The Mofo's Establishment Strategy in Brazil

Résumé du document

In spite of the crisis, the Foreign Direct Investment flow in Brazil increased to 25 % between 2008 an 2009. That is to say Brazil is a very attractive economy (is the second destination of FDI flows after China from the European Union). We have chosen the large-scale distribution because it is a famous sector for the foreign firm in Brazil, a high growth devolpment who can be envisaged. We have chosen to take a fictitious firm because Carrefour, the only company that we was interresting, is already in Brasil.

The BRIC (Brazil, Russia, India and China) can be defined like the most powerful country of tomorrow. Today, capital flows are higher than the flow of goods. Moreover, multinational firms play an increasingly important part in the International Business. Foreign Direct investment (FDI) can be defined as money invested by any country to abroad.

The OECD defines direct investment abroad as well: "FDI is an activity in which an investor resident in one country obtains a lasting interest and a significant influence in the management of an entity resident in another country. This may be to create an entirely new company (investment, creation) or, more generally, to change the status of business ownership (through mergers and acquisitions).

What is the advantage for a firm of developed countries to invest in the BRIC countries ? Do we have the managerial, organizational and financial ressources to internationalize ?

Extraits

[...] Brazil signed a bilateral convention with France in 1995, which is there to protect foreign investment. In spite of the recent financial crisis, Brazil is a country with a politico-economic stability. This has lead to a heightened growth in opportunities, or maybe less constraints on its entrance to Brazil. For French firms, the Brazilian market is extremely promising, because the Brazilians are fond of the French products (Camembert, wine The Brazilian market is urban, the middle-classes have a very high purchasing- power and are major users of foreign products. [...]

[...] Thanks to that, Mofo can find the best commercial strategy to penetrate the market. Region or local products ? The debate escapes reality insofar as there are thousand references. The basis commercial strategy cannot be integrated in Brazil because the taste and the culture differ between the countries and the region. There is the Coke exception. But we can tell the French frame is a good point of integration into the Brazilian market. Partner choice ? When the decision is finally taken, Mofo is going to open a discrete office two years before the first opening of a hypermarket. [...]

[...] We have chosen the large-scale distribution because it is a famous sector for the foreign firm in Brazil, a high growth development who can be envisaged. We have chosen to take a fictitious firm because Carrefour, the only company that we were interesting, is already in Brasil. The BRIC (Brazil, Russia, India and China) can be defined like the most powerful country of tomorrow. Today, capital flows are higher than the flow of goods. Moreover, multinational firms play an increasingly important part in the International Business. Foreign Direct investment (FDI) can be defined as money invested by any country to abroad. [...]

[...] Buckley, P (ed.) (2003), What is International Business ? Basingstoke : Palgrave. Chryssochoidis, G., Millar C. and Clegg, J (1997) Internationalisation Strategies, London : Macmillan. Anonymous author (2006) 'Create successful international mergers and alliances', Strategic Direction, Iss pg. 25-8. Brainard, L. and Martinez-Diaz, L. (2009), Brazil as an economic superpower ? Understanding Brazil's changing rôle in the Global Economy, Brookings Institution Press. [...]

[...] In a first part we will present the Brazilian Economy. In a second part, we will analyze a fictive firm, Mofo, if the firm can invest in Brazil. And finally, in a last part we will see if the establishment strategy of Mofo is possible. I The Brazilian economy and the implantation opportunities A General economic situation in Brazil As to be aware of the different opportunities available to a foreign firm establishing itself in Brazil, it is necessary, globally speaking to be aware of the Brazilian economy. [...]