Tesla Business Expansion in Brazil

Tesla Business Expansion in Brazil
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Introduction
Globalization linked and expanded the organization of different societies and social life regardless of the geographical constraints and cultural barriers. The innovations brought by globalization allowed the ease of trade, improved technology, and economic growth (Shazad, 2006). The economic growth of the country attracts potential business owners to invest and expand for its perceived profitability. However, the company needs to make additional studies to see if the country is suitable for business expansion. One strategy is the use of PESTLE analysis, which studies a countries macroenvironment including the political, environmental, social, technological, economic, and legal institutions, to see the strengths, weaknesses, opportunities, and threats in expanding a business.
Brazil is raised as one of the economically powerful countries in the world because of globalization. One of the main economic drivers of Brazil is its agricultural Sector (Mueller & Mueller, 2016). The country exports many agricultural products including soy, rice, and beef cattle that significantly improved its economy (Mueller & Mueller, 2016). Brazil also exports raw materials from the mining industry to match the demands of other countries (Butler, 2020). However, the increase in demand for Brazilian exports due to globalization has its advantages and disadvantages. The advantage is economic growth, while a disadvantage is the depletion of natural resources and deforestation (Butler, 2020).
Although Brazil is seen to have a strong economy, a PESTLE analysis should be conducted to see if the country is fit for business expansion. In this paper, the PESTLE analysis that is necessary for the business entry of Tesla, Inc. will be discussed to see the potential for business expansion in the country.
Major Historical Legacies
The Simultaneous Mega-Events of the World Cup and the Olympic Games
Globalization can improve different sectors of a country. In sports, two of the biggest and most prestigious competitions in the world are the FIFA World Cup and the Olympic Games (Zhaofeng, 2016). When Brazil got the hosting rights of the World Cup in 2014, Brazil’s economy significantly improved from the international investments from all participating countries. FIFA is an international non-government organization that handles events and matters related to football around the globe (BBC, 2015). The World Cup is the most prestigious sporting event for a single sports game football that only happens once every four years, thus organizing the FIFA World Cup alone is a testament of national strength and the economic power of a country, as it needs years of planning and billions in the budget (Zhaofeng, 2016).
After only a two-year interval, Brazil hosted the largest and most complex sporting event in the world, the Olympic Games. Unlike the World Cup, the Olympic Games needs more space and infrastructure for each sport. Brazil build courts, swimming pools, hotels, and other buildings to cater to the large influx of the tourist and share the rich culture of their country (Zhaofeng, 2016). When Brazil included the Olympic Games in their roster of activities, Brazil is expected to gain more international investments, including the large influx of tourists and international businesses, in the longer term. Additionally, the success of the events improved Brazil’s popularity that directly advertised the other sectors of a country, which raised their domestic gross product. The events also indirectly decreased the negative news and increase the positive feedback from other counties. The bold move of the country is a major historical legacy that rebranded the image of Brazil as an economic powerhouse (Zhaofeng, 2016).
Weak Institutions
Political Institution
Brazil is the most powerful country in South America but it is also one of the most corrupt (Fogel, 2019). Although there is a steady rise in the economic strength of Brazil, it cannot hide some of its major weaknesses. One of which is the political institution. In the study of Zhaofeng (2016), it was reported that the citizens of Brazil were neglected to focus on the vanity project of the government, which include the World Cup and the Olympic games. Protesters in Brazil are furious because rather than focusing on improving social issues and domestic development, the officials used mega-events as a means of corruption (Zhaofeng, 2016). For example, the government can pass a large proposed budget for the sports events but there is no transparency on how they will spend it, which can lead to some suspicious actions.
In 2019, the corrupt networks of politicians are threatening the country's democracy (Fogel, 2019). In the report of Londoño et al. (2020), of the New York Times, the current president of Brazil, President Jair Bolsonaro, is being accused of corruption and infringement on the democracy of the country. The family of the current president is under the hot seat for their alleged “family business”, where they gain wealth from the public funds.
Based on the largest corruption investigation of Brazil, the Operation Carwash, corruption of the country exists from the smallest municipalities to the higher echelon, where about billions of dollars are being laundered across multiple countries (Fogel, 2019). Fogel (2019) added that the operation carwash already led to the indictment of 300 individuals and the conviction of 100 people because of political corruption.
The political institution of Brazil shows low government trust. Their corruption implies a waste of public funds that leave the poor quality of livelihood and infrastructure in the country.
Environmental Issues
Deforestation is rapidly dismantling the environment of Brazil. In deforestation, large areas of the Amazon forest are being converted into agricultural and industrial areas (Butler, 2020). In the past year, deforestation rises significantly because of the greedy business owners who seek more profit by exploiting forest areas (Escobar, 2020). In the agricultural sector alone, cattle ranching and small-scale agriculture take 75% of the deforested land (Bulter, 2020). Large areas of the Amazon forest were converted into ranches for the rearing of cattle. About 63% of the deforested area in the Amazon was turned into pasture grasslands for the grazing of cattle (Butler, 2020). The majority of beef production for domestic and international exports are produced in the ranching areas in the Amazon (Butler, 2020). Small-scale agriculture is also to blame as the many small-scale farmers take patches of land that adds areas of the deforested rain forest. Even the large wildfires and sub-canopy fires in the Amazon rain forest are only attributed to a 9% loss (Butler, 2020). In the mining industry, Brazil had received large contributions of money from the many highly-taxed mining companies in the country (Butler, 2020). However, there is a conflict of interest between the environmental non-government units since the increased economic gain directly affects the preservation of nature (Gonzales, 2015).
As a result, any business that further contributes to the worsening of the environment will face more legal charges. Although the national government passed environmental sanctions and introduced many programs against deforestation in Brazil, about a 28% increase in deforested areas was reported in just one year (Escobar, 2020). It was speculated the deforestation was connected to poor political decisions that valued the income return from the large business investment of both local and foreign rather than protecting the natural environment of the country (Escobar, 2020).
Cultural Analysis
Many business opportunities are linked with more than 200 million inhabitants in the country, so studying the cultural difference in Brazil is necessary to ensure the success of the business entry. Because of the colonization of Portugal, Brazil acquired most of its culture, language, major religions, and customs were from the Portuguese and indigenous Indians. As a result, the national citizens argued about the national identity of Brazil since its culture was acquired from other countries and cultures (Britannica, 2020).
Family ties and personal relationships are central to the cultural landscape of Brazil. These relationship values affect the way how people do business in the country (Ritermann, 2018). Therefore, it is necessary to build rapport and strong personal networks with business partners before any transaction will take place. Brazilians also have a collectivist attitude where the people take into consideration the opinion of before making business transactions (Shofner, 2020). Businesses need to acquire as many favorable reviews from the people, as the citizens-based decision making as a unit, especially if they take into account the input of a family member (Shofner, 2020). Since they value relationships and interaction, Brazilians usually like social interactions, talk, and lively conversations where interrupting another talking are not considered rude, but rather a sign that a person is very engaged and interested in the conversation (Reitermann, 2018).
In the business setting, Brazilian also value interactions and positive relationships among individual (Shofner, 2020). Meaning, when they negotiate, they negotiate with the people and not with the company. They do business depending on how the individuals in the meeting present themselves as their persona rather than as a representative of their businesses. Brazilian business owners ...