International Business Environment: Market Analysis of India & Brazil

This essay provides a comprehensive analysis of the international business environment, focusing on market analysis for India and Brazil. It utilizes PESTLE analysis to examine political, economic, social, technological, legal, and environmental factors influencing business operations in both countries. Porter's five forces model is employed to assess the competitive landscape, including the threat of new entrants, buyer power, supplier power, substitution threats, and competitive rivalry. SWOT analysis is then used to evaluate the strengths, weaknesses, opportunities, and threats for businesses operating in India and Brazil. The essay also addresses potential risks associated with entering new markets and concludes with an investment decision analysis, providing valuable insights for companies considering international expansion.

International Business Environment

TABLE OF CONTENTS
INTRODUCTION................................................................................................................................
ESSAY.................................................................................................................................................
Market Analysis for India............................................................................................................1
Market analysis of Brazil.............................................................................................................5
Porter’s five forces analysis of Brazil..........................................................................................8
SWOT analysis for India.............................................................................................................9
SWOT analysis for Brazil..........................................................................................................11
Potential impact of risk for opening and entering into new market...........................................12
Investment decision...................................................................................................................13
References..........................................................................................................................................
APPENDIX 1.....................................................................................................................................
Appendix 2.........................................................................................................................................

ILLUSTRATION INDEX
Figure 1: PESTLE analysis..............................................................................................................2
Figure 2: Porter's five forces model.................................................................................................4
Figure 3: PESTLE analysis..............................................................................................................6
Figure 4: Porter’s five forces model................................................................................................9
Figure 5: SWOT analysis...............................................................................................................10
Figure 6: SWOT analysis...............................................................................................................12

INDEX OF TABLES
Table 1: PEST for India...................................................................................................................3
Table 2: PEST analysis for Brazil...................................................................................................8

