Introduction
The hospitality industry is highly competitive with new players coming up and old ones developing new working strategies or approaches; to be competitive in the industry mostly in an international market, then there is a need to have strategic decisions and ensure that scientific methods of decision-making are adopted (Schrage 2010). Latin American countries are offering a good market for the hospitality industry thus Burswood Entertainment Company, an Australian based entertainment company wishes to venture into Brazil and enjoy the opportunities there.
Burswood Entertainment is an Australian based entertainment industry that has various entertainment industry modern facilities, they include Casinos, Sauna, massage parlours, restaurants, Gyms, bars, hotel, golf course, day spa, night clubs among others; it is situated in Swan River near the city of Perth, Western Australia. The company has a strong brand name and wishes to diversify its services and line of business to Brazil.
Brazil is the largest economy in Latin America and offers low barriers to entry. Despite the favourable entry environment in the country; a market entry strategy needs to be developed; an effective entry strategy assists a company tap the new market potential successfully. When developing an internal marketing entry strategy, a company need to undertake an external environment analysis using situational analysis tools like political, Economic, Social, Technological, Legal, and Environment. There is also a need to do the internal analysis by use of tools such as strengths, weaknesses, opportunities, and threats. This paper undertakes the external environment analysis of the Brazilian market and the internal analysis of Burswood Entertainment for the purposes of the company’s expansion (Schrage 2010)
When in Brazil, the company will aim at offering similar services but will be offered by Brazilians who have undergone training and hands-on experience in Australia; however, for the introduction stage of the venture, Australians will be the main service provider so that they can set the pace for the business. In the developing stage of the business, the local Brazilians’ will be employed as the casuals to reduce the company’s expenses of importing Australians. The area of concentration that requires skilled labour will be conducted by the trained Australians to make the business stable, especially the management team.
Political Environment
The country has a democratic governance policy with three main arms of the government, the States, the Municipalities and the Federal District, each of the arms work for the general good of the country. The country has all its executive and legislative members elected while the judiciary members like judges are appointed after passing an exam (Magdalena, Eugenia and Oana 2008). Brazil is known to be the Federate Republic, headed by the president who acts as the state chief as well as the head of the government. The elections are conducted based on majority votes. Apart from the president, the other officials in the government include the vice president, ministers, senators, governors, and mayors.
When it comes to business, the administration of the country has made policies to facilitate fair trade among domestic and international companies. Some businesses are given incentives when venturing the market while others only enjoy industrial deduction relief from taxes payable. The growth of the country population and need for social amenities have necessitated the government to attract international hospitality industries entertaining companies; it does this through incentives like easy licensing, tax relieves and tax holidays and intellectual rights protection (Magdalena, Eugenia and Oana 2008).
Analysis
There is a stable political environment in Brazil as its elections are known to be conducted fairly. This stability is a favourable environment for Burswood Company to invest confidently in Brazil. The government has a positive attitude towards foreign investors thus creating a favourable atmosphere for Burswood Company in Brazil. Politically, the terms and conditions of foreign investors in Brazil are favourable.
Legal Environment
The country supreme source of law is the constitution, which every person is expected to respect it supports for respect of human rights in fields like employment, retirement and environment. These legislations are meant to facilitate free and fair trade among different players in the country. The hospitality industry has a union where it advocates for its rights and the rights of employees. Taxation laws are flexible in the country and have numerous deductions (The Brazilian Institute of Geography and Statistics (IBGE) 2011).
The Burswood operation in Brazil is restricted to register with BACEN as it is the requirement of law 4131 and law 4390 that govern both foreign and domestic investments. The taxation system of Brazil is categorized as follows; taxation on various types of incomes and revenues, taxation on production and movements of goods and services for both domestic and cross border transactions, and the final type of taxation are on financial transactions.
The only law in Brazil that may restrict Burswood from venturing into the Nation is failure to report to the central bank on the foreign exchange deals. Burswood Company would also be required to conduct a registration process for its investment with the central bank within the first month of its operations. This type of registration is supposed to be conducted electronically (The Brazilian Institute of Geography and Statistics (IBGE) 2011).
