Global Business Cultural Analysis Brazil final revision

Running Head: GLOBAL BUSINESS CULTURAL ANALYSIS: BRAZIL1

Global Business Cultural Analysis: Brazil

Jovanim J. Martinez

Liberty University

Author Note

Jovanim J. Martinez is a first year MBA student attending Liberty University, Lynchburg, VA. USA

Jovanim Martinez is a former U.S Marine male of Panamanian heritage and is considered an Afro-Latino, currently workingas a Nuclear Performance Improvement Manager at Edison Intl.

This research was supported and assigned by Dr. Corum, Liberty University; Business 604/B22

Running Head: GLOBAL BUSINESS CULTURAL ANALYSIS: BRAZIL

Correspondence concerning this article should be sent to Jovanim Martinez. Email address: [email protected]

Abstract

This paper reviews and analyzes the business culture

and relationship between Brazil and the United States in

order to conclude; if successful global business can be

achieved between the two nations outside of the oil trade

that is already in place. Extensive research from primarily

Brazilian scholars with American educated backgrounds with

published academic research and studies, official government

web sites, and world business recognized experts, have been

compiled and properly cited to give the reader a “boots on

ground” perspective from the experience and research of

actual Brazilian scholars, and not from a view of a graduate

student whom never stepped foot in Brazil.

This paper will not only report economic facts and

statistics, but will introduce a gruesome crime rate and a

picture of the grotesque, and presently oppressed Black-

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Latino, and indigenous people of Brazil, neglected by a

government that is currently economically seventh in size

worldwide. This paper suggests that Brazil’s business

culture is stricter than that of the US, but its government

accepted racism, and elitism will not allow them to move

forward in today’s global business.

Keywords: Global Business, Culture, Black

Global Business Cultural Analysis: Brazil

As citizens of God’s beautiful earth (Holy Bible, Genesis

1:1); a creation God created for man to live and love one

another on, can fathom in the year 2014, the vast amount of

technology, services and products, that are available today

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to most Americans and to other developed countries and their

citizens is nothing less than amazing! The reader may look

around and in just an arm distance of him or herself may

have access to a numerous amount of products based on

technology not necessarily introduced in the United States

but elsewhere around the globe. If one may take a moment to

look around and notice the products, services, and

technologies that are being provided, can safely assume

those may have come from other countries other than their

own. The fashion industry, the food and beverage industry,

the banking industry, the automotive industry, the

entertainment industry to include; box office films, sports,

news and television, military defense industry, and the

energy industry are just few of the many industries that

supports and finance todays global economy. The question

that should follow that statement is how does that happen- a

product such as an Apple MacBook on the shelves of an

electronic store in Japan, or an exclusive Gucci woman’s

handbag, made in Paris, available for sale from a boutique

style storefront in Beverly Hill, California? The success

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of Apple Inc., and their ability to be the “most valuable

company in the world” (Forbes.com, 2013, para. 6) is because

of global business.

According to Czinkota, Ronkainen and Moffett (2004),

“global business

consists of transactions that are devised and carried out

across national borders

to satisfy the objectives of individuals, companies, and

organizations” (p. 1). The authors describe the key tenant

of global business to be the “satisfaction” factor of its

customer (Czinkota et al., 2004, p.1). Just like any product

or service “ satisfaction” must be achieved to develop the

demand variable (in reference to the Law of Supply and

Demand). Success is dependent on satisfaction of the

customer or stakeholder.

Once satisfaction is reached, a demand will surface,

which in turn, will give a corporation or government an

option to explore markets of different nations. Questions

will arise such as; how will the product, service or

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technology fit in the international arena, what adjustments

may be needed for local conditions, where and what are the

logistics for supplying the product, expected threats from

global competition amongst other simple and more difficult

questions. Once a product and or company obtains success

through global business then, and only then, how an Apple

iPhone can be sold in China, a student at Oxford University

can use Google to help with their research and then send a

message displayed on his mother’s Facebook page requesting a

care package of all of his favorite treats, from his Samsung

tablet. That is the power of Global business.

The recent advancement of the internet and other

technologies broadcasting live events across the world, has

sparked the advertisement industry of an astronomical

magnitude. Nations across the world are pitching to the

appropriate committees to host major world events such as;

the World Cup - a soccer (futbol) tournament, Summer

Olympics, Winter Olympics, Mrs. Universe Pageant, and other

worldly events to profit from the influx of tourist dollars,

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and advertisers in which will boost the host nation’s

economy.

