Brazilian Expansion

The benefits of doing business in Brazil are becoming increasingly evident, so more United States organizations are meeting to construct strategies concerning how to approach potential business opportunities in the country.

Last week, Martell Innovation, a strategy and planning consulting firm, organized an event at the Wharton Club of South Florida to discuss sales opportunities and cross-border operational challenges that could face companies planning to expand into Brazil. More than 100 people – ranging from executives to entrepreneurs and community leaders – attended to express their interest in South America’s most attractive market.

According to a Martell Innovation press release, the event was sponsored by a number of companies such as American Airlines and Giraffas – organizations that have already experienced success in their Brazilian expansion efforts. Speakers stressed the importance of looking into Brazilian operations now, as key events such as the upcoming World Cup and Summer Olympics will likely spur greater growth in the coming years.

The words of Maxine Martell, CEO of Martell Innovation and event coordinator – resonated loudly with the local attendees. Martell suggested that while Brazil’s growth can help companies across the U.S., those benefits will be felt even greater in southern Florida.

“As Brazil’s wealth grows, its cross-border business with the U.S. will continue to increase dramatically, particularly with South Florida,” she said at the event. “Brazil is already Southeast Florida’s largest trading partner.”

Of course, it’s important that companies understand the legal process prior to Brazilian expansion. Without gaining firm knowledge of the country’s business laws, organizations could run into trouble as they set up shop locally or partner with Brazilian firms. Luiz Silva, one of the event’s speakers who owns several retail shops in both the U.S. and Brazil, warned attendees to be aware of the country’s unpredictable business laws.

However, by working with a Brazilian lawyer, companies will gain the tools and knowledge they need on the legal end to proceed with their business efforts.

Beauty Industry

Of the many industries taking advantage of Brazil’s rapidly emerging economy, beauty and fashion are leading the charge. With the help of a Brazilian attorney, U.S. companies looking to capitalize on the growing market will have a chance to do so once they learn the country’s business laws.

According to a report from the Associated Press, beauty product sales hit $43 billion in 2011, which represented a growth of roughly 142 percent over a five-year period. Should these numbers continue to climb, Brazil will surpass Japan in the near future to become the world’s second-largest beauty market.

Hana Ben-Shabat, a partner in the retail practice of global marketing consultancy A.T. Kearney, told the AP that Brazil’s burgeoning interest in the fashion industry has allowed it to compete with some of the globe’s top markets.

“The potential in Brazil is really significant. The demand is high and continuing to grow,” Ben-Shabat, said. “It’s incredible because the consumption per capita is very close to what you’re seeing in places like America and the UK. The population is very fashion-forward.”

In the coming years, beauty companies will have even more opportunities in Brazil. The 2014 FIFA World Cup and 2016 Summer Olympics will be high-profile affairs with celebrities traveling to the country in droves. That fact alone will likely lead to success for U.S.-based beauty product manufacturers that expand into Brazil.

Of course, no international growth strategy can be successful if the individuals in charge of the move don’t have a solid understanding of their new country’s business laws. Working with a Brazilian lawyer will give professionals the opportunity to learn all business regulations before setting up shop. This will start the international business venture off on the right foot, and go a long way toward ensuring success.

American auto dealers

Mergers and acquisitions are typically great opportunities for businesses, but they must be conducted properly, especially if they involve international organizations. Due to its rapidly growing economy, Brazil has become increasingly attractive for many U.S. businesses, but companies considering such deals must observe all of the country’s laws.

Group 1 Automotive, an auto retailer based out of Houston, is in the process of acquiring UAB Motors Participacoes S.A., one of Brazil’s largest automotive sales organizations. According to an article in the Houston Business Journal, the deal is for roughly $47.4 million cash, 1.45 million shares of Group 1 common stock and the assumption of about $62 million of net non-floorplan debt.

Once the deal is done, Group 1 will assume 100 percent ownership of 18 major automobile dealers in Brazil, which will give the company a huge financial spike. CEO Earl Hesterberg told the news source that while he is optimistic that the deal will yield positive results, he understands that there will be many challenges, particularly early on.

“We started looking at dealerships down there about a year ago and started working on this deal in September,” he said. “In the long term, we think this business is going to grow rapidly in the first year. We are going to have to get accustom to working in Brazil and make major investments in infrastructure and technology.”

Without a full understanding of Brazilian business law, any acquisitions or mergers with companies in the country could falter. It’s wise for organizations to hire a Brazilian attorney to look over all contracts before any deal is final. Working with lawyers will also give executives better understanding of the regulations pertaining to their business, which will mitigate the risk of any serious violation.

Brazil’s Education Spending

Brazil is in the process of making substantial investments into its education sector, and organizations from around the world are looking to capitalize on new business opportunities.

In recent years, national leaders have expressed an understanding of the fact that educating Brazilian children is the best way to ensure the country’s economic viability. However, the education system has traditionally been plagued by a lack of adequate personal. Therefore, the country is making investments into the infrastructure of schools and is procuring new technological solutions to assist with the teaching process.

Twig World – a UK-based producer of educational films – is branching out into Brazil to take advantage of the country’s increased educational spending. By creating films for Brazilian students, Twig can help Brazilian schools educate a large number of students at once, a need the country has traditionally been unable to fill.

Anthony Bouchier, a top executive at Twig, told the online publication Scotsman.com about his company’s efforts to improve the Brazilian education system.

“The problem in these countries is the quality of teachers,” Bouchier said. “Often in state schools in Brazil, teachers will have three or four jobs. Clearly a child having direct access to a personalized learning system is critical.”

Brazil’s educational spending is necessary and there are many ways companies around the world can help. Businesses in the United States should be cognizant of any news pertaining to the Brazilian education system, as any new investments could generate tremendous opportunities to branch out into one of the world’s fastest growing economies. However, any business with Brazilian officials must be conducted properly.

Companies must understand the laws in Brazil before venturing into the country. With the help of Brazilian lawyers, educational tool suppliers can ensure they are in position to properly assist educators, students and their own bottom lines

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.