UK and Brazil in terms of political, legal, economical and social factors

In this report I will compare the UK and Brazil in terms of political, legal, economical and social factors. Brazil is a part of BRIC , that refers to the fast growing developing economies of Brazil, Russia, India, and China. Brazil is one of the largest and most influential country in South America with a population of 190 million people, which is greater than the total of the rest of the countries in South America. Brazil occupies almost the half of South America.

Aims

The Aims of this report is to analyse issues facing an organisation in its international activities when investing in Brazil. This will include an analysis in terms of political, legal, cultural and economic environment. This report will discuss the issues that are possible to arise in Brazil in the two functional areas of marketing and human resource management, with recommendations on how to successfully manage marketing and human resource management in Brazil. These recommendations will be supported by theoretical frameworks.

Executive summary

Results

Brazil is one of the largest and most influential country in South America with a population of 190 million people, which is greater than the total of the rest of the countries in South America. Brazil occupies almost the half of South America. The UK has a population of 61 million people. In this report the findings will be discussed in different paragraphs; Economical, political, legal and cultural.

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Economical

Brazil has a moderate free market and export-oriented economy. It’s nominal GDP is 1,3 trillion dollars , this makes Brazil the tenth biggest player in the world and the second in the Americas; measured by purchasing power parity, $1.9 trillion, making it the eighth largest economy in the world and the second largest in the Americas, after the United States. The UK is a developed country, with the fifth (nominal GDP) CIJFERS or sixth (PPP) largest economy in the world. It was the world’s first industrialised country (2008 , CIA).

Brazil’s economy used to be subjective to extensive regulation which slowed down the normal operation of a competitive market economy. This changed in the 1990’s, Due to liberalization efforts in the trade, deregulation and privatization areas, the current economy operates almost like a free enterprise, but there is still considerable state and semi-state participation in various strategic sectors. The National Privatization Program was enacted a few years ago to privatize many formerly state-run enterprises, most notably the steel and petro-chemical industries. In July 1995, the congress has accepted the Constitutional Amendments that will open oil, mining, electric power, and telecoms to private and foreign investment.

One of the largest successes of the recent reform is the real, Brazil’s latest currency. Introduced to deindex prices and to lower inflation, the real and accompanying measures have brought fierce growth and a flood of new investment: 12 multinationals alone are planning to spend $8 billion by 2000. Most significantly, inflation has fallen, from 3000% in 1989 to 30% in 95. However, the strength of the currency encouraged imports and Brazil is facing a trade deficit: $3.2 billion in 1995. The government responded by devaluation, import curbs, tariffs, and quotas on car imports.

Legal

The Constitution establishes that foreign investments should be in the national interest, and it is welcome to the extent that it represents a long-term commitment to the economic development. Areas particularly favored by the local include development of agriculture, technology, labour-intensive industries, and manufacture of products that are currently imported and those that will increase exports. Foreign investors may also participate in the National Privatization Program by converting Brazilian foreign debt securities, or by subscribing to the privatization funds.

Although there are no federal tax incentives to attract foreign capital, many states and local government offer tax concessions especially in the poorer Northeast and Amazon regions. Except for the above tax incentives, all corporations are subject to 26% corporation income tax.

Political

Brazil is a federal republic , based on the federal constitution of 1988. The country consist out of 26 states, each of these states has its own constitution. The form of government is that of a democratic republic, with a presidential system. The president is both head of state and head of government of the Union and is elected for a four-year term.

The former trade union leader Luiz In?cio Lula da Silva (‘Lula’), leader of the PT (Partido dos Trabalhadores) was elected as president of Brazil on the 27th of october 2002 and was re-elected in 2006.

Culture

The culture of today’s Brazil has been formed from a diverse background of ethnic traditions. The early Portuguese settlers borrowed many customs and words from the original Indian population. During the colonial period millions of black African slaves who were brought into Brazil added an African element to Brazilian cultural life; their religious rites merged with Roman Catholicism to form the unique Afro-Brazilian cult, notable for its exotic ceremonies. There are some unwritten rules and habits in the Brazilian culture as for doing business.

– Brazilians need to know who they are doing business with before they can work effectively.

– The individual they deal with is more important than the company.

– Anyone who feels they have something to say will generally add their opinion.

– It is considered acceptable to interrupt someone who is speaking.

– Face-to-face, oral communication is preferred over written communication. At the same time, when it comes to business agreements, Brazilians insist on drawing up detailed legal contracts.

(Kwintessential, 2008)

In Brazil there is a class system, despite all the cultural differences. The middle and upper classes often have only brief interaction with the lower classes – usually maids, drivers, etc. Class is usually determined by economic status and skin colour. In the UK the class system is still intact although in a more subconscious way. (Kwintessential, 2008)

The British are very reserved and private people. Privacy is extremely important. The British will not necessarily give you a tour of their home and, in fact, may keep most doors closed. They expect others to respect their privacy. This extends to not asking personal questions.

Human resource management

International companies should understand the multiple, national cultures over the different countries and provide advice to the rest of the business on how to integrate and coordinate these differing national cultures. Hire and train a truly world-quality and globally aware work-force and management team. Develop their career planning and management development programmes that include international assignment and cultural training, so that they have the ability to communicate with the global workforce.

Conclusion

Precautions should be taken when dealing with local government due to the cumbersome and corrupt bureaucracy. Connections with the political scene is advisable. Also, Brazil has much more primitive financial and industrial base, and a much lower standard of labor productivity. Employee training would be a substantial part of investment.