Posted: November 28th, 2013
Brazil is a country that is acknowledged for having a rich atmosphere for conducting business. The country hosts a large population of one hundred and ninety million people who possess different ethnicities including German, African and Spanish among many others (US Commercial Guide 2). Brazil also has an expanded economic industry that includes several market opportunities for small and big businesses for countries including the United States. However, the main businesses that make up Brazil’s industrious economy involve products like vehicles, petrol chemicals and computers among others.
Focusing on personal computers, there are several ways in which an international business could be conducted. For example, the firm could export computers to the country, form a business partnership with a Brazil-based company or initiate a completely owned subsidiary. However, for the business to succeed, an evaluation of each of these methods is required in order to determine the best option. In this process, advantages and disadvantages of each method are identified in order to determine the best option that will be more effective to the business (US Commercial Guide 4).
In the business strategy of exporting personal computers from the United States to Brazil, cost advantages are realized. For example, the cost of manufacturing computers in America appears to be more costly than when in Brazil. In addition, the costs involved are opportunity costs since the expenses for producing PCs replace the costs of the cars that could have been manufactured. For example, while in America, a business would require to give up the production of one hundred and fifty vehicles to manufacture a thousand PCs, a business venturing in Brazil would only require giving up one hundred cars.
However, since Brazil’s major market is made of imports from the United States, it leads to a problem of congestion within the market space. For example, in such a scenario, there are probably American PC businesses that crowd the Brazilian market and hence it will be difficult for a business to establish itself due to increased competition. An emerging market is characterized by rapid economic progress and an increase in foreign business ventures. Brazil is one of the emerging markets in the world because of its rich possession of natural resources.
Brazil has also become an established market for American IT technology. U.S investors dealing with producing computer equipment are significantly required to incorporate the needs of the Brazilian population that speak languages including Portuguese (Jennifer 2011). For example, the American manufacturers could include a language translating function in the computer systems in order to meet the needs of the Brazilian population and hence become more profitable.
The alternative of establishing a partnership with a Brazilian-based company has its advantages. For example, one of the progressing sectors in Brazil is the PC hardware based on referring to the overall revenues earned that have increased to billions of dollars. This could create a great opportunity for an American business partnership with Brazil because if the computer industry in Brazil is progressing profitably, the investment is likely to follow the same trend (Jennifer 2011).
However, the success achieved from conducting business in Brazil is usually based on one’s persistence, experience and being highly acquainted with the country’s cultural and legal standards. This is because Brazil maintains a distinctive legal structure, which causes the problem of unfamiliarity among many foreign investors. Investing in the Brazilian partnership could lead to the emergence of more opportunities. For example, the partnership could take advantage of the situation, in which certain areas have population that is less acquainted with information technology by providing education services.
On the final alternative of starting a sole PC business in an emerging economy such as Brazil, several advantages are realized. One advantage is that the company is likely to experience early attainment due to the progressive economic state and hence gain acknowledgement as a strong influential brand within the industry. As a result, this could develop a great opportunity for American businesses that are competing within the elite category of the market. This is because the business will be able to maintain stable connections with other local businesses, which would create a competitive advantage over the other competitive businesses.
In emerging economies, capital is usually readily available and forming a connection to its accessibility helps businesses to contribute their resources for enabling domestic advancement. In addition, businesses that have lacked capital potential could be given an opportunity to reestablish themselves. Minimal firms are also given the opportunity to develop in the emerging markets, a chance that was not available to them while they were in the domestic market. However, the disadvantage of establishing a business in an emerging economy is the issue of dealing with cultural jeopardy.
Different cultural views on product utility may have requirements that differ from those identified by a business. For example, an American business may have certain cultural challenges while operating in Brazil due to being less acquainted with the business culture of that environment. After analyzing the three alternatives of how to operate the computer business, it is best to consider establishing a business within the country. This is because it will create the opportunities of transforming the business into a successful venture that gains acknowledgement and a strong influence over its competitors.
Blanke, Jennifer. “Global Competitiveness" World Economic Forum 6 July 2004. December 16, 2011 <http://www.weforum.org/issues/global-competitiveness>.
Doing Business in Brazil: Country Commercial Guide for U.s. Companies. Springfield, VA: U.S. Dept. of Commerce, National Technical Information Service, 2005. Print.
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