Objectives of Foreign Entry in Brazilian Market

This document discusses the objectives of Dutch lady to enter the Brazilian market, the internal analysis of Dutch lady, and the entry strategies for doing business in Brazil. It analyzes the strengths, weaknesses, opportunities, and threats of Dutch lady in the Brazilian market. It also includes a PESTLE analysis and Porter five forces analysis of the Brazilian market. The document recommends a joint venture strategy for Dutch lady to enter the Brazilian market.

Running head: INTERNATIONAL BUSINESS
Objectives of foreign entry
One of the major reasons for Dutch lady to enter in the Brazilian market is reduction in
the market share of them in their existing market. This is due to the reason that as per the reports,
Dutch lady’s net profit got down by more than 12 percent in the Malaysian market. Moreover, it
is also reported that future probability of Dutch lady in their existing market is low due to the
poor sentiment of the customers and high cost of operation. Hence, if foreign countries such as
Brazil can be targeted then market size will get increased and Dutch lady will have lower level of
dependence on the Malaysian market (Ang, Benischke and Doh 2015). Another reason of
entering in the Brazilian market is increasing the market presence in the western regions.
Currently, Dutch lady is having their presence only in the South East Asian regions. Thus, doing
business in Brazil will help them to position as a truly global brand. The vision of Dutch lady of
becoming a leading dairy brand in the world will be further complemented by entering in the
Brazilian market.
Internal analysis of Dutch lady
Strengths
One of the major strengths for Dutch lady is their high level of market penetration in the
South East Asian markets. This will help them in implementing the same strategy in getting the
foothold in the Brazilian market as well.Dutch lady is having positive brand image and goodwill,
which will be beneficial for pushing the sales in the new market.Being one of the leading dairy
brands in the existing markets, Dutch lady is having technological advancements, which will be
beneficial in gaining competitive advantages.

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Weaknesses
Dutch lady is having lower sets of market presence and brand identity compared to their
competitors such as Nestle. They are not having any extensive market understanding about the
Brazilian regions. Having limited product portfolio may not be successful in gaining markets
share in Brazil considering the different taste and preference pattern of the customers.
Opportunities
Entering in the Brazilian market will help Dutch lady to increase their market share
across the world.Positive market growth in the country will further contribute in increasing the
revenue for Dutch lady in doing business in Brazil.Introduction of market specific products for
the Brazilian market will help to gain more market penetration.
Threats
Emergence of economic slowdown in Brazil will cause reduction in the market
potentiality for Dutch lady.Emergence of political issues in the country will also reduce the
business viability in the long term.Entry of new global competitors in the country will saturate
the market and reduce the profitability of Dutch lady.
Objectives of entering Brazilian market
Brazil is one of the leading developing nations in the current time and is witnessing faster
growth rate compared to some of the developed economies. It is reported that Brazil is the ninth
largest country in the worldin terms of gross domestic products. Thus, it will pose huge
opportunities for Dutch lady in doing business in Brazil (Spers, Wright and de
AzevedoAmedomar 2013). On the other hand, the strategic position of Brazil in the Latin

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American region is another reason of selecting it. This is due to the reason that entering in the
Brazilian market will be beneficial for Dutch lady in tapping the American market. On the other
hand, Brazil is ranked at number 5 in terms of milk production in the world. This denotes the size
and potentiality of the dairy industry of Brazil. They are also one of the major exporters of dairy
items in the world (Brito et al. 2015). Hence, in doing business in Brazil, Dutch lady will have
the advantage of taping the different other markets with their milk based products. The following
sections will discuss about the major external factors to be faced by Dutch lady in operating in
Brazil using the PESTLE analysis and Porter five forces analysis.
PESTLE analysis
Political factors
Brazil is having moderate risks in terms of political environment. This is due to the
reason that even though they are having stable government but chances of military coup are high.
This will pose challenge for businesses (Schneider 2018).In terms of global corruption index,
Brazil is ranked at 105, which shows its poor condition. Thus, Dutch lady will face the challenge
of corruption in their business operation.However, on the other hand, the recent bids taken by the
authorities to attract foreign investments will help to have more advantages for Dutch lady.
Different pro business initiatives taken by the government will be beneficial for Dutch lady in
tapping the market opportunities.Brazil is involved in different trading bloc such as BRIC. This
will further help Dutch lady in getting the access of free trade with other developing nations.