For the eleventh time in history a country will host

the World Cup, and the Summer Olympics, and the third time

within two years apart (Kwizmi, 2013, para.1). Brazil is

causing multi-national companies mass hysteria to acquire a

piece of the marketing share, and the huge profits it can

warrant a company. According to Laura Stampler of Business

Insider (2013), a digital video advertiser can receive a

billion views during World Cup 2014. Simply speaking, that

means huge profits for companies.

Brazil, a country that has every major multi national

corporation on their toes will open their doors for the

world to see, in the beginning of summer 2014 and again in

2016 for the Summer Olympics.

Moreover, once a particular legal entity, be it a

corporation or government, have crossed all of the major

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hurdles and obstacles of entering the global business arena,

and chooses or wishes to do business in Brazil , then what

next? What key cultural aspects and avenues of approach may

help to achieve and or deviate from success.? In an article

titled “Working Abroad: Navigating International Business

Culture”, the authors Auffret and Dlouhy (2014) stated:

“Knowing how foreign cultures differ from your own and what

kind of behavior you should expect and avoid is probably the

first step in the right direction. It is essential that you

leave an “our way is the best way” attitude at home and try

to adjust to a different world” (Auffrett & Dlouhy, 2014,

para. 3). As a global manager, or an executive team member

representing a company, knowledge of customs and courtesies

of the host country may make or break a deal. Auffrett and

Dlouhy expresses how important and imperative it is to be

briefed and well versed in the host nations business

culture. Navigating through the language barrier, and

possible communication issues may be quite difficult but the

authors strongly urge and even warns, ignorance is not an

excuse, if success is the objective.

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This paper analyzes the business culture in Brazil

through the research of recognized and accepted published

academic study and bodies of work. This paper will help the

reader understand and comprehend the culture of Brazil, from

an American perspective, that may or may not help navigate

through the Brazilian business culture in order to help

achieve business success. The purpose of this paper is to

give the reader the greatest opportunity possible to achieve

success when doing business in Brazil by comprehending it’s

business culture. This paper will analyze the business

culture in Brazil by answering these questions in great

detail;

What are the major elements and dimensions of culture

in Brazil?

How do locals conducting business in the nation

integrate these elements and dimensions?

How do both of the above items compare with US culture

and business?

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What are the implications for US businesses that wish

to conduct business in that region.

Furthermore, Brazil has been studied many times over

and researched regarding global business opportunities

within the nation. This paper will undoubtedly show the

effects of racial and gender discrimination along with the

huge gap difference between the lower and higher social

economic class; particularly in reference to global

business.

What are the major elements and dimensions of culture

in Brazil?

Brazil has a very rich, colorful, history. A history

that mirrors the history of the United States in regards to

colonization with the help of the African slave trade. The

facts are very startling and will later be addressed. It is

very important to understand the history and different

elements of racial discrimination. An understanding of the

different elements and cultures of Brazil will be very

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beneficial because it gives one the knowledge of how a

culture looks at their own people, in turn will help

understand how they may view others of the same race but

with different nationalities as well.

Historical Background

Colonization. According to the website of the

Consulate General of Brazil in San Francisco, California on

Brazilian culture (2014);the Portuguese began colonization

of Brazil in 1530, whom which struggled during the sixteenth

and early seventeenth century to remain leading the efforts

in colonizing all of what is known today as Brazil. Their

struggles were in part from battles with unfamiliar terrain,

conflicts with the indigenous people, and the incoming of

French explorers and later the incoming of the Dutch

“undermining Portuguese control”. Brazil was granted

independence from Portugal in 1822 (Culture of Brazil, 2014,

para. 25-30).

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Role of slavery. The Consulate General of Brazil (2014)

expresses “Afro-Brazilians” are the direct descendants of

mostly western African nations. Slaves were brought to

Brazil over a three hundred year period. Afro-Brazilians and

people of mixed racial ancestry account for at least 45

percent of the Brazilian population at the end of the

twentieth century. The Consulate also noted the correlation

between the US and Brazil had both imported a large number

of African slaves, but reiterates in a hint of a bragging

manner that the African slave trade having started a century

before the United States. The Consulate states (2014) that

Brazil was “ involved (in) the importation of two to three

times more slaves than in the United States. Estimates range

from three to four million Africans forcibly taken to

Brazil” (Culture of Brazil, 2014, para. 26). Portuguese

settlers were mostly single men that “ took African or

indigenous women as concubines or wives (which) led to the

great racial mix that characterizes Brazilian society today

” (Culture of Brazil, 2014, para. 27). The slave trade was

abolished in 1888.