Burswood Entertainment has no option other than to respect the rule of law operating in the country. As the legal environment of the Brazilian country does not discriminate against some sectors but treats them fairly creates a favourable environment for Burswood Company to invest. With the fair taxation system in Brazil, the legal environment cannot be considered as a barrier to investments.
Economic Environment
The economic growth rate is expected to grow at a rate of 7% in 2010, the country economy is driven by the export sector being well developed and dealing with items like iron, aircraft and foodstuffs. The country has a well-developed telecommunication and transport system with the internet and mobile communication rated as one of the most efficient (Kotabe and Kristiaan 2004). In the year 1994, the Brazilian economy adopted a plan of removing the state control of wages, reducing the tariffs, and restrictions to international investments.
This plan was successful whereby the increment of international investments was recorded, and the living standards of the majority of Brazilians were also realised. In 2001, the growth of the Brazilian economy started going down, this was as a result of the increased interest rates by the central bank due to inflationary pressures. The interest rate of Brazil is known to be among the highest globally. The latest interest rates of Brazil are recorded to be 11.75% which is relatively higher compared to December 2010 when it was 10.75%.
Looking at the economic situation, when Burswood Entertainment ventures into the market, the company is likely to enjoy well-developed infrastructures and the economic growth rate offers the company a bright future. The expansion of the economy and international trade will also work for the benefit of the company.
Socio-cultural Environment
The society is classified to have a low tolerance to uncertainty; in the past, the countries have had an Uncertainty Avoidance (UAI) of 76; this indicates that the people are risk-averse, they are guided by laws and have high value for truth. This indicates that the level of investing for these people is low as they are risk-averse, this is a created room for foreigners like Burswood Company to venture and invest being ready and set for any form of uncertainty.
In families, the noblest element of society and the society itself, there is high levels of inequality in power distribution; Power Distance Index (PDI) is high. This means that head of the family, the man who has control over all other members of the family (Geert Hofstede –itim.2009). The idea of ahead of the family making decisions for the rest of the members creates a chance for Burswood Company management to adopt a system of approaching men when in the field promoting the services of the business. If Burswood Company manages to attract men as their customers, they would be bringing the whole nation to the business as men are the decision-makers.
The people of Brazil have minima ties among them, they interact for particular reasons and hardly do they stay in groups; it is an Individualism (IDV) country. The country has men as the dominant group, they are perceived to be superior to women; their roles are different from those of men, because of their perceived Masculinity (MAS) (Geert Hofstede –itim.2009).
Brazil being an individualistic country implies that decisions are hardly made by groups, and so the sales and marketing team of the Burswood Company should be approaching individuals when advertising their services. The sales and marketing team of Burswood Company should also concentrate on collecting views and grievances of individuals when doing fieldwork.
The county has a Long-Term Orientation (LTO); this means it aims at respecting their tradition today as it prepares future generations to adopt and respect the cultural practices taught (Geert Hofstede –itim.2009). If the cultural practices are passed from one generation to the other, the management team of Burswood Company would be emphasising their services to the old generation intending to use them to pass the message to the younger generation.
The country’s improved social-economic status is likely to benefit the Burswood Entertainment venture since it will offer a market for the company’s products; the success of the entertainment industry is dependent on the prevailing social-economic situation in the market thus with an increasingly young population, the company is more likely to benefit.
Technological Environment
Within the southern part of America, Brazil leads in science and technology making it more advanced in innovations. Most of the scientific developments conducted in the laboratory are transferred into the commerce field hence promoting the economic growth of the whole nation. The technological environment is widely advanced in improved raw materials, efficient telecommunications, and smooth energy transmission. The advancement of technology in Brazil is of advantage to Burswood Company as it will be easier to face several challenges (Kotabe & Kristiaan 2004). Brazil is known to have the most superior industrial sectors such as automobiles and computers which are expected to play a great role to Burswood Company.
