Factors Affecting Business In Brazil

Business Implications

Politics:

A political unstable environment can be a deterrent for many organisations. Businesses rely on forecasts to predict their future. In a political unstable environment; inflation, taxes and the price of labour can all rise quickly and the government can also introduce many rules and regulations that affect businesses. The current political situation in Brazil makes the economy difficult to predict which can leave businesses uncertain to which direction the company is moving. Brazil is likely to see a structural reform soon. Furthermore, protests and strikes can negatively impact businesses in the area when employees are forced to skip work.

Economic:

The current economic recession is going to have huge implications for international organisations in Brazil. When the economy is doing badly consumer buying habits tend to shift. Consumers no longer purchase luxury items and tend to cut back on spending. Also, high unemployment has a huge effect on consumer spending. The more people out of work the less they spend on goods and services.

One of the many industries that can be hit by the economic crisis is the retail industry. Brazilian’s tend to be very informed about the fashion world. Many Brazilian’s are aware of international designer brands and are keen

Large income inequality, lack of education and high crime rates are negatively impacting many organisations. Companies in Brazil must be weary of robberies and can spend 15-20% of their operating costs on security. Firms in Brazil lose almost twice the percentage of annual sales compared to those operating in other parts of Latin America and the Caribbean due to crime (Garellek, 2015). It is estimated that cargo theft costs companies over $558 million dollars each year (Belton, 2016). There is a lucrative black market in Brazil and pharmaceuticals, cigarettes, meat, alcohol and electronics are often