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Brazilians classify racial mixes differently than the

way the United States report in their census. The “one drop”

rule may not have any academic support to prove the truth of

that theory in today’s United States. The one-drop rule,

allegedly defines; a person as being “Black” as long as

someone is considered black in his or her genealogy. An

example is if someone’s great, great, great, great…

grandmother is Black then regardless if all other members

were White in color, then all children born in that family

line is Black. Some studies argue, that theory does not

exist today. An argument that defends that the theory exist

today is that the United States President, Barak Obama is

considered to be the first “Black” United States President.

The President’s mother is White, as well as his grandmother

and so on. His Father is African, a Kenyan of dark

complexion. Moreover, why is the president not considered

White?

Brazilians profile their races differently. According

to the Brazilian Institute of Geography and Statistics

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(2014) Brazilians are categorized in five categories; White,

Black, Brown, Yellow, and Indigenous (IBGE, 2014).

Role of the indigenous people. According to Survival

International, an organization that champions, defend and

protects the lands of tribal people around the world,

reports that there are 896,000 Indians identified with one

of the 238 tribes in Brazil. These members have experienced

genocide and racism by their government and oppressors for

over 500 years. Brazil does not recognize tribal land

ownership. Indians are considered less than a citizen by

law. Today they are stricken by disease, starvation, and

hunted like animals to be murdered for sport. The Brazil

government recognize them as second-class citizens (Survival

International, 2014). The obvious and blatant disrespect for

mankind is literally written in Brazil law, and are pranced

all over official websites describing their past history in

regards to their mistreatment towards Indians and Blacks; as

if their proud of it.

Religion. The Brazilian government (2014) reports,

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from their recent census, two-thirds of the population are

identified as Roman-Catholic, awarding them the country with

the most Catholics. Other religious groups are present but

as stated above most are Catholics. Only 1% of the nation do

not believe in a supreme God, or religion. Catholicism is

Brazil’s official religion (Brazil.org, 2014).

Social Status

Demographics. Table 1: Brazil Demographic Table (CIA,

2013)

Ethnic

Groups

White:

53.7%

Mulatto:

38.5%

Black:

6.2%

Other:

0.9%

Religion R.

Catholic

73.6%

Protesta

nt

15.4%

Spiritua

list

1.3%

Voodoo

0.3%

Other

2%

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Language Portugue

se

Populati

on

201.009,

622

6th in

world

Age 0-14

24.2%

Age 15-

24

16.7%

Age 25-

54

43.6%

Age 55 +

15.5%

Median

Age

Total

30.5

Male

29.5

Female

31.1

Birth

Rate

14.97 births / 1,000 population world comparison:

133

Death

Rate

6.51 death / 1,000 population world comparison:

152

Racial equality. Sônia Santos, Jaime Alves, Luciane

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Rocha, and Maria Andrea Soares; brave Afro-Latino American

graduate students of the University of Texas-Austin,

embarked with their professor Dr. João H. Costa Vargas

(2013) (currently a professor at the University of

California, San Diego; Africana Studies Department) in a

project where each student activist engulfed their selves

into the cities and streets of Brazil asking critical

questions about the polity’s nature and process. “Their

analyses suggest the imminently corrupt character of the

dominant Brazilian social and ideological project” in a

published journal article titled Gendered antiblackness and the

impossible Brazilian project: Emerging critical black Brazilian studies (Vargas,

2013).

The students concluded from endless amounts of data,

and from an actual “boots on the ground” experience, that

the racial inequalities in Brazil; should be considered

nothing less than an epidemic. To paint a picture in

recent events and to put in plain context, an event

occurred in 2007 that would make the “ Rodney King Riots”

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in Los Angeles seem like a small scuffle in an afterschool

brawl. Termed as the massacre of 2007 in the Complexo do

Alemão, 19 Afro-Latinos, of a working class neighborhood

were killed in a single police operation. A riot ensued,

the city of Rio de Janeiro experienced a great amount of

gruesome violence that included; “burning of buses,

trucks, and passenger cars; shootings of police officers,

including the downing of a police helicopter in Morro dos

Macacos in October 2009 (22 people were killed in that

operation)…” (Vargas, 2013). The authors concludes that an

aura looms over the country of an anti-blackness agenda

generating from the heights of the government and of the

affluent.

The role of gender. An outside perspective of Brazilian

women may come from viral digital videos found on the

world wide web displaying the popular Carnival with women

prancing, and dancing in the nude, painted and dressed in

many different colors and accessories with huge smiles on

their faces. The media often depicts the beaches cluttered

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with nude women sunbathing. These images may help form a

stereotype that may not be as far from the truth as one

may think. Mirror News, a United Kingdom media outlet

(2013) reports that Brazil has outlawed topless

sunbathing; causing public protests (Smith, 2013). The

perception of public accepted lewdness has prompted the

Brazilian government to create laws that will improve the

stigma of lewdness on its public beaches. The women of

Brazil have embraced their sexuality, and considers

topless sunbathing as an expression and a civil right that

has been taken from them.