INTRODUCTION
International business environment is defined as exchange of goods and services between
two or more countries (Hamilton and Webster, 2015). In this process buying and selling of goods
is done in the global market of countries EU manufacturing company of UK is planning to set up
a new organization in India and Brazil. In the present report relevant analysis models, theories
and their critical evaluation has been done. In this report PESTLE, Porter’s five forces model and
SWOT analysis has been done for India and Brazil. In addition to this, potential risk for business
to enter into new market has been explained in the report.
ESSAY
Globalisation has provided opportunities to organizations to expand their existing
business in other countries (Cooper and Finkelstein, 2014). Different risks and challenges are
associated while expanding business in other countries. EU manufacturing company is planning
to open its new organization in India and Brazil (Beamish, 2013). There are some challenges for
company to expand the scope of business in both countries which are as follows:
Market Analysis for India
PESTLE analysis: PESTLE analysis helps in identifying the factors of particular country
that affects the business, that is, political, economic, social, technological, legal and ethical
environment (Ferreira, Santos and Reis, 2014). It provides detailed analysis of external factors
that might affect company to increase the scope of business by operating in India.
Political factors
India is one of the largest democratic countries in the world. Political environment of
India gets affected by policies made by government, interest of politicians and various opinions
of political parties (Aguzzoni, Argentesi and Tognoni, 2016). Political factors put a huge impact
on the business environment of firm operating in India. Various other taxes are also imposed by
the government of India that put a direct impact on business organization (Verbeke, 2013). On
the other hand, government is also influencing privatization and motivating free businesses by
scheming variety of programs (Campello and Gao, 2017).
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Economic Factors
Since the policies for industrial reformation came into force in India economy of India is
growing steadily (Ishii and Xuan, 2014). This policy has decreased industrial licensing and
restriction has been removed from foreign capital. Industrial formation policy has also
introduced FIBP in India. Economic environment of India has been improving due to this policy.
India has reported GDP of $5 trillion in the year 2013. In the year 2014, GDP has increased by
5% in comparison to the previous year (Chebbi and et.al, 2017).
Social factors
Social factors are defined as change of trends in particular country that may adversely
impact the business environment (Campello and Gao, 2017). Continuous rise in population of
India is resulting in the rise of cost of pension and enhancement of employment (Chkili and
Nguyen, 2014). So government of the country is following structure which provides employment
according to age. Criteria of these structures are described according to education, background,
distribution of income, working attitudes, etc. (PESTLE analysis. , 2017).
Figure 1: PESTLE analysis
(Source: PESTLE, 2017)
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Technological Factors
Increasing use of technology is unusually influencing the development of product and
also, providing processes of cost cutting (Ishii and Xuan, 2014). India is having both 3G and 4G
technology which is helping in various technological projects of India. India have many IT
sectors and it is encouraging development of IT. So EU manufacturing company can take
advantage of this technology development in India as this will help company to publicize its
product efficiently (Kansal and Chandani, 2014).
Table 1: PEST for India
Political Corporate tax is high
Economic Products prices are high
Social Corporate social responsibility
Technological Advanced technology in India
Legal factors
Government of India has made many legal amendments by introducing minimum wage
system (PESTLE, 2017). These legal changes are the affecting demand and cost of business
organizations as well as in fostering productivity of companies. Legislation for discrimination
disability has also affected the business organization (Aguzzoni, Argentesi and Tognoni, 2016).
Different legislation like law of employment and international trade law are introduced by Indian
government to expand its business ventures.
Environmental Factors
India's environment has greatly influenced by industrialization. Global warming is the
major environmental factor in country and it is adversely impacting the business firms out there
(Beamish, 2013). Continuously increasing urbanization has destroyed environment of India and
it is causing untimely deaths. Pollution free firms are required for any organization to expand its
business in India (Kansal and Chandani, 2014).
According to PESTLE analysis of India, it is required for EU manufacturing company to
keep these factors in mind while setting up its business. There are some positive factors like
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good economic condition and policy for industrial reformation (PESTLE, 2017). These policies
can support EU manufacturing company to set up its business in India. Technological
development in India will also help the firm to grow at a high pace. However, taxation system
might affect company as this will reduce its profitability. Several environmental factors may also
trouble the organization to set up in India (Risberg, 2013) For example: Arex industries LTD is
working in the manufacturing sector of India. Business activities of this company gets influenced
by political changes that occurs in county frequently.
Porter’s five forces analysis for India: This model is used to analyse present competition
in the market. This model has five stages which play a significant role in manufacturing industry
(Botha, Kourie and Snyman, 2014).
Threat of new entrants
In all the markets of India, capital and expertise are must to set up manufacturing
company (Clark and Phillips, 2014). This is the major barrier for any company to enter in
market. New entrants require a lot of time in setting up their business. On the other hand, market
of India is enticing due to progress in infrastructure and availability of financing options
(Porter’s analysis, 2017).
Power of customers/buyers in bargaining
Figure 2: PORTER's five forces model
(Source: Porters analysis, 2017)
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Indian consumers have variety of options available to choose the firm (Levi, Li and Zhang,
