International Joint Ventures in Brazil´s Markets

Overcoming Market Entry Barriers and Expanding International Business into the Markets of Brazil

Research Paper (undergraduate) , 2010 , 22 Pages , Grade: 1,0

Business economics - Offline Marketing and Online Marketing

For several decades now, we are experiencing an unavoidable and strongly growing market globalization. Beyond the traditional export business, industrial globalization keeps penetrating the world´s countries and markets under many different forms of international
businesses and strategic alliances. This term paper describes, justifies and compares two forms of cross-border business expansion strategies into the Brazilian Market that a Multi-National-Corporation (MNC) may resort to: Foreign Direct Investment (FDI) and International Joint Venture (IJV). Their implementation strongly depends of the market type that a host country offers.

A common denominator of both international market entry modes is the obviously advantageous presence of interests of the involved MNC´s when trying to expand their businesses into host countries. This direct presence in a host country means additional speed to market and provides the MNC´s far more possibilities of establishing, conducting and controlling international businesses, than the traditional export business.

The generalizing statement made in the paragraph above is only meant to provide an introductory feeling on how the market of a host country determines the strategy for business expansion. Naturally, there are far more important facts and reasons to be considered that
ultimately force investors into conducting extensive, deep and detailed analysis of not only the market conditions and structures found in pinpointed host countries of their interest, but much more must they make profound and accurate analyses of the socio-cultural and political dynamics that overlay the people which they will rely on, as well as work and cooperate with in the host country. Only a very careful and detailed preparation of their business expansion plan under all aspects involved will enable them to enter, expand, subsist and succeed in a host country. Needless saying here is that there is no easy common way out, since most host countries have very diverse cultures and customs that are seldom known to the interested investors.

The dynamic issue of industrial globalization and international business expansion gets overly well reported on, as well as commented and documented in the world wide Internet. For this reason I chose to compile and comment relatively recent information obtained over the Internet, complementing and concluding it with some backing and legitimizing information derived from the UNCTAD and OECD annual reports.

Table of Contents

1. International Joint Ventures (IJV) and Foreign Direct Investments (FDI)

2. International Joint Ventures (IJV): Advantages and Disadvantages
2.1 Legal Business Structure of the IJV
2.2 Advantages of the IJV for the host country and the local company
2.3 Disadvantages of the IJV for the host country and the local company
2.4 Advantages of the IJV for the participating MNC
2.5 Disadvantages of the IJV for the participating MNC

3. Three good examples of MNC's participating in Brazilian hosted IJV's
3.1 American Electric Technologies Announces Joint Venture in Brazil to 4 Deliver Turnkey Power Solutions
3.2 Oil States forges Joint Venture in Brazil
3.3 Ecometals signs Joint Venture Agreement in Brazil

4. Foreign Direct Investment (FDI): Advantages and Disadvantages
4.1 Legal Business Structure of the FDI business
4.2 Advantages of the FDI business for the host country and its economy
4.3 Disadvantages of the FDI business for the host country and its economy
4.4 Advantages of FDI for the investing MNC
4.5 Disadvantages of FDI for the investing MNC

5. Two good examples of MNCs doing FDI business in Brazil
5.1 Brazil/Germany: VW increases investment in Brazil
5.2 Brazil/USA: Ford Motors invests $2.9 bn in Brazil

6. Cultural business barriers encountered when entering the Brazilian market by means of IJV or FDI and possibilities to overcome them
6.1 Patriarchal Society and vertical hierarchies
6.2 Family oriented society
6.3 Relationally based trust
6.4 Time
6.5 National pride
6.6 Fashion
6.7 Class differences
6.8 Coffee invitations, small talk, sovereignty, acting cool
6.9 Pyramidal Corporate Governance practices in Brazil

7. Conclusion

8. Annex: The interesting story of a very old USA/Brazil Joint Venture

9. References

• College: Munich University of Applied Sciences (Fakultät 09 für Wirtschafts-Ingenieurwesen: Master of Business Administration&Engineering)
• Course: Foreign Direct Investment (FDI) and International Joint Venture (IJV) in Brazil
• Grade: 1,0
• Author: M.Sc. Siegfried Hotter (Author)
• Publication Year: 2010
• Pages: 22
• Catalog Number: V188393
• ISBN (eBook): 9783656121008
• ISBN (Book): 9783656121404
• Language: English
• Tags: Foreign Direct Investment in Brazil, Traditional Export Business, Multinational Corporations, Crossborder Business Expansion, Entry Barriers, Brazilian Market, Legal Structure of the JV, International Joint Venture in Brazil, Advantages of IJV, Disadvantages of IJV, Expanding Business into Brazil, Socio-Cultural Characteristics of Brazilian Business, OECD Business Report, UNCTAD Business Report, intercultural business experiences, cross cultural communication consultants, Interkulturelle Markt-Eintritts-Barrieren, internationale Geschäfts-Erweiterung, Joint Ventures in Brasilien, traditionelles Export Geschäft, Grenzen überschreitende Geschäfts-Erweiterung, Brasilianischen Märkte, legale Strukturen der IJV in Brasilien, Vorteile der IJV, Nachteile des IJV, soziale und kulturelle Eigenschaften der Brasilianischen Geschäfts-Umwelt, interkulturelle Geschäfts-Erfahrungen, Interkulturelle Kommunikation, International Joint Venture, Foreign Direct Investment in Brasil, International Business Manangement, International Business Strategies, internationale Geschäfts-Strategien, Internationale Unternehmensführung, Latin American Markets, Lateinamerikanische Märkte, International Marketing, Marketing Strategies, Barry Leach Strategic, Barry Leach & Kollegen Strategic Advisors GmbH, Vivien Hotter, Madeleine Hotter, Advantages of FDI, Disadvantages of FDI, International Joint Ventures, Foreign Direct Investment, Brazilian Markets, Mercados Brasileros, Mercados del Brasil, Expansión de negocios y de empresas, Geschäfts-Internationalisierung, negocios internacionales, estructuras legales del IJV, cracterísticas sociales y culturales del negocio y comercio en Brasil, desventajas del IJV, ventajas del IJV, ventajas y desventajas del FDI, estrategias internacionals para el expandimiento de empresas, comercios, negocios y mercados, international joint ventures in Brazil, international joint ventures in brasil, markets in brazil, markets in brasil