Brazil, in 2011 celebrated the election of their

first woman President, Dilma Rousseff. Her achievement

should help with the future treatment of women and also

should motivate the women of Brazil to aim for success,

all a while the Afro-Brazilian woman have a harder road to

climb. According to a Brazilian government official web

site describing Brazilian culture it describes (2014)

“White, middle-class and elite women living in large urban

centers generally have more occupational choices and

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greater behavioral flexibility than their poorer, darker,

rural sisters”, and that “40 percent of Brazilian women

have jobs outside the home, although they hold only 2

percent of executive-level positions… 70 percent of Afro-

Brazilian women are employed in low-level agricultural,

factory, and domestic service jobs”( Brazil, 2014, para.

80-85).

Luciane de Oliveira Rocha researches the treatment of

black women in an article titled Black mothers' experiences of

violence in Rio de Janeiro (2012) “suggests that both the direct

discriminatory actions of the state and its failure in

providing for the needs of the black population produce(s)

prejudice and contribute to genocide (p.61). Her research

further describes the lack of government support and

protection especially against violence towards black women

in Brazil. The struggle for women equality have been a

longer and steeper journey, than that of the United States.

In Brazil, women were granted the right to vote in 1932, and

until the mid 1960’s was not allowed to open bank accounts

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of their own, or leave the country without permission from

their husband or father (Brazil, 2014, para. 85).

Government Profile

Table 2: Brazil’s Government Data and Statistics (CIA,

2013)

Government

Type:

Federal Republic, comprised of 26 states

and one district. Capital is Brasilia.

President is Dilma Rousseff (term started

Jan.1, 2013).

Legal System Civil Law (2002), Constitution ratified Oct.

5, 1988

Educational

Statistics

Education expenditure 5.8% of GDP (49th in

world), Literacy 90.4%. Male 90.1%, Female

90.7% (are able to read above the age of 15)

Internet .br top-level domain, managed by the

Brazilian Internet Steering Committee.

Ranked fourth in the world with 23,456,00

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Internet hosts, 10th in the world with

48,572,160 IPv4 addresses allocated, 23.6

per 100 residents Facebook is number one

site (2013).

Energy (EIA,

2013)

8th Largest Energy consumer in the world. 13

Billion Barrels of Crude oil available in

reserves (US and China chief importers). 2nd

Largest world producers of Ethanol. 14

Trillion cubic ft. of natural gas available.

2 active Nuclear Power Plants (2 units), 1

under construction.

Telecommunica

tions

Center and South Brazil have 3G HSPA, DSL

ISDB based Digital TV. Other areas of the

country, particularly the north and

northwest regions, lack telecom including

basic analog telephone lines.

Transportatio

n

5.5% of the roads are paved and 94.5% are

unpaved. The most important highway of the

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country is BR-116 and the second is BR-101.

2 International Airports (Guarulhos

International Airport in São Paulo and

Galeao International Airport in Rio de

Janeiro). High-speed rail under

construction.

Military Army, Air Force and Navy. Front line:

328,000 Land Systems: 49 tanks, 1332 armored

vehicles, Airpower: total 748, helicopter:

252, Navy: 1 carrier, 5 submarines, 10

frigates, 41 coastal craft.

Companies who decide to conduct business in Brazil must

have an understanding of its economy in order to take

advantage of any opportunities that may arise. The table

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above displays Brazil’s lack of paved roads, and no telecom

in large rural areas of the nation but, have a very strong

impact within the internet industry. The table also

illustrates China and the US as it’s chief export of oil. It

is also important to notice the literacy rate is above 90%,

meaning that 90% of the population above the age of 15 can

read.

How are the elements and dimensions of the priorquestion integrated by local business - persons of

Brazil?

A Professor of Latin American Business at University of

New Mexico and native of Brazil (2012) researched the

economy in Brazil in a paper titled Brazil Post‐Lula: Challenges and

Opportunities Facing the Brazilian Business Environment. He suggests the

prior president of Brazil’s past poor economic performance

is still effecting the economy today. He also points out the

“bottlenecks” the present President will face because of the

last 8 years of poor performance economically (Gouvea,

2012). The published article New Directions For A More Prosperous

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Brazil written by Thomas J. Trebat; an economist specializing

in Latin America, and Executive Director of the Institute of

Latin American Studies at Columbia University and of the

Institute’s Center for Brazilian Studies, suggests that the

locals in Brazil are upbeat and positive regarding their

local economies. They are very aware of their roles. Trebat

says “Brazil has a clear role to play in food security due to its water and

natural resources. Brazil holds about 18 percent of the world's supply of fresh

water. By 2020, it is expected to provide 10 percent of the world's food exports,

including 43 percent of all soybeans in world trade” (Trebat, 2013). Trebat

studies shows that local businesses do not necessarily

assimilate to the outside cultures, but outside cultures

assimilate to Brazil, hence the winning bid of both the

Summer Olympics and the World Cup.

