INT 220 Final Project Milestone 3

INT 220 Business Brief Template Course Project Jamie Townsend INT-220-J7511 August 11, 2023 Section One: Drivers for Global Entry Country Selection Brazil Purpose of Global Expansion A driver behind the need for expansion into the global market is to provide businesses with a better competitive edge in other regions around the world, while providing the company with a better opportunity to lower overall operational costs, while adding additional products and services and reaching a larger consumer base that would otherwise prove unreachable. “Private companies have also realized that the best opportunities for growth and profits often come from outside their home countries.” (Dunung, 2019). Another benefit that can be seen from doing business globally is the introduction of peace between new countries because of the new dependence that is created from the new business relationship. The expansion to new countries comes with many benefits for the organization but is not without risk which is why it is very important to take into consideration all the factors that are crucial to a successful transition such as the new culture, government, and society of Brazil so that we can establish the business according to their customs and cultures. Business Impacts of Global Business It is important for any company considering expansion into the global market to first develop an expansion strategy. First the goals for expansion have to be outlined, then proper market and cultural research must be conducted in the area, followed by establishing local connections in Brazil, and then finally hiring local employees that can be trusted to help make the transition as seamless and successful as possible (Eldan, 2021). As part of the entire strategic plan for the global expansion we are going to open a new production facility located in Brazil for manufacturing our cases so they can be manufactured and shipped to the consumer quickly. This would eliminate issues with the supply chain that could occur if we needed to import our cases from the U.S. This also brings in jobs to the local economy that has been hit hard by recession and job loss and bring s a boost of jobs and when it is needed most for local workers. On that note, we plan to have our manufacturing, marketing, distribution, and sales all led by a Brazilian workforce once we have fully transitioned our operations and everything is up and running smoothly in Brazil. Societal Impacts of Global Business Expansion of businesses globally has definitely led to cultural exchanges between countries. When businesses bring new ideas, services, and products to new areas of the world it can have an effect on the cultures and values of a region and possibly lead to those being overrun over time. This can be

seen in a very negative light. There have been numerous examples of errors made by American companies that tried to expand and market globally through cultural insensitivity that led to losses in revenues, customers, or fines for the organizations. A good example was a mistake made by McDonald’s running an ad in China that portrayed a Chinese man begging in the ad (Hopwood, 2019). To the Chinese begging is seen as a total insult. McDonald’s had to pull the ad, issue a formal apology, and lost revenues due to their insensitivity and misunderstanding of the Chinese Culture. Transportation has seen a growing demand for infrastructure like new ports, airports, or roads as a result of increasing global expansion efforts by organizations. This increased demand has resulted in the creation of the new infrastructure as well as improving upon what is already existing, but the sharp increases in transportation has had marked increases on traffic problems and air quality due to pollution concerns. Employment opportunities are certainly on the rise in various areas across the world due to global expansion because of all of the new positions that are created as new companies open various manufacturing, shipping, or executive offices in new countries as part of their expansion strategy. The downside is that it can lead to layoffs in their domestic market locations as downsizing becomes necessary because jobs are moved to places where the labor is cheaper. Infrastructure effects of global expansion are again both negative and positive. In one sense you are creating new office spaces, warehouses for your goods, IT services, communications networks, and manufacturing plants for production which has led to newly opened new facilities all over the world. You also have communities that may now have a homeless or displaced population depending on where the facility was built in addition the destruction of the land and environment on which your new facilities are now setting. It crucial to way the pros and cons of expansion to deem whether the pros outweigh the cons in your chosen region for expansion and work with the new government and population to have the least negative impact as possible. “The noticeable reduction in the transportation and communication costs has facilitated the division of the productive process, allowing participation by a larger number of geographical locations.” (Bonapace, 2010) Environmental climate has been an increasingly hot debatable topic for quite a while now and it has to be at the top of the list when an organization is looking into global expansion. It cannot go without merit to consider the pollutants that may be at an increased level as the new business you bring into a region is going to use considerable resources and produce large amounts of waste product. In addition, anytime the levels of pollution within an environment are increased with that comes things such as climate change or deforestation. A good example of this is all of the deforestation that has occurred in India to make way for oil palm plantations in the region. They would rather cut down the forest to make way for this than find other alternative ways to produce palm oil without tearing down the forests to frow it (Jong, 2022) Cultural Considerations for Global Business It is important for an organization to research the culture of the potential global market they are considering for expansion prior to their entry to that market because if you do not fully understand the culture of the region in which you are trying to do business it will hinder your ability to understand the behaviors of the people you wish to sell and market your products and services to. Understanding the values and cultural norms for the area helps better predict behaviors which in turn helps tailor marketing strategies for new products or services (Dunung, 2019). In addition, if you do not have a firm grasp of the culture, it can hinder your communication abilities as well. Understanding the language for the area

