Executive changes could have an impact on Four Seasons’ expansion into Brazil

Changes in the executive hierarchy can yield both positive and negative results, and it’s up to the individual to ensure their organization is put in place to succeed in the future. At Four Seasons Hotels, Inc., a change in CEO could make or break the company’s efforts to expand into Brazil.

According to multiple sources, the hospitality provider is dismissing Kathleen Taylor, who had ran the hospitality company for the past three years, and replacing her with Isadore Sharp, the Four Seasons’ founder and chairman of the board. Sharp had been CEO until 2010 when he picked Taylor to be his successor and he is resuming his role on an interim basis until the next full-time CEO is selected.

Sharp spoke with the Globe and Mail after he stepped down in 2010, indicating that he would always be around in some capacity.

“The role of founder lasts forever,” Sharp said.

Although there is no official reason as to why Taylor has left the company, the person who ultimately fills her shoes has a lot of work to do if they are to continue the global progress she had been making. One of Taylor’s key initiatives during her three-year reign was expansion into South America, particularly in Brazil. For this to continue, the new CEO will have to learn and understand the ins and outs of Brazilian business law.

This is something that all businesses should be aware of, especially if they are experiencing executive changes. New CEOs are likely to be ambitious, so expanding into places like Brazil is an obvious step. However, if these individuals don’t have a strong understanding of the laws in Brazil, they may not be successful in their new positions. Working with Brazilian lawyers will help corporate executives with their expansion efforts.

Domestic Tourism

When it comes to business-related profits, expansions, and growth, tourism and travel play an important role, as the number of people attending large events could influence the bottom line of a company. U.S.-based businesses that are looking to conduct mergers or acquisitions in Brazil would be wise to consider the tourism of the country as well as work with a Brazilian law firm to ensure all procedures are performed legally.

The Rio Times reported that the country’s largest carnival is expected to see fewer international tourists this year. The economic instability in Europe and the United States have traveling numbers in decline. However, domestic tourism is expected to make up the shrinking rate from international downfalls, as there has been a rise in Brazilians traveling to this carnival in recent years. The spending levels during this major event are likely to stimulate the local industries and leave larger profits at many businesses.

“In past Carnivals there was an average of between 65 and 70 percent of foreign tourists recorded in hotels, and the rest were Brazilians,” Alfredo Lopes, the President of Brazilian Association of Rio’s Hotel Industry, told the news source. “For Carnival 2013 the forecast is that this number will be equal – fifty percent foreigners and the other half Brazilian.”

In Brazil, tourism has risen as more people moved from poverty toward the middle class once the economy improved. Some other reasons behind the decline in international travelers includes the pricey hotels and high costs of living in Rio and São Paulo, the biggest cities in Brazil.

U.S.-based businesses that are interested in expanding to Brazil may see the rising domestic tourism as beneficial. When developing mergers or acquisitions, it is important to work with a Brazilian lawyer who can represent foreign clients effectively.

Dollar Weakens in Brazil

International businesses that are attempting to negotiate deals in Brazil would be wise to pay attention to the finances and economy of this country before making any long-term investments. This includes understanding the national tax laws as well as any other legal implications of trade within the nation. Working with a Brazilian law firm could prove beneficial for U.S.-based businesses that are considering expanding to this nation.

Forbes reported that the dollar is losing value in this country because the Central Bank prohibited its circulation out of currency markets for a number of months. The Central Bank finds a weakened dollar tolerable in order to strengthen the national economy and cut inflation, which is around 6 percent.

“Given our estimates of exchange rate pass through, the Central would have to guide the real about 10 percent stronger to make any meaningful dent in inflation,” Tony Volpon, a managing director at Nomura in New York, told the source. “We see the bank’s guidance of a stronger real as being limited in nature and serving more as a signal of its worry over the inflation outlook and an attempt to manage inflation expectations.”

However, the weakening dollar in Brazil has caused other problems, such as the country’s lack of competitiveness in the global markets, whether it comes to the shoe trade or other items. Currently, the stock market in this nation is declining while the unemployment rate is shrinking. At the end of 2012, this rate was only at 5.5 percent, which is the lowest its been since 2002. While the economy may have dropped, the currency is currently strengthening.

U.S.-based businesses will have to consider all of these factors when initiating deals, mergers, acquisitions or other transactions with companies located in this country. With the help of a Brazilian lawyer, international firms will be able to follow the business laws in Brazil.

Nightclub Fire

At the end of January, a nightclub fire in Santa Maria, Brazil was set off, killing 235 people, according to USA Today. The police force in this city arrested three people that were allegedly responsible for the inferno and are currently looking for a fourth person connected to the crime.

Inspector Ranolfo Vieira Junior explained that the arrests made were purely due to the overall investigation and have a limit of five days. The allegations at large are due to a pyrotechnics show that ignited the fire and led to one band member’s death. Two band members and a co-owner of the club were arrested.

The people at the nightclub attempted to flee but some were held up at the door by security guards who were making sure that bar tabs were paid. This further delayed escape and caused more than two hundred deaths.

“It was terrible inside – it was like one of those films of the Holocaust, bodies piled atop one another,” police inspector Sandro Meinerz told the source. “We had to use trucks to remove them. It took about six hours to take the bodies away.”

This disaster may have brought grief to families, but government officials are taking attempts to prevent such scenarios from happening in the future. The Rio Times reported that an investigation is taking place dealing with whether appropriate fire prevention regulations including health and safety laws are adequate and whether local authorities are following these laws in Brazil. Marco Maia, President of Brazil’s Chamber of Deputies, said that he will be reviewing safety regulations for nightclubs and may develop new federal legislation if necessary.

U.S.-based businesses attempting to trade overseas and develop transactions with Brazilian companies will need to comply with any new legislation, especially those centered around health and safety. By working with a Brazilian lawyer, such organizations will be supported effectively in order to grow their business.

Importance of International Trips

Businesses based in the United States may consider expanding or undergoing transactions internationally in order to sustain a growing company or gain a net profit. Conducting mergers or acquisitions in Brazil could be one option but a Brazilian law firm will need to be consulted in order to ensure that all global business laws are followed.

For instance, there are certain restrictions on imports and exports to and from Brazil, according to the Rio Times. Businesses will need to know the proper trade regulations within the country in order to conduct transactions effectively. Brazilian President Dilma Rousseff recently traveled to various nations to meet with their leaders and possibly decrease trade restrictions.

In December, Rousseff traveled to Russia to to discuss the ban on imports of meat and also made a stop in the United Kingdom for the Olympics. Her trips to Spain brought her to negotiate a number of business deals.

“The visits cement Brazil’s position as chief bridge nation between Latin America and Europe and, as if to underline this, the president’s first trip of 2013 will be to the Chilean capital, Santiago, for a joint summit of the Latin American and Caribbean States Community (CELAC) and the European Union, aiming to facilitate trade between the two regions,” the news source reported.

The president will also be present and give the opening speech at the UN General Assembly in the United States. In February, Rousseff is expected to travel to Africa to take part in the Africa-South America Summit. With such positive international dealings, the Brazilian government has shown businesses that expansion within this nation is encouraged.

However, entrepreneurs and business executives should confer with a Brazilian lawyer before taking part in any transactions to ensure they are following all business laws in Brazil.