Fundamental principles

Economy – GDP. Image:1, 2011 GDP World

Rank (CIA, 2012)

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Image retrieved from: http://i46.servimg.com/u/f46/16/86/29/31/gdp10.jpg

In 2012, Brazil dropped to number seven from the sixth

world’s largest economy (CIA, 2013), showing signs of

economical decline. Public opinion feels strongly that the

Administration focuses too heavily on providing adequate

security and infrastructure for the 2014 World Cup and 2016

Rio Olympic Games instead of improving present issues with

the economy.

Exchange rate. (July 29, 2013): U.S. $1 = 2.27

Brazilian reais. (CIA, 2013)

Unemployment. The Wall Street Journal (2014) reported

improvement of 0.1% in the unemployment rate and a 1.8% rise

in average monthly wages. Brazilian data released Friday

26


(February 14, 2014) suggest economic growth has weakened

over the past two quarters, illustrating how far a country

once considered the darling of emerging-market investors has

fallen” ( Chao, & Treisiani, 2014).

Criminal Statistics. According to the Insight Crime an organization that

studies and monitors organized crime reports:

Across the entire population (Brazil), homicides have risen 132 percent during the last 30 years, -- from 11.5 per 100,000 people in 1980 to 27 per 100,000 in 2011. Among those aged between 14 and 25 the rate in 2011 wasaround double that - 53 per 100,000. Just over 200,000 Brazilians were murdered in the last four years of the study -- only slightly less than the number of deaths directly caused by the 62 armed conflicts that raged around the world between 2004 and 2007, when the Iraq and Afghan wars were in full swing (Insight Crime, 2014, para.4).

Crime in Brazil is staggering, and may deter small

business dealings within city limits. Above statistics do

not show racial breakdowns of homicides. Many studies have

shown that organized crimes, gangs, drug cartels, and basic

criminals are indeed a large part of Brazils social

problems, but the governments lack of attention to the crime

rate and its effortless agenda to improve such; is looked

upon as a bigger issue. The Afro-Brazilian community are

27


treated as second hand citizens, but the government reflects

to the outside otherwise. Garmany (2012), a PhD at

University of Arizona believes “governmentality” is produced

through the nations strong adoption of religion and

spiritual beliefs (p.1). This mentality the government has

adopted does not reflect in its national criminal

statistics.

Tourism, Recreation and Commerce

Major tourist attractions. According to

Touripia.com the top major attractions are as follows; Christ

the Redeemer. Image 2 (Touripia, 2014)

28


Retrieved from: http://www.touropia.com/tourist-attractions-

in-brazil/

Christ the Redeemer is located at the peak of the 700

meters (2,300 ft.) Corcovado Mountain. The Christ the

Redeemer statue stands 39.6 meters (130 ft.) tall, including

its 9.5 meters (31 ft.).

Iguazu Falls. Image

3 (Touripia, 2014)


in-brazil/

29

http://www.touropia.com/tourist-attractions-in-brazil/





Found on the border between Brazil and Argentina;

includes 275 falls along the Iguazu River. The most notable

one is called the Devil’s Throat with a 269 ft. fall.

Rio Carnival

Image 4 (Touripia, 2014)


in-brazil/

“The Rio Carnival attracts two million people per day on

the streets and almost half a million foreigners during its

4 day celebration. The Carnival is all over the place, in

the streets and squares, bars, clubs and all other venues in

30




Rio, concluding in the spectacular Rio Samba Parade at the

Sambadrome” (Touripia, 2014).

How do both of the above items compare with US culture

and business?

Brazil vs. US

US culture overview. “ Culture is Serious Business” (2002),

Giganti writes, a former student of SLOAN Management

School, Prof. Schein; father of corporate culture. Corporate

culture is “shared values and practices of the company's

employees” (Giganti, 2002). Culture is standardized and are

enforced amongst major US corporations.

