BHARATI VIDYAPEETH’S

INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH

NAVI-MUMBAI

REPORT
ON
“BUSINESS ENVIRONMENT ANALYSIS
OF
BRAZIL”

Prepared by:

ANURAG BANSAL (02)

HARSHADA KALE (24)
KASHIF KAZI (26)
SHAILESH LINGAMPALLE (29)
SONAL NAIK (33)
SATYAM ADARSH (48)

Submitted to:
DR. PURVI PUJARI
 BUSINESS ENVIRONMENT ANALYSIS OF BAZIL

TABLE OF CONTENTS
1. POLITICAL .................................................................................................................................... 1
Executive Branch ............................................................................................................................ 1

Legislative Branch .......................................................................................................................... 2

Judicial Branch................................................................................................................................ 2

Political factors affecting business .................................................................................................. 2

2. ECONOMICAL .............................................................................................................................. 6
3. SOCIAL .......................................................................................................................................... 7
Demography .................................................................................................................................... 7

Cultural Life .................................................................................................................................... 7

Overview ......................................................................................................................................... 8

Key Concepts .................................................................................................................................. 8

Doing Business in Brazil................................................................................................................. 9

Working practices in Brazil ............................................................................................................ 9

Brazilian business etiquettes (Do’s and Don’ts) ........................................................................... 10

4. TECHNOLOGICAL ..................................................................................................................... 11
5. ENVIRONMENTAL .................................................................................................................... 12
Impact on business ........................................................................................................................ 12

6. LEGAL ......................................................................................................................................... 14
7. REFERENCES ............................................................................................................................. 15
 BUSINESS ENVIRONMENT ANALYSIS OF BAZIL

1. POLITICAL
Brazil officially the Federative Republic of Brazil, is the fifth largest country by both area
and population. Brazil is the largest country to have Portuguese as an official language, and
the only one in America. Brazil is South America's most influential country, an economic
giant and one of the world's biggest democracies. It is one of the rising economic powers -
otherwise known as BRIC nations - together with Russia, India, China and South Africa.
Brazil is the largest country in South America and the Latin America. It is the largest
Portuguese speaking country in the world. Brazilian economy is the world's seventh largest
by Nominal Gross Domestic Product. It is one of the world's fastest growing major
economies. Its economic reforms give the country new International recognition and
influence. Brazilian law is based on Roman-Germanic traditions and civil laws. The Brazilian
Federation is the "indissoluble union" of the States, the Municipalities and the Federal
District and these are called as spheres of Brazilian government.
At present, voting is compulsory for all Brazilian residents that are literate and between the
ages of 18 and 69 years.
The government of Brazil is divided into:
1) Executive branch
2) Legislative branch
3) Judicial branch
There are 27 states and more than 5,500 individual municipalities, each of which is run by a
Mayor. Each municipality is headed by an elected Mayor and a legislative body that handles
the legal aspects of running the municipal area. The elections take place across Brazil at the
same time.

Executive Branch
Jair Messias Bolsonaro is the 38th president of Brazil. The president is elected via ballot votes
and he or she will hold the executive power. The president’s term is of four years. The
president leads the Executive Branch and is the Commander-in-Chief of the Brazilian armed
forces. The Vice President would replace the President and assumes the role of presidency
while the President is abroad. The cabinet administers assist the president in the exercise of
the executive power by administrating a corresponding government ministry. The President
and Vice President are elected by the citizens of Brazil by absolute majority vote through a
two-round system.

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Legislative Branch
The Federal Senate is the upper house of bicameral Congress. The chamber of deputies is the
lower house. The Federal Senate has 81 members who are elected by plurality vote in multi-
member constituencies. The chamber of deputies has 513 members who are elected through
an open-list proportional representation system.
Federal Senate: 8 years; Chamber of Deputies: 4 years.
Each state in Brazil is assigned a governor and an elected legislature.

