Analysis Of Brazil And Its Effect On South America

1174 WordsApr 22, 20165 Pages
I recommended Brazil because of its large labor pool, vast natural resources, and its regional impact in South America. It is the leader in the region. Brazil together with Russian, India and China are called BRIC countries, four most rapidly growing developing countries. Forecast Due to Expansion Currently Nike also markets and sells in Brazil and other neighboring countries. However, with the establishment of factories in Brazil, we expect that the markets will be opened even larger. According to CSImarket.com, Nike made 3,898 million dollar sales in other market including South America in 2015. Assuming that half of them is from South America, then 1,949 million was from South America. Assuming that the entry of the Brazilian market will boost sales by 25% for the two years, and then 15% for the third year, 10% for the fourth year and 5% thereafter. We can forecast the regional sales in South America as follows: Table 4 Pro-Forma Income Statements for the South America Region 2015 2016 2017 2018 2019 2020 Revenue 1,949 2,436 3,045 3,502 3,852 4,045 Cost of revenue 1,052 1,316 1,644 1,891 2,080 2,184 Gross profit 897 1,121 1,401 1,611 1,772 1,861 Operating expenses 624 780 975 1,121 1,233 1,294 Operating income 273 341 426 490 539 566 Provision for income taxes 68 85 107 123 135 142 Net income 205 256 320 368 404 425 Overall sales 30,601 33,661 37,027 40,730 44,803 49,283 % of overall sales 6.4% 7.2% 8.2% 8.6% 8.6% 8.2% Assume that the overall sales will grow at
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