The US have laws in place to protect against racial,

age, religious, and sex discrimination. Corporations

understand other nations may have different beliefs

regarding sex and racial discrimination, and are advised to

plan accordingly. Brazil allowed their first Black woman in

31


1996 to star in a soap opera (abagond.wordpress.com, 2014),

but not many after her. US corporations may be reluctant to

send an African American woman to represent and / or broker

a multi-million dollar deal in Brazil; primarily because of

racial and gender inequalities. It’s difficult to

comprehend how a country with approximately 2/3 Roman

Catholic still have poor racial equality laws and

protection.

Brazilian business customs. The official Brazil

website Brazil.org (2014), share that their culture is very “

affectionate” and when conducting business having certain

etiquettes and expectations must be adhered to, in order to

be successful. The government notes that “In business

relationships, Brazilian businessmen will usually get to

know one another before committing to long-term business

dealings, as they want to know those with whom they deal”.

Important etiquettes and expectations are as follows:

• When invited to dinner or an event, do not under-dress. It is considered more appropriate to over-dress than to appear too casual in appearance.

32


• Always bring the hostess a small gift of gratitude (such as a glass of wine or some fresh flowers).

• Avoid giving anyone a gift that is black or purple, as these are perceived as mourning colors.

• Always arrive early for events and dinners.

• In business, Brazilians tend to ‘deal’ with individuals, not companies. Therefore, you will need to establish a trusting relationship with them if you wish to gain their business. It is important that you do not try to rush them into making decisions or forming relationships.

• Manicures for women and formal dress for both sexes are expected within corporate situations (Brazil.org, 2014).

Implications for US businesses that wish to conduct

business in Brazil?

Carlos Teixeira (2011), a rising Brazilian scholar, who

has been known recently for making a forcible case that the

United States has employed radical different policies in

Mexico and the Caribbean basin than in more distant South

America. HE argues that, “although the United States retains

a stronger position in an asymmetric interdependent

relationship with Brazil, this interdependence has been

clearly fading”(p.1).

Risk assessment

33


Brazil has never been shy in expressing it’s allegiance

to the alliance, Mercosur, which includes; Brazil,

Argentina, Uruguay, and Paraguay. The US have attempted free

trade talks with Brazil in the past, but Brazil insists

Mercosur must be included.

Business Conflict. An organization named The Brazil-

U.S. Business Council (BUSBC) is the premier business

advocacy organization dedicated to strengthening the

economic and commercial relationship between the two

countries. The Brazil-U.S. Business Council has actively and

strongly advocated for policy

changes. As a result, BUSBC has played an advocacy role in

achieving the following

accomplishments:

• Opening the U.S. market to Brazilian pork from the State

of Santa Catarina (2010).

• Establishing an electronic express delivery system in

Brazil (2010).

• Approving (2010) and ratifying (2011) Brazil’s adhesion to

the World Customs

34


Organization (WCO) Istanbul Convention (ATA Carnet).

• Signing the Agreement on Trade and Economic Cooperation

(ATEC) between

Brazil and the United States (2011).

• Signing the Air Transport Agreement (ASA or Open Skies)

between Brazil and the

United States (2011).

• Renewing the U.S. Generalized System of Preferences (GSP)

with the maintenance

of Brazil as a beneficiary developing country (2011).

• Eliminating the U.S. $0.54 per-gallon import tariff on

foreign ethanol and the

$0.45 per-gallon “blender’s tax credit” federal subsidy

(2011).

• Signing the Memorandum of Understanding between Brazil and

the United States

establishing the Aviation Partnership (2012).

• Signing of a spirits recognition agreement between Brazil

and the United States (2012)

and resulting recognition of Cachaça, Tennessee Whiskey and

35


Bourbon (2013).

• Establishing the U.S.-Brazil Working Group on Visa Issues

(2012).

• Complying with World Trade Organization (WTO) rulings

condemning

U.S. antidumping duties against Brazilian orange juice

(2012).

• Updating Brazil’s Transfer Pricing Law (2012).

• Defeating the so-called Rivera Amendment to the National

Defense Authorization

Act for Fiscal Year 2013 (2012).

• Securing Brazilian “dry points” regulatory reform to

promote private sector

opportunities (2013).

• Announcing Brazil’s 11th bidding round for post-salt oil

and natural gas exploration and production (2013).

• Approving the U.S.-Brazil Tax Information Exchange

Agreement (TIEA) by the Brazilian House of Representatives

(2010) and the Federal Senate (2013).

• Signing the U.S.-Brazil temporary agreement related to the

36


WTO cotton case (2010), defeat of four congressional

amendments to dismantle it (2011), and extension of the

agreement (2012 and 2013).

• Establishing an expedited process for issuance of

temporary work visas for technical

workers traveling to Brazil (2013) (Brazilcouncil.org,

2014).