Judicial Branch
The Supreme Federal Tribunal exercises the ultimate judicial power. The judiciary is separate
from other government entities. Justices are appointed by the president and approved by the
Federal Senate. Mandatory retirement age is 70 years.
Each of its judges is elected by the tribunal members and their term is life-long. The judicial
system is responsible for contesting and supporting any decisions made by the Government
that will affect the rights of Brazil’s individual residents. This gives the judicial system a
huge amount of power within the legal system of Brazil.
The political factors affecting business are often given a lot of importance. Several aspects of
Government policy can affect business. All firms must follow the law and managers must
find how upcoming legislations can affect their activities.
The political environment can impact business organizations in many ways. It could add a
risk factor and lead to a major loss. You should understand that the political factors have the
power to change results. It can also affect government policies at local to federal level.
Companies should be ready to deal with the local and international outcomes of politics.
Changes in the government policy make up the political factors. The change can be
economic, legal or social. It could also be a mix of these factors.
The political environment is perhaps among the least predictable elements in the business
environment. A cyclical political environment develops as democratic governments have to
pursue re-election every few years. This external element of business includes the effects of
pressure groups. Pressure groups tend to change government policies.

Political factors affecting business

1. Government stability and related changes:
Lack of political stability in a country effects business operations. This is especially true
for the companies which operate internationally. The stability of a political system can affect
the appeal of a particular local market. Governments view business organizations as a critical
vehicle for social reform. Governments pass legislation, which impacts the relationship
between the firm and its customers, suppliers, and other companies. The government is liable

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for protecting the public interest. Government actions influence the economic environment.
Government is a major consumer of goods and services.
Brazil is still considered a developing nation, and although that is often interpreted as a
precursor for ‘high growth levels’, it also means that several areas of the economy remain
underdeveloped. The consumer base, regulatory environment and sphere of investment are
not as mature as those of developed nations, and considerations must be made to that effect.

2. Bureaucracy:
The reform of the laws and regulations for opening and running a business in Brazil
has not adapted at the rate with which the economy has grown, presenting many hurdles to
overseas corporations.
Brazil ranked 125th out of 190 countries in the World Bank’s latest Annual Global Report
which evaluates the ease of starting a business, dealing with construction permits, registering
property, and paying taxes. On average, it takes 11 procedures and around 90 days of work to
start a business in Brazil - though this used to be almost 120 days - and construction permits
demand an average 20 procedures and 404 days to finally get authorised.

3. Corruption level:
Corruption is a barrier to economic development for many countries. Some firms
survive and grow by offering bribes to government officials. The success and growth of these
companies are not based on the value they offer to consumers. While Brazil is among the
world’s leading investment destinations and is formally a well-functioning business
environment, corruption and bribery are still serious obstacles. The federal structure of the
political system means there is a wide range of regulatory agencies, which can lead to
demands for bribes from public officials. In 2016, Brazil was ranked 76 in Transparency
International’s corruption perception index, and organised crime is a significant problem in
some parts of the country. However, this is something the government is fighting hard
through a so-called integrity programme.

4. Regulation and deregulation:

Governments could alter their rules and regulations. This could in turn have an effect
on a business. Brazil ranked 125th out of 190 countries in the World Bank’s latest annual
global report which evaluates the ease of starting a business, dealing with construction
permits, registering property, and paying taxes. On average, it takes 11 procedures and
around 90 days of work* to start a business in Brazil - though this used to be almost 120 days
- and construction permits demand an average 20 procedures and 404 days to finally get
authorised.

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5. Tax policy (tax rates and incentives):

Increase or decrease in tax could be an example of a political element. Your
government might increase taxes for some companies and lower it for others. The decision
will have a direct effect on your businesses. So, you must always stay up-to-date with such
political factors. Government interventions like shifts in interest rate can have an effect on the
demand patterns of company.
Brazil’s tax regime is one of the driving forces behind its complexity. More than 90 taxes,
duties and contributions are charged in Brazil, and all taxes are based on different
government spheres of federal taxes, state taxes and municipal taxes. The launch and roll-out
of eSocial has created a single system that replaces the need for companies to send separate
reporting to Social Security, the Internal Revenue service and Brazil’s Ministry of Labour
and Employment, but the new system has led to increased short-term complexity in reporting.

6. Trade control:
Brazil is the 21st largest export economy in the world; in 2016, the country exported
$182bn and imported $135bn worth of goods, resulting in a positive trade balance of
$46.4bn. Imports, however, are decreasing at an annualised rate of -19.552%. Businesses can
often be confronted with complications when exporting and importing goods. Most imported
goods are held in port for some time while the correct procedures take place and the average
cost per container is relatively steep. Compliance when exporting can take 71 hours at a cost
of 1185. High duties may make an export too expensive for the Brazilian market.

