SBU 240 45 International Business – Fall 2021

To: Prof. Marshall

From: Sabria Reuss
Date: December 11
Re: Executive #1 - Global Business Opportunities for Ford Motor Company in Brazil and the
United States.

Introduction

The purpose of this Executive Brief is to provide a summary and background on the
Ford Motor Company and its global operations of automobiles in Brazil and the United
States. The information provided will discuss the economic, cultural, political, and
technological factors of conducting business in Brazil compared to the United States.

Company Overview and Background

The Ford Motor Company is a United States automobile manufacturing company that
has been in operation since July 1903 that began with only 12 investors and 1,000 shares.
This family-focused business was started by Henry Ford who offered a new way of
manufacturing a large number of automobiles through the production method of a moving
assembly line. This revolution in manufacturing cut production time from 12.5 hours
down to 1.5 hours.
In 1904 Ford expanded its international operations to Walkerville (Windsor),
Ontario, across the Detroit River from where their current facility was based. The goal was
to gain customers in Canada and the British Empire. In 1908 the first overseas branch was
opened in Paris, France. In the same year, Henry Ford created the bestselling vehicle of all
time, the Model T. With 15 million sold between 1908 and 1927, this simple, affordable,
durable automobile became a reliable option for new drivers, providing transportation
across the 18,000 miles of paved roads in the U.S. (Company timeline).
 The great grandson of Henry Ford, William Clay Ford Jr. is the current executive
chairman of the company and owns 6.8 million shares of common Ford Motor Co. stock.
Today, the Ford Motor Company offers a variety of vehicles for consumers and businesses.
The types of vehicles the company manufactures includes trucks, vans, sedans, SUV’s,
crossovers, fleet vehicles, performance racing supercars, hybrid and electric powered
vehicles, and now self-driving AI vehicles (Our purpose).
On January 12, 2021, the Ford Motor Company ceased all production in Brazil closing
the last three factories because of poor sales and significant losses due to the global
pandemic. The company estimated a total loss of around 4.1 billion and leaving
approximately 5,000 people out of a job.

Comparison between the United States and Brazil

Geographic factors
The geography and climate of Brazil differs greatly from the geography and climate
of the United States. The United States is located in both the Northern and Western
Hemisphere with a distinct four seasons in most of the country. The Amazon Rainforest
covers one third of Brazil, lying within the Southern Hemisphere with a tropical climate
with an average temperature ranging between 72-79 degrees Fahrenheit year-round.
Unlike the United States summer months ranging from June until September, Brazil’s
hottest summer seasons range from December to March.

Manufacturing Climate Conditions

The main producers of the world’s market for rubber manufacturing was the
Netherlands and England in the early 20th century and held the rubber plantations in the
East Indies. 70,000 rubber trees were originally transferred from the Brazilian Amazon to
the East Indies, ultimately robbing Brazil from being the number one exporter of rubber in
the world. Henry Ford sought out alternative rubber manufacturing locations because of
the high, unfair prices set by the British, since three quarters of all imported rubber into
the United States went to the automobile industry. After conducting an independent study
of the Tapajos River valley, Ford made a deal with the Brazilian government on July 21,
1927, for 2.5 million acres of land in exchange that after 12 years, Ford gives 7% of annual
 profits back to their government and 2% of annual profits to go to their local
municipalities. This deal seemed to be very beneficial because it was estimated that the
company would be able to produce enough rubber to supply 2,000,000 automobiles a
year.
Henry Ford saw potential in producing products in Brazil’s tropical climate. From
1928 to 1945 the Ford Motor Company created two plantations to begin permanent rubber
manufacturing in Brazil. He had two goals in mind; to supply Ford’s internal demand for
rubber while providing a better life for the local Brazilians. Ford invested $2 million into
creating a plantation in the Amazon Rainforest of Brazil called Fordlandia, along with
another plantation named Belterra nicknamed “Dearborn in the Jungle.” When both
plantations were in custody of the Brazilian government, the total investment in both
plantations equaled over $20 million. Belterra became a community of 7,000 members and
included a few major schools, hospitals, churches, stores, a golf course, a power plant, a
water purification plant, a sanitary department, and much more. In 1941, the company
planted 3,651,500 rubber trees between both locations.
A major setback and downfall with this deal was that Ford failed to understand the
Brazilian culture and tried to impose an American-like work schedule and lifestyle on the
locals (Ford rubber plantations in Brazil).

Economic
In 2020, the United States population was 308,758,105 compared to the population
of Brazil at 209,469,333 (Explore economies). To put the current economic differences into
perspective, we can look at a factor between the countries which is the GDP per capita. The
United States GDP per capita is $63,543.58 whereas the GDP per capita of Brazil is
$14,836.31 (Country comparator).

Cultural
As Latin America’s largest country, Brazil has a diverse cultural background. It may
be assumed that Brazilians speak Spanish but that is untrue. The native belief systems,
ethnicity and language can range from Portuguese to Japanese to Egyptian to German. It is
important that all communication and documentation be conducted in Portuguese and
English since Portuguese is the official language of the country. Although there are 192
living languages spoken by the Brazilian people (Morrison & Conaway, 2006).
Unlike the American culture where we strive for equality between race, gender, and
social status, the Brazilian culture has slightly different views. In the U.S., men and women
are starting to see a transition towards better equality in the workplace. Brazilians view
men as superior and women are expected to be subordinate. There is also a distinct
separation between the rich and the poor with the wealthy given special privileges.
Depending on your class and status in Brazil, that will determine a person’s occupation
(Morrison & Conaway, 2006). The U.S. provides all with the opportunity to climb the social
ladder and obtain any career goal they choose.

Political
Brazil’s political system is a multiparty federal republic with the president acting as
the head of state and the head of the government. The two legislative houses include a
Senate and a Chamber of Deputies. Unlike Brazil is a market economy where the prices of
goods and services are determined in a free price system (Morrison & Conaway, 2006). On
the contrary, the United States is a mixed economy which embraces economic freedom with
some government intervention.

Summary
To summarize, this executive brief provided a brief introduction of the Ford Motor
Company and an overview of the business opportunities within Brazil and the United States.
As suggested, the Ford Motor Company from the United States has had an extensive history
of conducting automobile manufacturing operations and other business ventures such as
the creation of rubber plantations in Brazil. Although the United States and Brazil share
some similarities when it comes to the geographical, economic, political, and cultural factors
of the countries, the two differ greatly and these factors must be taken into consideration
when expanding business internationally. Henry Ford was a visionary that saw potential in
the tropical environment for the benefit of the company and to better the lives of the
Brazilians. Unfortunately, the global pandemic solidified the end of operations for the three
remaining manufacturing plants in Brazil at the beginning of 2021.
 References

Company timeline. Ford Corporate. (n.d.).

https://corporate.ford.com/about/history/company-timeline.html.

Country comparator. Results. GlobalEDGE Comparator. (n.d.).

https://globaledge.msu.edu/comparator/home/results?year=&field=NY-GDP-PCAP-
PP-CD&country=3.

Explore economies. World Bank. (n.d.).

https://www.doingbusiness.org/en/data/exploreeconomies/brazil.

Ford rubber plantations in Brazil. The Henry Ford. (n.d.).

https://www.thehenryford.org/collections-and-research/digital-resources/popular-
topics/brazilian-rubber-plantations/.

Morrison, T., & Conaway, W. A. (2006). Kiss, Bow, or shake hands: The bestselling guide to
doing business in more than 60 countries. 2nd e.d.

Our purpose. Ford Corporate. (n.d.). https://corporate.ford.com/about/purpose.html/?

intcmp=hp-brandgallery-ourpurpose.