Pestl Anaysis Brazil

2. Business environment

The Brazilian business environment is as rich and varied as the country

itself. With a population of about 190 Million, a territory that can fit the

whole USA (minus Alaska) and with Spanish, Portuguese, German, Italian

and African influences, to name a few, you cannot expect anything less.

In order to then break down this varied environment into bite]size chunks,

we will make use of Michael Porterfs PEST model (namely Political/Legal,

Economic, Social/Culture and Technological) to give you a broad overview

of what you will come across in your dealings with Brazil.

Political and Legal

Brazil has been operating as a Federal Republic since 1985 and consists of

26 states and a federal district. These states are divided into five regions,

namely:

. North (Acre, Amapa, Amazonas, Para, Rondonia, Roraima,

Tocantins)

. North East (Alagoas, Bahia, Ceara, Maranhao, Paraiba,

Pernambuco, Piaui, Rio Grande do Norte, Sergipe)

. Central West (Goias, Mato Grosso, Mato Grosso do Sul, Federal

District)

. South East (Espirito Santo, Minas Gerais, Rio de Janeiro, Sao Paulo)

. South (Parana, Rio Grande do Sul, Santa Catarina).

Legislative Bodies

. Federal: Chamber of Deputies (513 seats), Senate (81 seats)

. States: Unicameral legislatures in each state and in the Federal

District

. The presidential elections run every four years and the president

can be elected for a maximum of two four]year terms.

Legal System

The Brazilian legal system is based on Civil Law tradition and the Federal

Constitution, in force since October 5th, 1988, is the supreme rule of the

country. The Constitution organizes the country as a Federal Republic,

formed by the indissoluble union of the states and municipalities and of

the Federal District. The 26 federate states have powers to adopt their own

Constitutions and laws; their autonomy, however, is limited by the

principles established in the Federal Constitution.

c Copyright 2010 UHY International Ltd ]4]

Federal laws take precedence and are hierarchically superior to any state

or municipal law. The federal government has the exclusive authority to

legislate on civil, commercial, penal, procedural, labour, electoral, agrarian,

maritime, aeronautical and space matters. Federal law also has the

exclusive authority to rule on matters such as expropriation, energy,

telecommunications, insurance, foreign trade, nationality and citizenship,

among others.

The federal government, the states and the Federal District (Brasilia) have

concurrent authority to legislate on certain matters, like tax, financial,

education, environment and the consumer. In these cases, the federal

government provides the general guidelines, outlining main issues and

rules, while the states and the Federal District is in charge of

supplementary legislation according to their own specific needs, but

always with due regard for the generic federal law prescriptions. The

municipalityfs legislative authority is restricted to matters of local interest

and municipal taxes.

Besides the Federal Constitution, the main legal documents in Brazil are

the Codes. The most important are the Civil Code, the Tax Code, the Penal

Code and the Civil Procedure Code. The Civil Code comprises over 2000

articles regulating matters such as Obligations and Contracts, Businesses

and Corporations, Real Estate and related property rights, and many

others. The Tax Code defines the main Brazilian tax regulations, which are

complemented by many Federal, State and Municipal laws. The Penal

Code brings the definitions of conducts considered crimes and

the punishments for anyone fitting the respective legal descriptions.

Finally, the Civil Procedure Code regulates the due process of law.

Economy

Characterized by large and well]developed agricultural, mining,

manufacturing, and service sectors, Brazil.s economy outweighs that of all

other South American countries and Brazil is expanding its presence in

world markets, where it is currently the 10th biggest economy in the

world.

It has weathered many storms, such as the military dictatorship 1964.1985,

hyperinflation in the 1990s and it most recently came out of a very short

lived recession (just two quarters).

The recession has left its mark though and it is expected that Brazilfs

economy will only fully recover in 2011. That said, there are still large

investments