Scientific invention and innovation have led to new hardware and software that assist in conducting business. Brazil has adopted the new technology from other countries and it is inventing and innovating its systems. Computers are used in different sectors in the hospitality industry. Brazil has the infrastructure and human resources to develop in-house software for the benefit of Burswood Entertainment, which depends on modern technology for its operations.
SWOT Analysis
Strength
In the entertainment industry, Burswood Entertainment is one of the most renowned restaurants that offer quality and competitive products and services; it thus has taken strong roots in the industry. Its brand strength can be seen from the growing numbers of executives, businesspeople, politicians, and international customers continued support of the company. To maintain the high quality and not to disappoint their customers, the restaurant has embarked on quality foods, high tech Casinos, pleasant environments, high tech customer service and always aims at giving its customers a memorable experience. Other than employees, the company has vision-ally management teams willing and with the knowledge and expertise to drive the company to a completely new level. Financially the company has a strong financial base and good credit policy; this will assist the company access to loan facilities to finance its diversification (Burswood Entertainment Company Official website 2011).
Weakness
Though the entertainment industry is as old as humanity, the target customers that the company has are only the high-class people in the society: it thus loses the market of the greatest population, middle and lower-class people. Secondly, the company is skewed to one line of business, entertainment. It misses an opportunity to enjoy the goodies that are brought about by other sectors like accommodation (Burswood Entertainment Company Official website 2011)
Opportunities
The main opportunity that the company has is the increasing world living standards, people are developing fast and the demand for recreational services is on the rise. In Brazil, the countries youthful population will offer a market for the company’s products. The most important thing in the market is to differentiate one’s products among the many players (Zahra, Ireland and Hitt 2000). The government support is another opportunity in Brazil that Burswood would exploit as the government treats equally both foreign and capital investments. The Brazilian government has been encouraging foreign investments thus supporting them.
Threats
The world is recovering from a financial crisis that started in 2007, Brazil is not an exemption from these effects and as a result, it is experiencing slowed growth. The hospitality industry specifically the entertainment industry is undergoing massive changes, innovations and inventions: this has created an increase in competition in the industry, as the companies search for competitiveness strategies (Hooley and John 1993). Several famous entertainment bays in Brazil will be competing with Burswood Company. Some of these entertainment bays have been in the market for a long period thus it will be a challenge to compete with them.
Burswood Entertainment financial standing, reputation and brand name are strong elements that it can ride on in its expansion strategy, when these internal forces are tapped to take advantage of opportunities in Brazil, and then the company is likely to benefit from a successful venture and an increased business (Brazil Federative Republic of Brazil 2011). The company has little to do to eliminate threats by the external world but can develop strategies to mitigate any losses. With the expansion, the company can develop products targeting the middle and lower class so as it can enjoy an increased market.
Recommendations
From the analysis conducted, Brazil has an untapped market that Burswood Entertainment can tap, the most important thing that the company should have is an effective market entry strategy and be open-minded when in the community: being open-minded will assist it to adjust its strategies to fit the needs of the Brazilian market. Success in the entertainment industry depends on the quality of services that the country will offer as well as how updated its services will be. However, Brazil may be ahead in the sector or lagging backwards, this should be interpolated to assist the company fit the level of the county. Being a new company, then research should be embarked on to assist in product development and differentiation.
Burswood Entertainment has minimal pollutants in case of some they are manageable, so the factor cannot limit the company’s development. The management should go ahead and diversify the economy. To develop an effective market entry strategy as well as make business strategic decisions, Burswood Entertainment needs to understand its internal strengths and weaknesses. The Understanding will help it tap opportunities offered by the Brazilian market as it mitigates against possible threats in the market, using management tools for internal and external analysis will assist the management make sound decisions.
Brazilian Political, Economic, Social, Technological, and Legal Environment analysis revealed that the country has potential in the entertainment industry. Burswood Entertainment, on the other hand, has a strong financial standing and a strong brand name that can assist it to enter the market effectively. Internal weaknesses can be solved through research and development, whereas strategic measures are developed to mitigate external environment threats.
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