An analysis of the obstacles and the entry modes of European firms to the Brazilian market

Details

Supervisors

Lejeune, Christophe ; Defraigne, Jean-Christophe

Faculty

Louvain School of Management

Degree label

Master [120] en Ingénieur de gestion

Abstract

This paper aims at discovering how European firms live their internationalisation processes towards Brazil, the reasons of their interests for this country, the opportunities they have access to when entering the market, as well as the challenges they face during and after their internationalisation process. To that end, we first remind what the literature has to say about foreign direct investments, from the Transaction Costs theory’s point of view. After that, we present the results of our theoretical research about the business context in Brazil, the reasons why the South American giant is approached by many foreign investors, but also the contingent difficulties this country displays. In order to support these elements, we decided to study the cases of three European companies who succeeded in their expansion to Brazil. We analysed the context in which they entered the country, the entry mode they used, the opportunities and challenges they met as well as the strategies they put in place to counter these challenges. In order to collect these results, we led three semi-directive interviews, one for each analysed company, with the executives who were in charge of opening the foreign subsidiary or running the Brazilian office. In addition to showing if companies going through an internationalisation process follow the Transaction Costs theory’s prescriptions over which entry mode to choose according to certain factors, this paper also exposes the three firms’ plans of action to resist to the difficulties posed by the Brazilian market. Moreover three main points appear as a conclusion to this thesis: - It is necessary to surround oneself with knowledgeable people, who know their way through the Brazilian administration and huge internal market. It is also strongly recommended not to enter Brazil without a local partner. - Entering Brazil takes time and dedication, and one should not expect financial results to flow in rapidly. A few years are sometimes necessary before being profitable in Brazil. - Doing business in Brazil is not easy. It requires international experience, know-how, maturity, financial means and time.