Brazil: Introduction to International Expansion


Brazil: An Introduction to International Expansion Jeff Burney Shorter College

the topics of political stabilization and culture will be reviewed. In governmental atmosphere.Brazil: Introduction to International Expansion 2 Abstract This paper will discuss the prospect of opening business operations in Brazil. Labor conditions will deal with the laborer¶s work environment and labor unions. how the education system is provided and how it affects politics. and education in Brazil. Education will discuss how it affects income. We will review the governmental atmosphere. . These areas will be used to make a final decision on moving forward with foreign operations. labor conditions. Ethics and religions will be discussed under culture. The paper will review several different areas that will help make a final decision on foreign operations within Brazil.

electrical equipment. politics etc. It has a diverse background when considering it¶s demographics. In 1974. It is the 5th largest country in the world behind Russia. Brazil has been plagued with multiple governmental changes since 1889. The number identifying itself with Catholicism makes it the largest Catholic nation in the world. Brazil is the largest country in Latin America and is the only Portuguese-speaking country. They have a wide variety of wildlife. Brazil¶s government has three parts much like the United States.200. Brazil has a population of 190.000 people. They are a major exporter of aircraft. Brazil is home to diversified habitats. iron ore. and extensive natural resources. with 74% of the population identifying itself as such and 15%-20% identifying itself as protestant.74% among the population between 15 and 19 years of age.000. automobiles. The population is mostly mixed among two different races. Brazil has the 10th largest economy in the world and has the largest economy in South America. General Ernesto Geisel became the president and started the country on its current path of re-democratization. & the US with a land area of 8. It has changed from a democratic republic to military dictatorship multiple times. A civilian government has been in control since 1985 and is one of the longest spans of democratic control in the past 120 years. natural environments. culture. Canada. The illiteracy rate is around 12% and only 1. Brazil gained its independence from Portugal in 1822 as the Brazilian Empire and became a republic in 1889. coffee.876 km2.Brazil: Introduction to International Expansion 3 Introduction Brazil is a very diverse country.514. Their currency is currently tied to the US dollar. China. They . etc. The population is approximately 48% white and 44% brown or multiracial. Most of the country has a tropical climate and includes the Amazon Rainforest. The predominant religion in Brazil is Roman Catholic. It has a GDP per capita of $10. This has been done through a very purposeful and slow process.

Judiciary authorities have virtually full control of the legal system of Brazil. We will be looking at how each of these items would affect opening our operations in Brazil. he tells us that ³International business is much more complicated than domestic business because countries differ in many ways. We will look to see how both the market and cultural issues affect the opening of a new international business. Brazil has a three prong military consisting of the Brazilian Army. The paper will discuss work conditions. Brazilian Social Democrat Party (PSDB). Influential aspects are the governmental atmosphere towards business. We will look to see how the labor conditions may affect our company in Brazil. education and labor. Brazilian Democratic Movement Party (PMDB) & Democrats (DEM). and politics. The National Congress consists of two parts. Legislative and Judicial. Brazil is made up of 26 states and 1 Federal District. The country has four main political parties: the Workers¶ Party (PT). It has the largest military in Latin America. and the Brazilian Air Force. In Hill¶s textbook. we will see how it affected by ethics. Brazil is currently a Democratic Republic with a Presidential system that allows for two four year terms for the elected president. The governmental atmosphere can cover a wide range of areas. the Chamber of Deputies and the Federal Senate. . we will focus on a few points with opening up our business operations in Brazil. religion. We will be focusing on the market and culture of Brazil. Brasilia the capital of Brazil. We will review how this may impact the company in the future and how to be prepared for issues ahead of time. Labor conditions in any international market are very important. Within culture. the Brazilian Navy. with the highest court being the Supreme Federal Tribunal. labor unions and child labor.Brazil: Introduction to International Expansion 4 have the Executive.´ To help understand these complicated differences and to try to solve and/or be better prepared for them up front.