to be greeted with a grab of the hand followed by a kiss on the cheek (Proquest, 2023). Brazilians value personal space far less than Americans so they have no problems moving in quite close when greeting or communicating with one another. They are also quite expressive by use of their hands during their conversations and rely far less on fancy presentations by way of computers or documentation which they perceive as dull and impersonal. This is important to understand as to not take offense. Foods in the two countries both combine flavors from native, European, and African cultures which makes them somewhat similar in their offerings. In Brazil Barbeque is considered to be one of its staple foods. However, in America , convenience and fast foods are a fundamental part of American culture that is not nearly as important or easily found in Brazil (Proquest, 2023). Religion is an area that both countries are quite similar. Brazil is mostly Christian with the most widely practiced being Catholicism. In the U.S. Christianity is also the largest religious makeup as well even though it is divided amongst Catholicism, Protestant, Baptist, Lutheran, and Presbyterian. In addition, the U.S. has several other religions that are practiced such as Jewish, Muslim, Mormon, and Buddhism. This makes it easier to understand the beliefs of each culture when you step into that world when doing business. Both The U.S. and Brazil also partake in unique festivals or celebrations in their nations. For example, Brazil’s Carnival is probably the most well-known festival in which they hold parades, have live music, and their citizens enjoy in dancing in their streets while wearing bright colorful clothing or costumes. In addition, they also celebrate Christmas and the 4 th of July. The same can be said in the U.S. where we also observe the 4 th of July celebrated with fireworks and gatherings to mark our independence. In addition, we also celebrate Christmas, Thanksgiving, and New Year’s. If we work hard and understanding the cultural differences that are present between the U.S. and Brazil, I believe we can develop long lasting relationships that can prove useful to establishing business in this region of the world. It will be important to use effective communication strategies and learn collaboration tactics that work well across both cultures to help in facilitating good working relationships with the people if Brazil. Category United States [Brazil Commonly Spoken Languages English, Spanish, and Chinese are the most common but Vietnamese is also pretty abundantly spoken. Portuguese, English Commonly Practiced Religions Christianity, Jewish, Muslim, Non- Denominational Catholicism is most common but other forms of Christianity can also be found in the area Power Distance Index (PDI) 40 69 Individualism Versus Collectivism (IDV) Individualism Collectivism Masculinity Versus Femininity (MAS) 62- Masculine 49- Masculine Uncertainty Avoidance Index (UAI) 46 – low to moderate uncertainty Index 76 – low level of tolerance for uncertainty

