According to Pacek and Thorniley (2007), Emerging markets, a term first used by Antonie W. back in the 1980s is today loosely used as an umbrella term to lump together all those countries whose growth (economic) is expected to be relatively high going forward. However, other analysts take emerging markets to be those economies whose incomes are extremely low. According to the two authors, what remains the single most important force shaping the desire of companies to invest in emerging markets is the high level of demand originating from these unique markets. This also happens to be the guiding force when it comes to International Phone Inc.'s decision to expand into Brazil.
Based on the matrix analysis of the various elements which underscore Brazil's attractiveness as an investment destination, it remains clear that International Phone Inc. could be better off (in terms of profitability, stability and continued growth) investing in this important emerging market. Given the granted authorization to expand into Brazil, I will in this text come up with an entry as well as an implementation strategy for the imminent expansion.
Proposed Organizational Culture
The organizational culture I propose herein is tailored to ease the entry of International Phone Inc. into Brazil. In basic terms, organizational culture entails all the shared expectations or beliefs as well as norms and values which dictate the approach to work taken by individuals within the organization as well as how such individuals interrelate. Hence in developing an organizational culture for International Phone Inc. (Brazil), I will take into consideration the elements I identify in the definition of organizational culture above. These elements include organizational values, beliefs or shared expectations and lastly, Norms.
In this case, shared expectations will underline the approaches to be taken to attain organizational goals i.e. enhanced motivation for employees and increased productivity. Given that this is a new market, there is an existing need to effectively manage the resulting diverse workforce going forward. With that in mind, the relevance of job motivation for enhanced productivity cannot be overstated. To increase employee motivation, the expression of humor within the work setting will be conveyed as a belief or shared expectation.
All the accepted as well as typical behaviors within International Phone Inc. (Brazil) will make up the norms of the Organization. The emphasis in this case will therefore be to describe how various tasks should be accomplished or undertaken, the work environment attributes, organizational communication modes and methods and lastly; the leadership approaches and styles. Therefore, when it comes to International Phone Inc. (Brazil), the organization's work environment will be brought out as pleasant and relaxed. Further, steps will be taken to ensure that each and every employee is allowed to have his or her input when it comes to critical decisions. Hence the decision making process in this case will be largely participative. Regular meetings will be held to brainstorm emerging ideas and remedies to persistent problems within the organization.
Values in this case represent all those things which are viewed as important within the organization. Hence in the case of International Phone Inc. (Brazil), what will be considered important within the organization will be brought our as the company's core value and all the employees will be expected to adhere to these guiding principles. These values which will be prominently be displayed in the organization's premises and/or Website will include giving back to the society, mutual understanding and respect, hard work, quality, integrity and humor.
Environmental Scanning Analysis
When it comes to environmental scanning for the new market, I take into consideration the various external factors which constitute International Phone Inc.'s macro environment as it seeks to enter the Brazilian marketplace. According to Henry (2008), PEST analysis remains one of the most practical ways of undertaking an environmental scan. This analysis concerns itself with a number of factors which include political, economic, social and technological components.
Political and Legal Factors
As a country whose government is fully committed towards economic growth, it will be relatively easy for International Phone Inc. To access the full support as well as cooperation of the government of the day. However, it can be noted that the company might encounter difficulties when it comes to the labor laws of the country. For instance, according to The Economist (2011), Brazil has a set of labor laws known to be punitive to both workers and businesses. Other legal issues the article points out include unreasonably high payroll taxes in addition to the existing labor laws which are described as onerous. However, in comparison to the other countries in South America, it can be noted that Brazil offers a rare incentive to corporate managers and owners as the government does not necessarily seek to share corporate power with new entrants. Further, for those companies which show the willingness as well as the ability to uplift both the regional economies and the quality of lives for their inhabitants, the Brazilian government offers a number of incentives including reduced corporate taxes.
It should be noted that Brazil has a free market framework. Further, by virtue of having experienced an impressive rate of economic growth which stood at 7.5% in the year 2010, Brazil remains an attractive market for International Phones Inc. Further, figures availed by the Country's Geography and Statistics Institute reveal that Brazil is the biggest economy in Latin America in terms of GDP. A look at the interest and inflation rates of the country also makes Brazil an ideal place for investment.
When it comes to technical development, Brazil is way ahead of the pack. This is largely due to the role the Brazilian government plays when it comes to research and development (R&D) funding, with over 70% of the same being from public coffers. The Butantan Institute and the Oswaldo Cruz Institute are some of the best technological hubs in Brazil. This effectively means that in this case, barriers to entry are significantly lowered.
A vast population of Brazil can be defined or described as urban with Belo Hoizonite, Rio de Janeiro and San Paulo being Brazil's largest metropolitan areas. The population growth rate in this country is within manageable levels with a significant portion of the population being health conscious. With these factors in mind, it is easy for International Phone Inc. To chart the country's potential markets as well as consumer needs.
Entry Strategy, Ownership Structure and Organizational Structure
International Phones Inc. will undertake a joint venture as an entry strategy. Basically, a joint venture is a situation in which several investors come together and agree to share ownership of an entity under an agreed upon entrepreneurial engagement. By using this as an entry strategy, International Phones Inc. will be able to share the risks associated with a new market. Further, it may be possible to compete more effectively by combining our respective financial strengths.
In regard to ownership structure, the resulting outfit brought about by the joint venture arrangement between International Phones Inc. And a strategic partner will be registered as a limited liability company. Given that the organization is entering a largely unfamiliar marketplace, the possibility of problems (financial or otherwise) leading to the eventual fold-up of the business cannot be overlooked. If such an eventuality happens, the actual owners of the outfit cannot be held personally responsible for the debts of the firm. This is an important consideration I make when formulating the ownership structure of the company.
When it comes to the organizational structure, I recommend a flat structure. My assertion in this case is based on the relatively minimal level of bureaucracy exhibited when it comes to such a structure. This effectively means that decision making will be much easier in addition to enhanced communication between workers and their managers. The lower costs associated with this structure due to the fewer levels of management is also a plus for International Phones Inc. given that it needs standby resources to take care of any emerging eventuality.
Brazil's Political Risk Assessment
Until 1st January 2011, Brazil's president was Luiz Inacio whose popularity was largely hinged on his policies which were viewed by analysts to be market-friendly. It was hence hoped that with his exit, a pro-business president would take over the leadership of the country so as not to water down the gains already made by his or her predecessor. Dalma Rousseff is Brazil's current president. President Dalma who also happens to be the first economist elected as president in Brazil's history is expected to further enhance Brazil's competitiveness as an economic hub given her extensive experience in the financial arena including her brief stint as Treasury's municipal secretary. The country can be described as democratic given the relatively high number of political parties that dot the political scene. Hence in that regard, the country's political environment can be viewed as being pro-business and hence investor friendly.