which at that time was a record amount. Brazil has suffered through some hard economic times over the past 20-30 years. We will review Brazil¶s governmental atmosphere by looking at the recent history of Brazil¶s market. and at the cost of a long period of low growth with high inflation²to weather the 1980s with neither adjustment nor economic collapse. politics. According to Armijo & Faucher (2002). the government has become more stable and has had peaceful transitions of leadership through democratic elections. and how Brazil¶s culture affects it.Brazil: Introduction to International Expansion 5 The education of a location is very important when looking to open new operations. During the 1980¶s when much of Latin America was suffering through a major debt crisis. Also. We will look at how culture affects the type of education that is provided to the citizens of Brazil. through military coups multiple times in the last 120 years. through external capital flows attracted by high interest rates and debt refinancing. even though it was not due until 2006.´ In 2002. We will review how education has changed over time in Brazil. Culture can make a large difference when deciding where to open our new business.4 billion in aid from the IMF in mid 2002. Brazil managed to survive. the discussion of education will include whether or not the country can sustain the type of workforce needed to produce a certain product. Culture has a strong influence over the ethics of a country or even regions within a country. Brazil has ranged from civilian democratic control to military dictatorships. We . They were able to repay the package by 2005. Since the mid 1980¶s. Brazil had to request and receive a rescue package from the International Monetary Fund (IMF). Governmental Atmosphere Brazil¶s governmental atmosphere has been one of almost constant turmoil and upheaval. ³through export revenues. Brazil received $30.

´ One item that we would want to ensure that we review is the differences in the subcultures of Brazil. they claim ³Attitudes toward business ethics may vary so greatly even within one culture that trying to come to a consensus across cultures can become nearly impossible. Also.´ In addition. and Yamamura (2003) in a study of business ethics makes the claim that ³Clearly. They state that ³A Brazilian individual judges whether a proposed action may be ethical or not based on the consequences of the action for the relevant in-group to which he/she belongs. Are there differences between the ethical decision making in the United States and Brazil? According to Beekum. Stedham. Lenartowicz and Roth (2001) list ³four regional Brazilian subcultures: Mineiros from the Minas Gerais state. We would not want to go into Brazil with a general belief that one overarching cultural view would cover the whole country. We will review how different cultures may affect our business operations in Brazil. . Cariocas from the Greater Rio de Janeior. Paulistas from the Sao Paulo state. Stedham. we want to review how ethics might be different within the Brazilian culture. Byles (2002) came to a very point blank conclusion that ³Clearly. and Gauchos from the Grande do Sul state.´ Through our evaluation.Brazil: Introduction to International Expansion 6 would need to review the idea of ethics for each area we look to do business. Beekum. In Sims & Gegez (2004) article on the Attitudes Toward Business Ethics. Americans involved in business with Brazilians must understand and consider this emphasis when trying to convince a Brazilian that a certain action is ethical and the µway to go¶´. respondents from Brazil and respondents from the United States differ in their assessment of the ethical content of business decisions. This shows a strong lean towards collectivism. it would be important to look at how this would affect the opening of our business in any country. which is the opposite of the individualistic tendencies we have in the United States. In a review of Lenartowicz and Roth. and Yamamura (2003) give a good description of how to work with a Brazilian.

Labor Conditions In Logsdon & Wood¶s (2005) article in the Journal of Business Ethics. they state ³Labor conditions and human rights. These topics can make or break our business ventures as we move forward with an international expansion. Even more powerful is the mounting pressure for global social justice in trade practices. compounded by severe concerns about job loss and downward income pressures in developed countries.´ There can be a big difference between labor conditions in an international and domestic business. we as a company must decide who we want to deal with for our . A solid evaluation of the religious affiliations of the area we are looking to operate in would be vital to our international operations. have assumed a place of prominence for global stakeholders. What we consider poor working conditions in the United States may be considered ideal in other regions. When it comes to working conditions. along with environmental practices. it has allowed for my protestant politicians to be elected on their own religious platforms. Since the increase of the protestant population.Brazil: Introduction to International Expansion 7 companies are seeking ways to adapt their ability to understand the mysteries of culture and put that understanding to good use in the marketplace. Labor conditions can vary widely throughout the world. According to Patterson (2005).´ Religion can also affect the culture of a foreign market. ³more than 50 Protestants were elected to the national legislature in 2000´. These two areas of concern contain a vast number of specific issues on which little or confusing guidance is available to multinational enterprises. the protestant Brazilians have shown more inclination to politics than their catholic counterparts. With Brazil¶s increase in protestant population to approximately 20% of the population. The governmental atmosphere may be one of the most important topics we review as we consider business in Brazil and any other foreign locations.