Category United States [Brazil Long-Term Orientation Versus Short-Term Normative Orientation (LTO) 26 – Long Term Orientation 44 – Intermediate Long-Term Orientation Indulgence Versus Restraint (IVR) 68 – high indulgent society 59 – average indulgent society Political and Economic Profile There are both similarities and differences when you compare Brazil with the United States both economically and politically. Both countries share very similar systems for governing their nations by way of political systems that support having an elected President as the Head of State. In addition, both have a congress as well as a judicial branch as part of government. The roles of Congress vary between nations. In Brazil, Congress is more of an advisory body for the President who has sole decision-making authority unlike the U.S. President. That said, Brazil has struggled historically with more corruption within its’ government than the United States as well. More recently they have cracked down and weeded out some of the corrupt individuals and have elected a brand-new President in hopes of getting a fresh start. The economy of Brazil is considered to be a developing mixed economy whereas the U.S. has a mixed economy. A mixed economy simply means that the economy is a mix of both private and government owned entities that share interest in owning, selling, or trading goods within a country (Marketline, 2022). Brazil closely mirrors the U.S. in their economic approach but they are still developing and have more government involvement or manipulation than the U.S. It needs to be noted that Brazil is a difficult economic climate to do business in due to the high cost of doing so. They have an extremely high tax burden and poorly structured revenue system (Marketline, 2022). In addition, they are currently facing a rising cost of inflation and difficulty with their supply chain making infrastructure a problem in the region. If you are looking to expand for agricultural reason than Brazil could be a viable option otherwise you would need to do plenty of research to make sure you knew what you were getting into before pursuing expansion here. Lastly, purchasing power between the two countries is drastically different. Households in the U.S. have per capita GDP of approximately $76,350 in comparison to Brazil where the per capita GDP in 2022 was $8,831. Both of these countries have a good history on trade. The U.S. is the 2 nd largest trading partner for Brazil in terms of imports (International Trade Administration, 2023). Exporting goods from Brazil proves to be quite a bit more difficult for businesses due to very complex regulations and taxes. Brazil is the largest exporter of soybeans but they also export coffee beans, sugar, orange juice, beef, and chicken. Agriculture is a big part of the economy and makes up the largest part of the country’s exports and continues to grow in Brazil. Overall, the economy is stable in Brazil despite an increasing inflation and a low per capita GDP if you play your cards right and do proper research in regards to the regulations and tax burdens associated with doing business in this country you can be quite successful once you get yourself setup and running in the country. You can have ample opportunity for growth along with the ability to setup manufacturing operations, shipping facilities, and exporting and receiving operations as well.

Documentation requirements in both countries are pretty standard and would be fairly easy to navigate depending on what type of business you were starting with in the country. Both countries require that you acquire a taxpayer identification number. In the U.S. this is obtained from the IRS and in Brazil these are issued by Brazilian Revenue Service. Once the number is issued the business can now adhere to the proper tax reporting requirements necessary in both countries. In addition, both countries require certain types of permits dependent on the type of business that you will be conducting. It is important to do your research and determine if your particular type of business requires any special permitting in the region prior to your arrival so that you can obtain proper licensing or permits necessary to remain in compliance. This may apply to certain environmental companies, construction type projects being performed in certain areas, or professional services requiring licenses like doctors and lawyers. While operating a business in either the U.S. or Brazil is fairly similar when it comes to the regulations and legal requirements it should still be noted that it is critical that you do proper research, align yourself with local legal help that can assist you in navigating the regulatory and legal system to assure that you have all the proper documentation and licensing in place to avoid penalties and costly fines that could be imposed in the event that you misunderstand something, miss an important legal standard as part of establishing your business, or fail to follow a regulation in country that ends up being an oversight that causes interruptions to your business operations. Section Three: Market Considerations Monetary Considerations The currency used in Brazil is the Real. The current exchange rate between USD and BRL is 1 USD = to 4.73 Brazilian Real. If you are going to conduct business in Brazil you must be aware of exchange rates in the country since this is their official currency all business transactions taking place in their country are conducted using the Real. This can be significant is you are doing business I the country because in the event th Central Bank of Brazil raises the Real against the U.S. dollar then the cost of services or products in their country will also rise which going to have an effect on overall profitability for your organization. The monetary policies for Brazil are established by the Central Bank of Brazil and are intended to promote economic growth and regulate the supply of money within the country (Banco Central Do Brasil, 2023). This regulation is typically achieved using interest rates to help control inflation. However, currently in Brazil they are experiencing a very high rate of inflation which is effecting how much businesses are willing to invest and how much consumers are going to be willing to spend. There are times when growth slows too much and so does investment and spending that no matter what the Central Bank does it isn’t going to help stabilize the economy. Why is this all so important when considering whether or not to expand the business into the Brazilian market? The best example to explain this would be to look at in terms of contracting with a Brazilian manufacturing plant to handle the production of products and the negotiated price for doing so was set in the Brazilian Real. Then suddenly the Real increases in value compared to the value of the U.S. dollar, then suddenly as a company you will end up paying more for the product to be produced than what was initially agreed upon between the company and manufacturing firm. It is important that any business that is considering doing business in a foreign market to also understand the available options to lock in exchange rates to reduce the risk associated with fluctuations in exchange rates such as using spot rates, forward rates, or swaps (Dunung, 2019). Supply chain and logistics, manufacturing,

