd March 2007, Grenoble Website of Redgreen [Online] www.Redgreen.dk [Accessed 2nd of March, 2007] Fiche de synthèse, Mission Economique du Brésil, Le secteur de l'habillement au Brésil Actualised on 1st September 2006 (Paperwork from the Economic Delegation from French Embassy in Brazil) Fiche de synthèse, Mission Economique du Brésil, Le régime des importations au Brésil Actualised on 1st September 2006 (Paperwork from the Economic Delegation from French Embassy in Brazil) OVERSEAS BUSINESS REPORTS (BRAZIL) University of Missouri St. [...]
[...] As a drawback, costs of national advertisement in Brazil should be paid by Redgreen like other support services to the franchisee. With a corner it wouldn't be the case but with a joint venture, it would be even more (national and local advertisement) In addition, training of franchises should be done that imply costs and involvement. It is more costly than with a corner but always cheaper than if Redgreen set up a joint venture (fixed cost + salary) According to pros and cons analysis, by chosing to open a franchise, Redgreen can focus on the 2 main cities in Brazil: Brazilia and Sao Paulo, where the main portion of the wealth is concentrated. [...]
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