7. Infrastructure:
Being on the world stage for the football World Cup and the Olympic Games pushed
the Brazilian government to urgently improve the country’s infrastructure, auctioning road,
railway and airport concessions as well as cutting financial transaction tax on several major
projects. According to the World Economic Forum, Brazil ranks 107th out of 144 countries in
the level of infrastructural development. That said, the build was fraught with controversy,
and the long-term impact is yet to be truly assessed.

8. Mitigation of Risk:
Buying political risk insurance is a way to manage political risk. Companies that have
international operations use such insurance to reduce their risk exposure. There are some
indices that give an idea of the risk exposure in certain countries. The index of economic
freedom is a good example. It ranks countries based on how politics impacts business
decisions there.

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Various laws in favour of business:

Government involvement in trade unions and agreements, freedom of the press,
tariffs, education law, anti-trust law, employment law, discrimination law, data protection
law, environmental law, health and safety law, competition regulation and consumer
protection and e-commerce.

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2. ECONOMICAL
The world’s either largest economy and ninth largest purchasing power. One of the fastest
growing major economies in the world (average annual GDP growth rate of 5%) is predicted
to become one in the five largest economies in the world in the next few decades. It has
hundreds of trade partners with 60% of exports being manufactured or semi manufactured.
Before the Portuguese explorers arrived in Brazil around the 15th century, the natives had
lived there unchanged since the Stone Age. Originally, Brazil's exports relied on agriculture
and the production of gold, coffee and sugar. The economy relied heavily on African slave
labour until the late 19th century. About 4.5 million people emigrated to Brazil between
1882 and 1934.
To produce more food and develop more cattle and crop for the rising population, Brazil
created an Agriculture and Cattle-Raising Plan, which guaranteed financing for equipment
and encouraged the farmers to use new technology. Over 600,000 Km of land is divided into
about 5,000 areas of rural property. Brazil produces 110 million tonnes/year of grain crops
followed by 50 million tonnes of soybean.
Has the second biggest industrial sector in the America. Brazil's industry produces
automobiles, steel, petrochemicals, computers, aircraft and consumer durables. An important
export of raw materials in Brazil comes from iron and magnesium reserves. Brazil also
exploits deposits of nickel, tin, chromite, uranium, bauxite, beryllium, copper, lead, tungsten,
zinc, gold, and other minerals.
300 years after being discovered by the Portuguese Brazil obtained its first permit from the
Portuguese colonial government to set up factories and manufacturers. By the 21st century,
Brazil was the eighth largest economy in the world. The time when the economy grew the
greatest was between 1875 and 1975. Brazil has created a balance between exports and
imports.

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3. SOCIAL
Brazil, officially Federative Republic of Brazil is the largest country of South America that
occupies half the continent’s landmass. It is the fifth largest country in the world, exceeded in
size only by Russia, Canada, China, and the United States of America. Brazil is the fifth
most-populous country on Earth with a population of 212,392,717 people and accounts for
one-third of Latin America’s population (1). Most of the inhabitants of Brazil are
concentrated along the eastern seaboard, although its capital, Brasília, is located far inland
and increasing numbers of migrants are moving to the interior. Rio de Janeiro, in the eyes of
many of the world, continues to be the preeminent icon of Brazil. The nation’s burgeoning
cities, huge hydroelectric and industrial complexes, mines, and fertile farmlands make it one
of the world’s major economies. However, Brazil struggles with extreme environmental
degradation, social inequalities, intermittent financial crises, and a sometimes deadlocked
political system. The official language of Brazil is Portuguese. Brazil is unique in the
Americas because, following independence from Portugal, it did not fragment into separate
countries as did British and Spanish possessions in the region; rather, it retained its identity
through the intervening centuries and a variety of forms of government. Because of that
hegemony, the Portuguese language is universal except among Brazil’s native Indians,
especially those in the more-remote reaches of the Amazon basin. At the turn of the 21st
century, Brazilians marked the 500th anniversary of Portuguese contact with a mixture of
public celebration and deprecation. Portuguese is the first language of the vast majority of
Brazilians, but numerous foreign words have expanded the national lexicon. Brazil’s
indigenous peoples speak dozens of discrete languages, and some authorities suggest that the
greatest divergence of the Brazilian language from the Portuguese can be traced to initial
contact with the Indians. About two-thirds of the Brazilian people adhere to Roman
Catholicism, which ceased to be the official religion after the proclamation of the republic in
1889 (2).