customer service, sales, taxes and legal fees are a few of the many areas that involve cost and revenue. Fluctuations in exchange rates can directly impact the relative value of expense or income in all areas of international business operations (Sindhu, 2021). Category The U.S. Dollar Brazil Exchange Rate $1 (USD) is equal to 4.73 Brazilian Real 1 Brazilian Real is equal to $.21 (USD) Management and Logistics Considerations When approaching a new market for your business and the considerations involved in how to manage the new employees in Brazil it is crucial to understand the people, diversity, culture, labor laws, or goverenmental policies surrounding employment practices before establishing your new business operations to avoid potential pitfalls. Brazil has very strict protections for their worker’s as it pertains to benefits, classifications of employees, discrimination, the right to unionize, and strict laws surrounding terminations and the notice periods that must be given. Should the organization overlook any of the labor laws outlined they face heavy fines, penalties, or legal actions (Marfice, 2020). Logistically because of the unique labor market the Brazil presents a business needs to structure their policies and working standards to accommodate their employees in such a way that they can be successful. This includes providing safe working conditions and necessary safety equipment for employees to perform their job functions. Scheduling procedures that will take into account what is important culturally to Brazil, specifically taking into account the holidays or events that employees should be afforded the ability to have paid days off for observance and attendance. An inclusive environment that considers the diverse nature of the employees working for the organization needs to be considered to encourage workers to participate collectively in the success of the business increasing performance, innovation, and improvements of daily operations. The overall idea when a business is designing their plan to manage their human resources as they are expanding into Brazil is to aim for a high performance work system. This entails a set of man- agement practices that attempts to create an environment within an organization in which the employee has greater involvement and responsibility (Dunung, 2019). A business that is expanding operations into a new country with a new workforce that comes from a different cultural background and is made up of a diverse group of people has an obligation to focus on diversity management, job design, the selection and placement of employees, and finally a compensation and benefits package tailored to this diverse groups needs and the laws of their country. If an organization can do this successfully and continue to focus on these fundamentals while managing their workforce they could make the transistion into a new market a successful one. Otherwise, an organization could encounter a great deal of difficulty with the government by way of violations and fines, from workers by way of complaints or suits filed within the legal system, or total failure within the Brazilian market. Mode of Entry Considerations

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ProQuest. (2023). Brazil: General Attitudes. CultureGrams Online Edition. Retrieved from https://online.culturegrams.com/world/world_country_sections.php? cid=25&cn=Brazil&sname=General_Attitudes&snid=6 . Serviap Global. (2021, January 31). Expanding your business in Brazil: Challenges & Benefits: Serviap Global ® . International Professional Employer Organization | Serviap Global. https://serviapgroup.com/blog/challenges-and-benefits-of-expanding-your-business-into- brazil/ Sindhu, A. (2021, November 15). How exchange rates influence international business . EWU. https://online.ewu.edu/degrees/business/mba/international-business/exchange-rates- influence-international-business/ U.S. State Department. (2021, February 25). Brazil - united states department of state . U.S. Department of State. https://www.state.gov/countries-areas/brazil/