How A Company Approaches Entry Into The Brazilian Market

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Introduction In the last few decades, foreign investment has flooded into the BRIC (Brazil, Russia, India, and China) markets. These countries have greater market potential than most developed countries, primarily due to their higher growth rates and the sheer size of their populations. For this reason, these countries are often grouped together in business literature and research, but they are hardly homogenous. Companies intending to conduct business in these countries need to consider their market entry strategy carefully and distinctly for each country, without generalizing across all of the BRIC nations. In this paper, we will focus specifically on the factors that determine how a company approaches entry into the Brazilian market. Corporate executives looking to do business in Brazil must determine their activity mode (whether to export to Brazil or produce there), their ownership mode (wholly-owned subsidiary or joint venture), and their establishment mode (acquisition or greenfield). We’ll review recent research that illustrates and analyzes the most common market entry strategies and their impact on a foreign firm’s success in Brazil. In particular, we’ll discuss why greenfield production through joint ventures is the primary entry mode of choice for foreign investors in Brazil. Overview of the Brazilian Market Before we examine market entry strategies for Brazil, it’s important to understand some basic characteristics of the country’s business environment.

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