Demography
Like most developing countries, Brazil has a young population, but the median age has been
increasing since the mid-20th century. By the 1980s the proportion of people under 20 had
declined to less than half of the total, and the trend continued into the early 21st century,
when between one-fourth and one-fifth of Brazilians were recorded as being under age 15.
During that time the proportion of people in the older age groups increased, so that nearly
three-tenths of the population was age 45 and over. As Brazilian society has modernized and
become more affluent, life expectancy has increased and the rate of population growth has
declined. (2)

Cultural Life
The cultures of the indigenous Indians, Africans, and Portuguese have together formed the
modern Brazilian way of life. The Portuguese culture is by far the dominant of these

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influences; from it Brazilians acquired their language, their main religion, and most of their
customs. Brazilian Portuguese language; other Indian contributions to Brazilian culture are
most apparent in the Amazon basin. African influences on the Brazilian way of life are
strongest along the coast between the Northeast and Rio de Janeiro; they include traditional
foods, religions, and popular music and dance, especially the samba. Commercial and cultural
imports from Europe and North America have often competed with—and influenced—
Brazilians’ own cultural output, and critics have argued that the nation’s cultural identity is
suffering as a result. Despite numerous social and economic challenges, Brazilians continue
to be exuberant and creative in their celebrations and art forms. (2)

Overview
Brazil is a country greatly shaped by its diverse culture and geography. It has long been the
source of important natural resources such as timber, sugar, soy bean, beef and coffee. The
culture has also been a thriving fusion of Portuguese, African and indigenous Indian
influences, all of which have left their mark on the Brazilian society resulting in a rich
diverse culture. Brazilian culture is known for its hospitality, openness and colourful and
rhythmic events. As Catholicism is the predominant religion in Brazil, many of these events
have a strong Catholic influence. The diversity of Brazilian society is further emphasized by
the prevalent class differences which permeate almost every aspect of society. Understanding
the diversity of Brazilian society and the unique values and attitudes of its citizens will help
you develop better relationships and do business more successfully with your Brazilian
colleagues. (3)

Key Concepts
Family: Brazil is a collectivist society which places family at the centre of its social structure.
Families in Brazil tend to be large and close-knit, providing members security and
connections. The importance of family is also evident in Brazilian business culture where
often family members will be found working for the same company, either family owned or
otherwise. (3)

Relationships: Similar to the importance placed on family, Brazilians depend heavily on

relationships with others. It is essential therefore to spend the time getting to know your
Brazilian counterparts, both personally and professionally. Knowing the right people will also
help minimize any frustrations you might experience doing business in Brazil. (3)

Time: Time in Brazil is approached in a very relaxed and flexible manner. Punctuality and
precise plans are not common. Brazilians tend to live life at a slower pace and this carries
over into business which can result in negotiations taking much longer than you are used to.
Meetings are also often delayed or cancelled without any prior warning. (3)

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Doing Business in Brazil

Brazil’s unique heritage has been influenced by a variety of diverse populations and cultures.
First inhabited by indigenous tribes over 8,000 years ago, Brazil became a Portuguese colony
in the 16th century after it was discovered by Europeans. In 1822, Brazil gained its
independence and has since seen an exponential increase in its population as people from
around the world settle there. Traditionally a very agriculturally based economy, Brazil also
has strong service and industry sectors which have fuelled its economy over the last century.
The last decade has seen Brazil open up its economy to foreign markets and investment
making it the fifth largest economy in the world. Recognized as the largest economy in Latin
America, Brazil also benefits from its position as the gateway to the lucrative Mercosur
market. A strong diversified economy and unique culture make doing business in Brazil an
exciting but often challenging endeavour. Understanding Brazilian business culture and
etiquette is therefore essential for successfully doing business in Brazil.