SWOT Analysis

Strength

Location- Borders 10

nations, and a huge

coastline- Atlantic Ocean

BRIC Alliance (Brazil,

Russia, India, China)

Mercosur Alliance (Brazil,

Argentina, Paraguay,

Uruguay)

GDP Ranking

FDI Rank and Index

Largest economy in S.

America

High price commodities –

natural resources; iron,

Weakness

1/3 of population lives in

poverty

Super high crime rate

skilled laborers,

engineers

high tolerance of

corruption

racial segregation

Elitism; whitification

environment pollution

social economic gap

crime families well armed

slums in chaos (lack of

govt. attention)

37


copper, silver, ethanol,

and oil, 14% of the worlds

fresh water.

80% Electricity from Hydro

Power

Most sophisticated Bio-

Fuel industry in the world

Worlds leading exporter of

beef, chicken, orange

juice, coffee, sugar, and

iron (mostly to China)

Large auto industry

3rd Largest aircraft

manufacturer

Strong and popular

executive leadership-

first woman president

Off shore oil reserves

found

Haven’t fought in a war

since 1870

Tourism

Natl. Sports: futbol,

volleyball, martial arts.

Indigenous people- 2nd hand

citizens by law

high murder rate- top 20

worldwide

majority of roads are

unpaved

Deforestation

Opportunities

Credit availability from

lenders for local business

Highest Human Development

Threats

Social inequalities

Favelas; Slums in terms of

health, crime, and

38


Index in BRICs

Natural resources

High Economic Growth

China and other Asian

countries leading supplier

of natural resources and

food

Improved relations with US

World Cup 2014

Summer Olympics 2016

FDI

Potential American

employment

beautification

Racial and gender

discrimination

Crime rate in respect to

tourists, and major urban

areas

Government lack of

attention to hate crimes,

and discrimination

protection

2% women representation at

the executive level

Elitism

Foreign Direct Investment (FDI) Analysis: Brazil

What is FDI? According to the International Monetary Fund,

foreign direct investment, commonly known as FDI, "... refers to

an investment made to acquire lasting or long-term interest in

enterprises operating outside of the economy of the investor." An

experience economist would define FDI as “the net inflows of

investment (inflow minus outflow) to acquire a lasting management

interest (10 percent or more of voting stock) in an enterprise

39


operating in an economy other than that of the investor”, as

defined by the World Bank (2012).

Countries can increase the inflow of FDI by creating a

business climate that gives foreign investors a positive view of

future profits, and insurance that their initial investments will

not be lost. Brent Radcliffe (2013) states that “Low tax rates or

other tax incentives, protection of private property rights,

access to loans and funding, and infrastructure that allows the

fruits of capital investment to reach market, are a few of the

incentives that countries may offer” (Radcliffe, 2013). Brazilian

Ministry of Finance (2013) reports “The Government has put in

place several measures aiming to reduce (foreign) investment

costs, among which the following stand out are: electricity,

infrastructure and taxes” . The minister also prepares a report

titled Brazilian Official Guide on Investment Opportunities listing the

highlights in its particular markets for business investors. They

are listed as:

Leader in clean renewable energy

40


Home to the world´s largest biodiversity

A global reference in the production of biofuels

Host to the 2014 World Cup and the 2016 Olympics

2nd largest market for ATMs

3rd main market for biodiesel

3rd largest market for personal computers and for beauty &

healthcare products

3rd main aircraft producer and top producer of models

seating up to 120 passengers

4th largest market for cell phones, automobiles and TV sets

5th largest market for medical equipment

10th largest industrial producer

13th largest producer of scientific articles

Average of 12,000 PhD and 41,000 Master degrees granted

annually from Brazilian universities

Home to the world’s 15th largest oil reserves

75,000 new government scholarships for Brazilians to study

abroad to be granted by 2015

60% of all R&D investment in Latin America is allocated in

Brazil

61 tech parks in operation

41


88.8% of the Brazilian electricity energy matrix is

renewable

Brazil FDI Rankings- investment in US dollars (source: World

Bank, 2012)

. United States: $258 billion

. China: $220 billion

. Belgium: $102 billion

. Hong Kong (China): $90 billion

. Brazil: $72 billion

. Australia: $66 billion

. Singapore: $64 billion

. Russia: $53 billion

. France: $45 billion

. Canada: $40 billion

Foreign Direct Investment (FDI) Confidence Index® (2013)

“The Foreign Direct Investment Confidence Index® is a regular

survey of global executives conducted by A.T. Kearney. The Index

42


provides a unique look at the present and future prospects for

international investment flows. Companies participating in the

survey account for more than $2 trillion in annual global

revenue” (Kearney, 2013). The top five nations reported are:

1. China 1.87

2. India 1.73

3. Brazil 1.60

4. US 1.52

5. Germany 1.52

Statistical analysis. The Secretary of State (2012) reports

Brazil as the seventh economy in the world with a Gross Domestic

Product (GDP) of USD 2.4 trillion amounting to nearly 50% of

Latin American economy. Brazil has a large and fast growing

consumer market, comprising of approximately 201 million people.