In the interview.´ The new unionism has shown its power when in 2002 the Workers¶ Party was able to elect one of their own. According to Arat (2002). Luiz Inacio Lula da Silva a former metalworker was elected to the presidency of Brazil. ³it focused on internal democracy and the democratization of labor relations«. Arat (2002). Having regulations in place on how to deal with this before it becomes an issue would be a good business decision. that is a decision we must be prepared to defend if we are ever attacked. In an article by Zehara F. the unionism¶s objectives. and membership were based on a broad view of the meaning of representation that involved attempts to include and organize workers outside the formal sector and to link the representation of workers¶ interests with a wider political program for democratization and socioeconomic change. strategies. in the Brazilian case. Fourthly. He . he cites an interview with Oded Grajew. If we are happy dealing with international businesses that have less than ideal working conditions which allow us to make a bigger profit. Brazil has progressed to what Mark Riethof (2004) calls new unionism. Relocating or opening a new business venture in any area of the world makes it vitally important the company understand how much and what kind of influence labor unions demand. a strong relationship with a new left-wing party based on labor unions. He says that this new unionism has four primary characteristics. One of the considerations that we will need to review will be child labor. The company must make a decision and decide how we feel about working with these companies.secondly the movement emphasized autonomy from the state and a rejections of corporatist unionism«. Brazil has a high union membership. it is mentioned that there are 3-4 million children under the age of fourteen that are working in Brazil. A consideration of opening a business in Brazil will be Labor Unions. thirdly the new unionism maintained strong connections with social movements and.Brazil: Introduction to International Expansion 8 transactions. the Workers¶ Party«.

Brazil went through a series of economic structural adjustment periods. will normally cause an increase in pay. During the same period. How does the education of an international market affect labor force¶s income. and Verner (2001) tell us. There are many aspects of education that can be reviewed. ³the main reason children work is because the family needs money´. Education Education is another important factor that must be examined when looking to open operations in a foreign market. He believes. Over the past several decades. We need to put rules and regulations in ahead of time.Brazil: Introduction to International Expansion 9 believes that a payment should be made to the family of these children to help support them in school. ³The average Brazilian worker in 1998 had received more years of schooling than comparable workers in 1982. so we do not have to deal with these issues as they pop-up. Education can have a large impact on business. Holm-Nielsen. HolmNielsen. lower secondary (middle school). Brazil is still suffering from a lack of educated laborers. education has started to take on a more important role within Brazil. Brazil has seen this over the last few decades. upper secondary (high school) and tertiary (university) with each level being completed after a graduation test. especially as it increases. Education. the way that the schools are operated and participation in politics? We will touch on each of these topics. but too few Brazilians are getting advanced . Blom.´ These adjustments have helped with an overall increase in Brazilian education. We need to consider what kind of labor conditions we are willing to have our products developed and produced. There are four levels to the Brazilian education system: the primary level (elementary). Blom. and Verner (2001) also tell us ³Brazilian firms are increasingly demanding workers with a university degree. Labor conditions are very important in making a final decision on moving to Brazil.

This shortage is making it increasingly attractive to obtain a university degree. and we would need to keep a close check on these changes.´ Education can affect the political process as well.Brazil: Introduction to International Expansion 10 degrees. Another impact that has affected the education system of Brazil is a change in the way the educational system is set-up. As Brazilian education increases. ³In the Brazilian state of Minas Gerais. and dropout and repetition rates have dramatically declined. decentralization shifted responsibility for decision making from the state capital to school boards headed by an elected principal and composed of equal numbers of parent representatives and school staff. More control has been given to the local governments with less supervision from the state and federal government. we must make sure that we play close attention to what kind of unskilled or skilled workforce we will require. it will continue to open doors for new politicians to enter the political realm. One example is mentioned by Alexander (2001) when he discusses Minas Gerais. It will allow for greater diversity of leaders within all levels of the government. He states ³Thus Brazilians who are the best educated are the most likely to feel politically engaged. The lack of university educated workers will need to be reviewed before making a final decision on operations within Brazil.´ As the more educated Brazilians continue to become more involved in politics. Education will play a vital role in the opening of a new venture for our company in a foreign market. . Educational standards have improved. Patterson (2005) discusses this in one of his papers. Therefore. citizens are taking more of an interest in political topics and elections.´ The lack of university degrees has caused an increase in salaries for those who obtain a university degree. It can also cause changes within the laws that are in place to govern worker conditions.

The religion aspect of the culture of Brazil will also need to be considered. by contrast. This stabilization will help in making a decision in doing business in Brazil. We would need to break it down and review the . it mentions a survey that shows ³Brazil scored low on individualism. In a survey in Beekum. it could be disastrous to operations in Brazil.Brazil: Introduction to International Expansion 11 Summary In conclusion. The continuous change in governments leading up to the early to mid 1980¶s would have made it very difficult to have done business in Brazil. there are a few topics that we need to consider. The government of Brazil has stabilized tremendously over the last 30 years. Stedham.S. we will summarize the topics presented in this paper to help decide whether or not the company should move forward with opening operations in Brazil. Brazil shows a stronger tendency towards collectivism.´ This would be a very important topic to discuss with our domestic managers as they work with the leadership and employees that we would have in Brazil. and education in Brazil. The summary will cover the main topics about the governmental atmosphere. If they do not understand how to work with a collectivist society. We would need to review the individualism/collectivism tendencies of Brazil. The governmental atmosphere of Brazil is an important topic to review before commencing with operations in Brazil. labor conditions. Religions have made a large impact in the whole world. and Yamamura (2003) article. and hence is considered a collectivistic country. the U. The slow change from a military dictatorship to democratic control seems to have helped Brazil stabilize itself under democratically elected officials. In regard to the culture. scored high on individualism and is considered an individualistic country.