Working practices in Brazil

(1) In most Brazilian cities, working hours are 8:30 a.m. to 5:00 p.m. with an hour or two
in the middle for lunch. Businesses are usually open from 9:00 a.m. to 7:00 p.m. from
Monday to Friday and 9:00 a.m. to 1:00 p.m. on Saturdays. Larger businesses and most
businesses in Sao Paulo may be open for longer hours.
(2) Brazilians love socializing and spending time with each other. This is often done over
lunches or mid morning coffee breaks which can go on for several hours. Although Brazilian
culture tends to be relatively informal, Brazilians are quite fashion conscious. It is therefore
important to dress smartly and conservatively.
(3) Brazilian companies tend to have vertical hierarchies where managers at the top make
most of the decisions. These positions tend to be dominated by men, but women are slowly
gaining employment in executive roles.
(4) Differences in classes are still very prevalent in Brazilian society and business culture.
Class is mostly determined by economic status and is reflected in the salaries people receive
resulting in large disparities of pay and status. There are laws against discrimination, and
most class differences in business are subtle.
(5) Relationships are one of the most important elements in Brazilian business culture. By
cultivating close personal relationships and building trust, you will have a greater chance of
successful business in Brazil. The strong importance placed on family relations in Brazil
means that often you will find a number of family members working for the same company.
This is especially reinforced since Brazilians prefer to do business with those they know and
trust.
(6) Handshakes are the most common form of greeting between business colleagues. In
more informal situations, women will tend to greet each other with a kiss on either cheek
while men may briefly embrace.

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(7) When you meet someone for the first time, it is polite to say ‘muito prazer’ meaning
my pleasure. Expressions such as ‘como vai’ and ‘tudo bem’ are common forms of saying
hello once you know someone and can show you are making an effort to know them. This is
highly appreciated.
(8) The use of titles and first names vary across Brazilian society. It is polite to address
you Brazilian counterpart with their title and surname at their first meeting or when writing to
them. Once you know them, it is common to use just first names, or else their title followed
by their first name.
(9) An extensive system of regulations combined with a relaxed attitude to time often
results in lengthy business interactions. It is imperative not to rush this process however and
spend the time to continue developing relations. It is a common practice in Brazilians to hire
a middleman to help you in your business dealings.

Brazilian business etiquettes (Do’s and Don’ts)

(1) DO schedule extra time in between meetings to allow for any additional time needed
since they are often delayed or cancelled without warning. As a foreigner, try to always be on
time however as this will be expected of you
(2) DO expect to spend a lot of time getting to know your Brazilian business counterparts
before any business takes place
(3) DO make eye contact as this shows you are paying attention, interest and are honest
(4) DO accept any food or coffee offered to you. Saying no can be seen as an insult
(5) DO expect to be interrupted. The Brazilian method of communication usually entails
a lot of overlapping speech and people are not afraid of what they say or think
(6) DON’T rush business dealing with your Brazilian colleagues and avoid pressing for
final decisions
(7) DON’T show feelings of frustration or impatience as it will reflect poorly on you as
an individual. Brazilians pride themselves on their ability to be in control, so acting in a
similar fashion will improve your relationship and interactions with your Brazilian
counterparts
(8) DON’T bring up topics of conversation such as crime, corruption or deforestation as
these are sensitive issues at the moment
(9) DON’T publicly criticize your Brazilian counterparts. If you need to tell them
something negative, do so in private so they do not lose face or their pride in front of others
(3)

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4. TECHNOLOGICAL
Compared to countries like the U.S. and Russia, Brazil possesses a weaker technological
infrastructure, as well as investment, but there are efforts being made to push the
development of technology centres all over the country. However, IT is a sector in which
Brazil has been constantly improving and it currently ranks 53rd in the world.
Technological research in Brazil is largely carried out in public universities and research
institutes, with the majority of funding for basic research coming from various government
agencies. Brazil's most esteemed technological hubs are the Oswaldo Cruz Institute, the
Butantan Institute, the Air Force's Aerospace Technical Centre, the Brazilian Agricultural
Research Corporation and the INPE. The Brazilian Space Agency has the most advanced
space program in Latin America.
Uranium is enriched at the Resende Nuclear Fuel Factory, mostly for research purposes (as
Brazil obtains 88% from its electricity from hydroelectricity) and the country's first nuclear
submarine will be delivered in 2015 (by France). Brazil is one of the three countries in Latin
America with an operational Synchrotron Laboratory, a research facility on physics,
chemistry, material science and life sciences. And Brazil is the only Latin American country
to have a semiconductor company with its own fabrication plant, the CEITEC.
So, the scope of doing business is very limited to Information Technology sector in
Technology. For all other businesses to flourish, there is a need of bringing in technology
from across and also development of right skills is required to implement the technology.
There is also a wide scope of Research and Development of nuclear elements with
Technological aspects.