From 2003 to 2012, real GDP increased by 41 percent, real total

wages by 65 percent and domestic retail sales by 119 percent. It

is also nestled nicely in the east-central part of South America,

where it borders almost all other South American countries,

allowing companies to easily access Latin American and African

markets. It has received USD 65 billion foreign direct investment

in 2012, becoming the fourth biggest FDI recipient in the world

43


according UNCTAD, and currently fifth. Foreign investors have

security and legal permission to send profits to their home

countries, and foreign capital is subject to the same legislation

applied to domestic investments.

According to the Central Bank's most recent foreign-capital

census (2010), the United States had the largest share of

accumulated foreign-capital stock in Brazil, with18.0 percent of

the total. Spain had14.7 percent, Belgium 8.7 percent, and Brazil

8.3 percent. Investment inflows between the years 2006 to 2011

have accumulated to nearly USD 377 billion.

According to a Brazilian Central Bank market survey report,

FDI inflows to Brazil are anticipated to have reached more than

USD 63.0 billion in 2011. According to the U.S. Bureau of

Economic Analysis, FDI inflows from the United States to Brazil

were USD 2.7 billion in 2010 and the stock of FDI from the United

States in Brazil was USD 66.0 billion as of the end of 2010.

Conclusion

Business success between two different nations with

similar governments, similar history of colonization,

44


similar religious beliefs, similar ideology of the African

slave trade, and similar views of abolishing it’s indigenous

people, in theory, seems to be, or should have been the

recipe to a very fruitful and successful relationship. “Like

minds – like ideas”, right? Well, not so much, this paper proved that

theory otherwise.

The United States continues to lead the world in GDP

ranking, primarily because of it’s economy that has led with

corporations that are diversified and expresses innovation.

The United States have companies like Wal-Mart, Exxon Mobil,

General Electric, AT&T, JP Morgan & Chase, Ford Motor Co.,

who are all global giants, and experts in global business.

The United States have strong relations with Mexico, Central

America, and the Caribbean nations, but up until recently

have not traded freely with Brazil. Some studies, to include

governments from both sides have positive views of their

future business relationship with each other.

45


The strong racial, gender and socio-economical issues

Brazil have especially with its ill regard, and “close eyed

view” to the uplift, and security of its Black and

Indigenous citizens is horrific and outrageous. The United

States have its first Black President in his second term,

and Brazil have their first woman President in office in her

first term, may give hope that these social problems may be

rectified before Brazil open her doors to the world during

the World Cup, and Olympics exposing her true colors of

hate, racism, and elitism. Corporations and organizations

that are not concern with these issues may see huge profits

looming over their heads awaiting new opportunities in a

land that is about to host a world event in a few short

months. Brazil is still a crime-ridden country, full of

corruption and evil. Business opportunities and US relations

have been recently trending in a positive direction but

leaders and business owners should ask themselves; “is all

money good money?” Hebrews 13: 5 says “Keep your life free

from love of money, and be content with what you have, for

he has said, “I will never leave you nor forsake you” (ESV).

46


From a Christian perspective, Brazil is a country that has

money and greed high on their agenda; as most countries,

however, their lack of attention to their lower social

economical class is evident in their “favelas”; slum

neighborhoods. A since of evil hovers over these

neighborhoods filled with innocent children playing in the

streets ravished with crime, disease, drug abuse, and

prostitution.

Moreover, an analyst can easily see Brazil as a tier 1

economy, with an incredible FDI and index. The SWOT analysis

shows strengths that can easily help take care the social

problems that haunts Brazil. The Brazilian economy is said

to be “booming”. On paper Brazil is a gold mine and is open

for business for outside investors, and if profits is the

goal of your organization, and or maintaining global

business in that nation, then take your chances for the pot

of gold at the end of the rainbow and enjoy the refreshing

culture Brazil perspires. Brazilians are very personal and

relax compared to American business men and women. So bring

47


your hugs and kisses, and practice on your Portuguese.

Desculpe-me por falar tão mal o português.

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Documents

Global Business Cultural Analysis Brazil final revision