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Economical factors
As discussed earlier, Brazil is witnessing positive economical growth, which will help
Dutch lady to have better market opportunities.Brazil is based on free economy and thus Dutch
lady will find it easier to design their marketing strategies according to the relevant marketing
forces (Doner and Schneider 2016).Competition in the dairy sector of Brazil is low due to the
limited presence of the foreign brands. Thus, Dutch lady will find huge untapped market in doing
business in Brazil.However, on the other hand, it should be noted that higher rate of taxation will
affect the business of Dutch lady. This will increase the cost of operation of them in Brazil
(Acemoglu and Robinson 2013).
Social factors
Dairy products are having huge market in Brazil with high rate of consumption. Thus, the
social potentiality for Dutch lady will be more in the country.Similar to the globalized trend,
majority of the customers in Brazil are also aware about the ill impacts of carbonated drinks and
positive impacts of dairy based products. However, this should be noted that high level of
corruption in the society will pose challenge for Dutch lady in their business operation (Arias
2013). According to the reports, age groups between 20 and 40 are the major portion of
population in Brazil. Moreover, dairy based products are being consumed across every age.
Technological factors
Being operating in the dairy industry for long period, Dutch lady is having expertise and
experience in dealing with different factors.They are also leading in terms of technology also and
favorable technological infrastructure in Brazil is also favorable.Information technology in
Brazil is witnessing huge growth, which will help Dutch lady to leverage on this element for

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further development.However, added cost of technological development in producing according
to the local market trends will cause added cost for them.
Legal factors
Dairy products are included in food segment and thus will face legislations in terms of
product quality. It is important for Dutch lady to adhere to the legal complications by the
Brazilian authorities. It is also important for them to also follow the legislations in terms of
foreign investments in the country.
Environmental factors
Dutch lady should have the mechanism of sustainable production process in terms of
environmental conservation. In addition, the emission standards set in Brazil should be followed
by them to avoid lawsuits.Brazil is having histories of corporate disasters and thus the
legislations in terms of environmental protection are stricter.
Porter five forces
Bargaining power of the buyers
Bargaining power of the buyers is high in the case of doing business in Brazil. This is due
to the reason that number of similar products are being offered by the competing firms (E. Dobbs
2014).Customers are having number of options to choose from. Thus it is important for Dutch
Lady to design their marketing strategies based on the market forces such as market based
pricing.
Bargaining power of the suppliers
Bargaining power of the suppliers is moderate. This is due to the reason that there are
number of suppliers are present in Brazil.Thus, Dutch lady is having the options to choose from

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the more effective and eligible suppliers.However, on the other hand, suppliers are also having
the upper hand in choosing their buyers considering that number of dairy brands are operating in
the country. Moreover, the brand value of Dutch lady will also be beneficial in bargaining with
the suppliers.
Threat of new entrants
Threat of new entrants is moderate for Dutch lady in doing business in Brazil.This is due
to the reason that huge investment and capital is required to match the economies of scale of the
established brands (Van Alstyne, Parker and Choudary 2016).Moreover, operating across the
entire national and international market will cost huge cost and expertise. This is reducing the
threat of new entrants.However, number of local based firms is operating in the country, which
will pose threat in limited level.
Threat of substitutes
Threat of substitutes is high for Dutch lady in doing business in Brazil. This is due to the
fact that all the competing firms are offering similar sets of dairy products in similar price
points.Switching cost for customers is low. However, the brand loyalty for the customers will
help Dutch lady to retain their customers.
Competitive rivalry
Competitive rivalry is high in the dairy industry in Brazil.All the firms are competing on
the basis of cost leadership strategies to attract more customers.Differentiated brand elements
will only help Dutch lady to stay ahead in the competition.