2014). There are more than 20 foreign manufacturing companies in India. Along with this, there
are various companies that provide products at a cheap rate.
Substitution threat
There is huge competitor substitute in India. So, this can be used by consumer to replace
any company's product with another if one firm provides the same product at lower rate than
consumers take no time to switch over to that organization. This weakens the power of company
and constitutes to substitution threat (Lebedev, Peng and Stevens, 2015).
Bargaining power of suppliers
Suppliers for any company have the highest power of bargaining. Competition among
suppliers in India is very high. This implies that suppliers do not depend on single company and
are free to trade their products everywhere in India (Verbeke, 2013).
Rivalry among competitors
Rivalry among companies of India is very high and country is still struggling in finding
out the leading manufacturing companies (Beamish, 2013). This is due to large size of industry
and restriction as well as limitation imposed by government to control competition.
It can be evaluated from porter’s five forces model that EU manufacturing company can
face certain challenges for setting up its business in India (Meyer and Peng, 2016). Customers of
India easily get attracted to lower the price of product and so, it can help EU manufacturing
company in a positive way.
Market analysis of Brazil
PESTLE analysis: Several factor of Brazil the can affect the EU manufacturing in expanding its
business in Brazil:
Political Factors
There is no uncertainty in the government of Brazil. Though there is stability of
government but thing changes overnight there during election seasons. Corruption rate in the
country is high and it is getting worse day by day (Hamilton and Webster, 2015). Condition are
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escalated to the level that launching a small business requires organization to give bribes to
government officers. However, Brazil is one of the most populated nation and it provides
opportunities to organizations (Campello and Gao, 2017). The country also having important
place in global market. High tax rates and interest is also a major concern in the country.
Economic factors
Brazil is most stable country in terms of economic growth. There is no gap between rich
and poor and growth of middle class people is considerable (Meyer and Peng, 2016). Currency
devaluation risk is has been reduce by central bank. This has made inflation rate under control.
Domestic venture and foreign ventures are having equivalent position. Labour cost of the country
is very low. New economic policies made by Brazilian government is helping in attracting
foreign investments. Corporate tax in the country is 15% .Economy of Brazil follows lower
interest rate and high taxation structure (Chkili and Nguyen, 2014).
Figure 3: PESTLE analysis
(Source: PESTLE analysis, 2017)
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Social factors
Approximately 20% population of Brazil lives below line of poverty. Society of Brazil is
diverged by social class line (Kansal and Chandani, 2014). There is disparity of income among
people which is extremely high. Major part of the population is living with minimal income.
Since labour cost is low there a company can easily find workers who will take minimum
payment. Wealthy people of Brazil are following latest trends and believes in buying expensive
products and services. Competition among manufacturing industry in Brazil is less so demand of
this industry is really very high in the country (Risberg, 2013).
Technological factors
In comparison to other countries Brazil is less developed in technology and investment
rate is also very low in the country (Clark and Phillips, 2014). Government is trying to develop
technology at every place of country. It sectors in Brazil is growing constantly in the country.
Start-up in the country is developing regularly (Lebedev, Peng and Stevens, 2015). It is
forecasted that these companies will increase revenue for country and will get place in foreign
markets.
Legal factors
Legislation is very complex in Brazil. Opening a business in the country requires 120
days for confirmation. Companies in the country are considered as single legal entity (Cording,
Harrison and Jonsen, 2014). In Brazil as per rule creditors are not provide with rights to seize
assets of partner for paying off debts. It is necessary for a company to get itself registered with
media of foreign investment.
Environmental factors
In Brazil, it is required for a company to follow environmental policies which are made
for security and safety of environment. Government of the country is continuously forcing
manufacturing industries to make products which are eco- friendly as well as combustible
(Risberg, 2013). Brazil is ranked first in emitting of greenhouse gases. There are strict rules for
companies to perform their activities in Eco-friendly manner. Government is also compelling
industries to reduce their carbon footprint (Verbeke, 2013).
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This can be illustrated from the PESTLE and market analysis of Brazil that EU
manufacturing company can take advantage of good economic condition of country. Company
can make use of low labour cost in the country (Aguzzoni, Argentesi and Tognoni, 2016).
Table 1: PEST analysis for Brazil
Political Stable politics with no uncertainty
Economic Growth of economy is stable
Social Diverge social classes
Technological Less developed technology
Porter’s five forces analysis of Brazil
New entrant threats
Threat of new entrants is very low in Brazil as there is very low competition in markets
of country. Organization to grow there in the country requires large investment in capital and
high level of technical experts (Stahl, Angwin and Durand, 2013). This restricts any company to
enter in the market which in turn reduces the threat of new entrants. EU Manufacturing Company
can gain profit in particular segment.
Substitution threat
Threat of substitute in Brazil is very low as there are very less manufacturing industries
in the country (Risberg, 2013). Substitution is still possible as it is tendency of people to get
attracted by lower price product. So any company can be easily substituted by another.
Bargaining power of buyers
It is defined as ability of consumer to switch from one company to another. Bargaining
power of buyers is very high in the country. Wealthy customers of Brazil spend high amount of
money in buying expensive product and goods (Campello and Gao, 2017). Long term contract is
also involved in the process of switching so this make the bargaining power of customers low.
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