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5. ENVIRONMENTAL
According to the geographical location of Brazil, it is very easy accessible by the sea, this
means the country has an exit to the Atlantic Ocean. The raw materials, equipment, and
products can easily be delivered by the sea which is not costly comparing to transportation by
air.

Also, according to the geographical location of the country there is no natural disaster like
earthquakes and tsunami, which may cause stoppage of the business.

Due to the large size, the climate of Brazil is different, even though the most part of the
country is within tropical zone. The climate of Brazil experiments two seasons: the rainy
which is summer and dry season which is winter. There is no cold at all, so the climate is
partly same as in Malaysia, and it is very suitable for doing business in this country.

1) Environmental policies to stop deforestation and emission: Once brazil have the highest
deforestation rate and in 2005 still had the largest area of forest remove annually. Since 2005,
the country has established more than 2,00,000 km2 of parks, nature reserves, and national
forests in the amazon rainforest. And the illegal appropriation of land and logging,
encouraging the use of land for sustainable timber harvesting.

2) Eco-friendly combustion technique was enforced: The companies in brazil were

compelled to have eco-friendly combustion. As the companies also realised that overt,
greenwashing implies higher risk than benefits. The Brazilian companies started spending
more on social and environmental initiatives than most other countries, including the UK and
Canada.

3) Climate of Brazil: The climate of brazil is different, even though the most part of the
country is within tropical zone. The climate of brazil experiments two seasons:
A. The rainy which is summer and the dry which is winter.
B. There is no cold at all and it is very suitable for doing business in this country.

Impact on business
1) Brazil has a generally advanced and comprehensive legislation on environmental
protection and sustainability. Laws regarding forests, water and wildlife have been in
effect. It helps in preserving the environment and doing business in the country.

2) The moderate climate in Brazil is very much suitable for doing business and the
world’s largest Amazon forest provides the natural resources there.

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3) The tourism business can be a good option in the island of Salva Dor, as Porto Da
Barra beach in Salvador is considered as the 3rd best beach in the world with eco-
friendly and sustainable environment provides stunning opportunity.

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6. LEGAL
Brazilian law is based on Roman-Germanic traditions and civil law concepts prevail over
common law practice. Most of Brazilian law is codified, although non-codified statutes also
represent a substantial part, playing a complementary role. Court decisions set out
interpretive guidelines; however, they are seldom binding on other specific cases. Doctrinal
works and the works of academic jurists have strong influence in law creation and in law
cases.
Supreme Federal Court of Brazil serves primarily as the Constitutional Court of the country.
The legal system is based on the Federal Constitution, which was promulgated on 5 October
1988, and is the fundamental law of Brazil. All other legislation and court decisions must
conform to its rules. As of April 2015, there have been 53 amendments. States have their own
constitutions, which must not contradict the Federal Constitution. Municipalities and the
Federal District have "organic laws" (leis orgânicas), which act in a similar way to
constitutions. Legislative entities are the main source of statutes, although in certain matters
judiciary and executive bodies may enact legal norms. Jurisdiction is administered by the
judiciary entities, although in rare situations the Federal Constitution allows the Federal
Senate to pass on legal judgments. There are also specialized military, labour and electoral
courts. The highest court is the Supreme Federal Court.
This system has been criticized over the last few decades for the slow pace of decision-
making. Lawsuits on appeal may take several years to resolve, and in some cases more than a
decade elapses before definitive rulings. Nevertheless, the Supreme Federal Tribunal was the
first court in the world to transmit its sessions on television, and also via YouTube. More
recently, in December 2009, the Supreme Court adopted Twitter to display items on the day
planner of the ministers, to inform the daily actions of the Court and the most important
decisions made by them.

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7. REFERENCES
1. [Link]

2. [Link]

3. [Link]
[Link]

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