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Identification of the entry strategies(700 words)
From the analysis of Brazilian dairy market, it is found that it has grown at a CAGR of
over 10 percent during the period of forecasting. The increased amount of consumption of dairy
products has been one of the major drivers of growth in the Brazilian dairy market and this has
made them more inclined with the dairy products imported and exported to and from Brazil
considering its quality, ingredients used, etc. Based on the production of milk, Brazil has been
ranked sixth with an approximate 27.9 million litres of milk in the year 2010 and it has been
growing since them. According to Van Alstyne, Parker and Choudary(2016), the milk production
constitute of agri-business and has offered great employment scopes for many individuals all
over, which contribute to the significant growth in economy of the country as well. This creates
great opportunities for Dutch Lady and has allowed for entering the country with much ease,
which has further enhanced its potential to become one of the leading vendors of dairy products
in Brazil (Van Alstyne, Parker and Choudary 2016). There are over 60,000 litres of milk
production every day and the production has doubled in past few years, which can be beneficial
for Dutch Lady to furthermore focus on the market segments comprising of the customers
requiring good quality dairy items available at reasonable price range.
Based on the internal and external analysis being done on Dutch lady, different positive
and negative factors are being identified. Market entry strategies should be effective enough in
aligning with these factors and gather the maximum outcome for the firm in the host country. In
the case of Dutch lady, it is recommended that they should follow joint venture strategy in
entering the market of Brazil (Holtbrugge and Baron 2013). This is due to the reason that
initiation of the joint venture market entry strategy will have certain advantages over other entry
modes. According to Sun and Lee (2013), Dutch lady will be able to gain competitive

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advantages in the form of innovation. This is due to the fact that joint venture will involve
partnering with another local firm. Thus, the competitiveness with the local firm will be gained
by Dutch lady. In the highly competitive dairy industry of Brazil, innovation will prove
competitive for them. It is identified that bargaining power of the buyers in the dairy industry of
Brazil is high and thus generation of innovation will be fruitful for Dutch lady to stay
differentiated among the competition.
On the other hand, it is stated by del Mar Benavides-Espinosa and Ribeiro-Soriano
(2014) that initiation of the joint venture will also reduce the risk and liability of Dutch lady in
their foreign investments. This is due to the reason that with help of joint venture, they will
partner with a local firm with proportionate investments. Thus, Dutch lady will not have lower
investment in their new market, which will help in reducing the long term risks and enhancing
the return on investments. In the above external analysis, it is identified that political
environment of Brazil is not stable and in this case, the lowered investment due to joint venture
will help Dutch lady to reduce their potential risks. In the case of foreign investments, it is also
important for the organizations to have effective retrenchment or turnaround strategy for any
unwarranted situations. Thus, reduced investments in joint venture will help Dutch lady to have
effective and proper strategies.
Successful foreign business will be gained only when the local market trends and
preference pattern will be determined effectively. In this case also, joint venture will be
beneficial. According to Huang, Hsiung and Lu (2015), it is important for the foreign investors to
partner with a local firm from the same industry. This will help in gaining the local market trends
in less time and accurately. Thus, Dutch lady should have joint venture market entry strategy in
Brazil. They should partner with a local firm from the dairy industry. This local firm will have