³The increasing religious pluralism of the region may imply that Latin American countries are becoming more open and tolerant-values that are fundamental for democracy to thrive´. he clearly states what the rise in protestant population means to Brazil. With Brazil having a strong labor union presence. With the increase in the protestant population of Brazil. There are two topics that we will need to discuss.Brazil: Introduction to International Expansion 12 local areas that we are looking to open foreign operations. This would be another strong sign to the stability of the democratic government of Brazil. First. it would probably be beneficial to help out the local community with needs that are not always met. The company could help with the public relations portion by advertising what the company is doing to help these local poorer areas. the company needs to consider the possible public relations fiasco that could happen if the company is associated with producers in foreign areas that are accused of operating sweat shops. Secondly. it would need to be discussed ahead of time and how the company . labor conditions and unions. There are a few ways of viewing the labor conditions of some areas. In addition. Labor conditions also need to be reviewed when summarizing the possibility of moving opening operations in Brazil. The company can do random surprise inspections of the facilities that are producing our goods. In an article by Patterson (2005). Labor unions are a strong consideration that needs to be discussed. the company needs to decide what kind of work environments are suitable conditions for their employees. There are a few ways to counteract this problem. Labor conditions are a very important part of doing business in foreign markets. the company needs to understand what this can mean to the politics of Brazil. The company needs to be prepared to deal with the increase in the protestant population.

Brazil: Introduction to International Expansion 13 would want to interact and negotiate with these unions. Some examples of an increase in the education system are ³By far the largest expansion in completed schooling has taken place among the middle levels of education. and Verner (2001) completed a study on how Brazilian¶s increasing their education level affects their income. Being prepared ahead of time before having to face the unions could be a strong advantage for our company. This increase in greater education has also caused an increased in income levels in Brazil. With the continuing higher education level of the Brazilian populace over the last 30 . The company must ask itself multiple questions about the education of the area. and how politics will affect it.6 this implies an hourly wage of R$4. Holm-Nielsen.7. A few of them are how will income affect our operations. and Verner (2001) have done a lot of research on how the change in the education system has affected Brazil. Blom.´ This is an amazing increase in the education system of Brazil. The group of workers with completed lower secondary education increased by 27%. The largest difference between educational groups is epitomized by the 814% difference between the monthly wage of a university graduate and a worker with no degree´ One of the most important factors that our company will have to review when we are looking at new ventures is how the education system is doing in that country. The main focus that we will look at in conclusion is how the increase in education is affecting Brazil¶s labor force. and the share of workers with upper secondary education expanded by a remark-able 68%. an average metropolitan worker earned R$199 a week for an average work week of 41. Education is extremely important when deciding which foreign markets to move into. Holm-Nielsen. Education is a key determinant of wage in Brazil. how the education system is build. Blom. they state ³In 1998.9 hr.

how the company plans to deal with labor conditions and labor unions in Brazil. The stabilization of the government over the past 30 years has taken care of one of the main concerns of opening operations in Brazil. and ensure that the right kind of skilled labor will be available through the education system for the part of Brazil that we will be operating in.Brazil: Introduction to International Expansion 14 years. . it would be my recommendation that the company moves forward with opening operations in Brazil. Taking everything in to consideration in this paper. The other points that the company will need to focus on are the differences in culture between the United States and Brazil. we will need to consider that the incomes we are paying our new employees in Brazil will continue to rise for the foreseeable future.

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. Religious Activity and Political Participation: The Brazilian and Chilean Cases. Riethof. . 47. R. 50.Brazil: Introduction to International Expansion 16 Patterson. 1-29. Latin American Politics and Society. Latin America Perspective. Journal of Business Ethics. 253-265. 31-47. Gegez. E.E. A. (2004) Attitudes Towards Business Ethics: A Five Nation Comparative Study. 31. Sims. M. (2004) Changing Strategies of the Brazilian Labor Movement: From Opposition to Participation. (2005).L.

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