Institutional analysis of the political, economic and socio-cultural environment of Brazil as an Emerging Market for processed foods
Justification for the selection of Brazil as a potential market for a Mexican based canned/processed foods manufacturing company
Overview
Brazil has a population of approximately 200 million persons (UN Data 2018), thus it is a rich market for products and services. Over the years, the processed foods industry in the country has been on a steady increase, from 2009 to 2017 (Machado et al. 2018). However, this progressive and continued growth was interrupted by the political and financial challenges that hit the country in 2017. Even in the face of the 2017 challenges, the country was able to post a reasonable performance of processed foods except for some categories e.g. dairy products and snacks. The primary reason for the decline in the performance of these products, specifically yogurt, ice cream, and confectionaries being that consumers considered them non-essential, particularly at the height of the financial challenges (Valdes 2006). However, at the moment, the processed foods industry in Brazil has picked and it is resumed the increasingly increasing growth (Euromonitor International, 2017). This section of the paper seeks to justify why Brazil would be a potential market for a Mexican based canned/processed foods manufacturing company by critically analyzing the institutional environment, identifying opportunities and institutional voids.
Political
Brazil is a very mature democracy that has a federal government and state governments. It has three...
Any political issues are solved through due process and the country is politically stable. In the recent past, due to the strong political standing of the country, there has been an impeachment of a sitting president, and former president has been sent to jail for corruption-related crimes (Johnson 2018). Because of the strong political standing, and the independent functioning of the three arms of government, any controversies are solved through due process, even though corruption is rampant. State governments have jurisdiction in their states, even though the federal government has overriding power over states.
Economic
Brazil is an upper middle-income country with a GDP of about USD2.5 trillion. The country is ranked seventh on the size of its economy, and it is the most influential in Latin America. The country has and relies on monetary policy. The processed food industry has retail sales of USD5.53 billion as per 2017 statistics (Statistica 2018). Both foreign and domestic enterprises are treated equally by the federal government, but state governments offer incentives for foreign companies to invest in the respective state. There is an abundance of labor – both skilled and unskilled – and even though it is considerably expensive, at the global level, it is comparatively cheap in the country.
Social-cultural
There is a huge economic inequality among the Brazilian population with about 19% of the population living under the poverty line. However, over the recent years, this…