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more information and market data regarding Brazil compared to Dutch lady. Hence, the product
development process will be accurate and in accordance to the target market trends. In the above
internal analysis of Dutch lady, it is identified that they do not have fair understanding about the
dairy market of Brazil. Thus, initiation of the joint venture will help to leverage on the partnered
local firm to gain the market information of Brazil. The social factors will also become more
favorable for Dutch lady with having the association of a local brand. Thus, it can be concluded
that they should follow joint venture mode of entry in doing business in Brazil. However, on the
other hand, it should also be noted that the partnered firm should be from the same industry and
should have positive word of mouth in the market.
Recommended responses(600 words)
A few strategies will be recommended in this step, which will be beneficial for Dutch
lady to have the effective and favorable operations in Brazil. The following section will discuss
about these strategies.
Human resources
It is recommended that Dutch lady should follow geocentric approach of staffing for
recruitment. This refers to the selection of the employees irrespective of their nationality and on
the basis of requirements. Hence, this will ensure that both the host and home country employees
will get to work in the same facility of Dutch lady in Brazil. This will enhances the diversity
along with mutual understanding among the employees. On the other hand, it should also be
noted that initiation of the geocentric staffing will help to carry forward their existing
organizational culture and processes along with adopting it according to the local employee
requirements. It is also recommended that diversity management should be initiated to have the

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maximum outcome from the side of the employees along with less chance of issues among them.
Cultural factors can also be properly managed among the diverse workforce with the help of
diversity management.
Operational approaches
In case of operational strategies, it is recommended that Dutch lady should have
centralized approach in their initial stage. This is due to the reason that centralized approach will
help them to control the foreign market operations in accordance to the vision of the upper level
management. However, in the later stage, it is recommended that they should decentralize the
process to have more adoptability with the Brazilian market. On the other hand, the existing
process should follow in the host market operation due to the reason that it will help Dutch lady
to face lesser difficulties in designing new organizational processes.
Branding strategies
Market adaptation strategy should be followed over the standardization strategy to have
the better connectivity with the local market. Brand elements will be designed in accordance to
the local market factors. However, the core products will be standardized in the initial stage and
should be modified in the later stage. Different cultural factors between the customers of Brazil
and South East Asian customers will pose challenges for Dutch lady due to the fact that
standardized products will not be able to meet the expectations of the host country customers.
Thus, in the later stage, market adaptation strategy should be taken.
The rebranding of products is recommended considering the fact that it is important to
adopt the local culture of Brazil. This would be possible with the new type of packaging done for
drawing the attention of clients in Brazil, furthermore ensure brand revamping through increased

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expenses on advertising and promotional activities. Often the cultural differences can cause
major issues associated with the customers getting inclined with the brand and this it would be
essential for Dutch Lady to revamp the packaging initiatives in such a manner that the product
outlook cater to the cultural requirements and can influence the customers.
The expansion of portfolio of products by adding new variety of dairy items such as
liquid milk, curd, ghee and fat free cheese could also extend the customer by making them
choose healthier dairy products’ consumption. This could influence their buying behaviors and
allow for increasing the sales revenue, furthermore make Dutch Lady capable enough to enter
the foreign markets in Brazil with ease and efficiency.
The economic slowdown and high competition in the dairy market can be major
challenges associated with the direct and store based selling nowadays, though with the strategic
partnership with local dairy stores and retail supermarket chains, the company tends to bring
positive outcomes with higher level of customer satisfaction and enhanced sales revenue.
The assessment of feedbacks and responses regarding the new products made available
for them must be done for making any necessary changes and make sure to cater to their needs
and preferences effectively as well. This could increase their satisfaction level and influence their
buying behaviors too.
Conclusion
This report concludes that Dutch lady will face a few challenges as well as opportunities
in doing business in Brazil. However, the market opportunity for them will be huge and they will
also gain the access to other American market in the long term. This report analyzed the internal
and external factors relevant for Dutch lady. On the basis of these factors, it is recommended that

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Dutch lady should follow joint venture entry strategy in entering the Brazilian market. hey will
face fewer risks for these. In addition, a few more managerial strategies are being recommended
for them, which will further help them to have effective business operation in Brazil.

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