Paint Sector In Brazil: Operations Management

Paint Sectors In Brazil

EXECUTIVE SUMMARY:

Brazil is a unique mix of many cultures when it comes to doing business properly. With a smorgasbord of internet research conducted for this report. A complete reference list can be found at the conclusion of this report.

Even though the Brazilians have adapted many different cultures and norms in the way they conduct business, yet they still hold traditional Brazilian traditions and customs. Portuguese is the official language of Brazil, so a translator may be necessary if one is not fluent in Portuguese.

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Catholicism is one of the guiding cultural influences within Brazilians and largely affects the way business along with operations management is conducted. Catholicism strongly believes in The Bible meaning they strive to be inspired, live an error-free lifestyle, and trust the word of God. Remembering these values in a business setting would be in one’s best interest.

Standard procedure for business card presenting, giving someone a gift, and business meeting negotiations are very paramount and should be studied before attempting business in Brazil.

Conducting business in a foreign country surely comes with a fair share of challenges, but with proper devising and studying will help in adjusting to the unexpected.

Taking a deeper look into the business/ operations management side of Brazil, the use of paints and pigments have all been used throughout history. Paint is used to express oneself through artistic expression while also evolving as the development of civilizations around the world has also. Paints and pigments are an important sector in Brazil’s economy today as Brazil is one of the largest producers of it in the world. Companies in the country must observe the uses and (reuses) of paints. Thus, resulting in diversified and complex demands which require research, innovation, production, and marketing. In this study, I present an overview of the world of paint

in Brazil focusing on the real estate paints segment. As results we describe the current market (commercialization) of paints and coatings in Brazil; we characterize the production scenario of real estate paints, identifying the main technological changes; we discuss the perspectives of paint production and trends, focusing on market orientation; and we elaborate a representative scheme of the productive chain of paints, highlighting the real estate paints.

INTRODUCTION:

Prehistoric people began creating a paint by grinding colored materials like plants and clay powder then adding water to produce the different colors. The technique was actually very simple since most of the time the work was done by hand, stones, or sticks. The first artistic expressions of prehistoric mandate to the Upper Palaeolithic era (35,000 – 10,000 years BC) which saw the appearance of a modern man (homo sapiens). At the first man embellished the caves with schematic engravings. Painting techniques flourished during the Magdalenian period (17,000 – 10,000 BC). The most famous sites are mainly located in France and Spain, notably the caves of Lascaux, Pech-Merle, Font-de-Gaume, Cosquer, and Altamira. The prehistoric painting was basically animal-based, usually on horse and bison, though deer, goats, and mammoths were also found. Man very rarely represented himself: in the Trois-Frères caves in the Pyrenees, he seems to be disguised as the “sorcerer”. The artists used a palette composed mainly of black, different ochres, and reds derived from various oxides (manganese, iron, etc). The paint was applied directly, either sprayed or stump-drawn, and the painters used the reliefs of the wall to give volume to their representations.( Cotrill K. 1996)  A bit later the ancient Egyptian civilizations began using the first synthetic pigments, hand tools, and binders such as gum Arabic and beeswax. Then came along the industrial revolution in the late 18th and early 19th century which began manufacturing paint in machines to increase its processes and production. Mechanization makes the manufacturing process of paint accessible to a larger and less specialized group of entrepreneurs. Paint factories begin springing up in population and industrial centers across the nation. The weight of prepared paint makes it expensive to transport, so small manufacturers in discrete markets dominate the industry until the mid-1900s.(Taylor & Russel 2014) The first factories appeared in Europe which created not only paint but their own way of mixing paint as well. These manufacturers actually introduced the first market for paint which created a total secrecy as their formulas were seen and treated as “, treasures.” Later another breakthrough during the periods of WW1 and WW2 were important events for the scientists and chemists, as they found new pigments and synthetic resins, which were substitutes for the primitive ingredients used before. This began major innovation in the creation of the materials used in paint. In the present day which is the 21st century, the name “ink” is used to describe a product, usually liquid, that is used in order to embellish and protect objects and surfaces. This product is used in the art industry, civil construction, automobiles, equipment, pipes, and many others. With that being said the paint is a very important sector in many economies as Brazil is the fifth largest global producer of paint only behind the USA, China, India, and Germany. In 2012 Brazil sold 4.2 billion dollars’ worth of paint this was mostly accounted to the real estate segment which bought 64% of these sales. In addition, diverse and often non-associated – campaigns to encourage housing, sports championships, elections, and economic instability – may interfere with performance indicators in this sector. This condition may also have been established, in part, due to the heated market which has demanded both standard products, ie standard products, and specific products, following contemporary market orientations.

LITERATURE REVIEW:

In the country of Brazil, the industry for ink was beginning around the 20th century, the founding fathers of the sector were Paulo Hering (founder of Tintas Hering), in the state of Santa Catarina and Carlos Kuenerz(founder of the Sao Critovao Plant) in Rio de Janeiro both men were of German descent. As stated in the introductory part, Brazil is one of the largest producers of paints in the world. Throughout the country, Brazil has many paint suppliers although 75% of sales are concentrated among the top 10 suppliers. This percentage is divided among real estate, automotive, and industrial users. According to data, the real estate of 80% of the total volume and 64% of the billing. Automotive Paint, used by automakers, corresponds to 4% of the volume and 6.5% of the billing, already the one used for the automotive refinishing, represents 4% of the volume and 8.5% of the billing. Finally, the Industrial Ink, used for furniture, auto parts, naval, aeronautics, represents 12% of the volume and 21% of sales. As I conducted research on this sector it is a notice that the industry motivation is due to the increase of sales of painted products in Brazil, especially cars and appliances, as pointed out by one of Dr. Giulios interviewees, the CEO of the Association Brazilian Paint Manufacturers Association, Dison Ferreira. In the words of the executive, “In the country, paints for the most varied applications with state-of-the-art technology are manufactured. Worldwide suppliers of raw materials and supplies for paints work here, from directly or through their representatives, together with national companies, many of them with high technology and with exporter profile”(Cotrill K. 1996). The national market is driven by heating construction which is upgrading its technology and technical competence, adding the most advanced producing centers in the world, also investing in the quality of products that show a concern for the environment. While focusing on the issue of sustainability, the major paint industries have been investing in techniques to develop products whose impact on the environment can be reduced. This will minimize the products used quantities of water, energy, waste, and pollution and emission control of the compounds aiding in a possible higher demand for the products. There are several factors that can interfere in the demand for a particular product and vary according to the nature of the producing company, government regulation, competition, and preferences. Dr. Giulious believes there are two different ways a company can establish a relationship with a medium. 1) By competitive (or operational) behavior, which seeks to make a profit from them through the exchange process. The company does this by trying to produce the most efficient way possible and guarantee the largest market segment and the best product available 2) Through entrepreneurial (or strategic) behavior, when it seeks to replace obsolete products and markets with new ones, which offer greater potential for future profits. The company achieves this through the identification of new areas of demand for the development of acceptable products, production techniques, and marketing, testing the market and introducing new products. In the case of the object of this study, the relationship of the real estate paint market is directly related to civil construction, and in Brazil, this sector presents a demand for market and has internationally recognized organizations and brands. (Johannson K. 2011). As society evolves, the desires increase and evolve as well with this companies look to improve products and services they offer to meet and appeal to market expectations. There are also other factors such as reduction of informality in the paint manufacturing market and the evolution of “urban care” and the “ecological concern”, which raise consumer demands. Finally, there is technological innovation which drives as a deciding factor for the creation of competitive advantage and long-term economic development. Innovative companies are objects of competitive pressures knowing that their products are not forever, and as a result, they should continually improve.

In a contemporary scenario, the emergence of multidimensional perceptions and issues have become known. These issues include sustainability, innovation, and technology that has influenced opinions along with consumption habits. This poses many challenges and several sectors that analyze in productive chains according to my research. The concept of market orientation and its influence on organizational performance, have been addressed in studies that demonstrate that organizations aligned with their clients and with the market demands are better able to provide products, services, and solutions with better performance. This may be obvious to some sectors, where even there is a proximity between the link production and the final consumer, which is not the case in the chemical industry. Therefore the understanding of market orientation is necessary, especially the real estate paints segment. Thus, the term market-oriented can be interpreted in several ways. For the research & development (R & D), can mean product specifications and characteristics techniques; for manufacturing, durability, and safety; for marketing, the desires of consumers; and for business planning the term may mean having the product in the market niche (Cotrill K. 1996). In the evolution of the concept of market orientation (MO), two approaches have been adopted (Johannson K. 2011). The first is organizational norms and values that encourage behaviors consistent with the market orientation. In it, market orientation is presented as a concept created from three elements: Customer orientation, focusing on the company’s needs; Competitor orientation, which analyzes the adversary strategy and market movements; and Inter-functional coordination, which introduces cooperation among employees. Next, the second approach identifies three main components of the concept: information about current and future customer needs and serve them; The integration and dissemination of such information between departments and individuals within the company; and The design and coordinated implementation of an organization-wide response to the market opportunities (Taylor & Russel 2014). This perspective behavioral focus focuses on organizational and human activities that are related to the creation, propagation, and reaction of market intelligence (Johannson K. 2011). Both approaches to market orientation are complementary to explain the behavior of companies, according to Vieira’s (2010) survey, which dealt with the background and resulting from the market orientation in Brazil. Taking a deeper look into the market orientation theory and the research object of the study an overview of the paint sector in Brazil is as follows: market, management, and technology. It is my belief that in order to understand Brazilian context it is pivotal that you abide by two elements which are the customer and completion which is shown in the first approach to meet the consumer’s demands in this industry.

CONCLUSION:

After extensive research, I have found that the operations management aspect of paint in Brazil is vastly extensive. It has been observed that the paint market is constantly changing in Brazils paint world making it very important to meet the consumer’s needs, which is done by informing the consumers about the products and services one wishes to acquire. This breakthrough has forced companies to invest in innovation and research to “get closer” to their target audience. These technological advances have created new raw materials used in the manufacturing of segment of real estate paints. As a result, it is possible to purchase ink today with thermal and acoustic reduction, reduction of water absorption, resistance to abrasion, among many other products that indicate new possibilities, markets, and demands for the sector.

References

• Cottrill, K. (1996). Consumer spending energizes markets. Chemical Week, 158(47), 52. Retrieved from http://lynx.lib.usm.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=9612241881&site=ehost-live
• Johansson, K. (2011). Brazil Set for Growth. Paint & Coatings Industry, 27(11), 6. Retrieved from http://lynx.lib.usm.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=f5h&AN=70706025&site=ehost-live
• Robertson, R. S., & Bernard, T. W. (2002). Operations & Supply Chain MGT (8th ed.). NY: John & Wiley.
• (August 6, 2009 Thursday). Research and Markets: A Profile of the Brazilian Paint Industry, 2nd Edition Provides an Overview of Eight Mainstream Coatings Sectors in Brazil. Business Wire. Retrieved from Nexis Uni.
• (May 16, 2005 Monday). Research and Markets: Brazil One of the World’s Key Emerging Markets Investing in the Paint Industry . PR Newswire US. Retrieved from Nexis Uni.