Entry Decisions in Volatile Markets: How Brazil's Current Unstable Economic and Political Situation Shapes the Market Entry Decision-making og German Companies

Leonie Bourgeois

Student thesis: Master thesis

Abstract

Emerging countries and BRIC countries in particular were hold as the engines for economic growth representing a highly attractive business environment for foreign companies form developed markets. A lack of changes in respect to infrastructure, the political, financial and legal system required in these rising economies now have resulted in a declining GDP in some of these once so promising economies. Especially Brazil has suffered from a heavy economic and political instability lately. Many international companies are struggling with keeping up there once large sales volumes. Interestingly, only few MNCs pulled out of the market though. It is thus a major purpose of this research project to understand why companies still enter this market, i.e. what motivations they have. In addition, it is critical for companies, which also seek to enter this market despite the current crisis to understand what characteristics companies have which have positive future prospects for their business in Brazil. Finally, companies should be aware of how their strategies have to be adapted to the volatile market conditions In Brazil. In order to find answers to these questions, five cases of German companies, which entered Brazil in 2014, 2015 or are planning to do so in 2016, were analyzed. Drawing additionally on industry expert information the main results are: a) German companies were primarily motivated by three patterns for entering Brazil: (1) Seize market opportunities, (2) Leverage competitive resources and (3) Follow the company’s internationalization strategy; b) Companies that have rare resources, which they can leverage in Brazil right now leading to a competitive advantage, should enter the Brazilian market despite the unstable economic and political situation. c) Companies take proactive and/or passive strategies dependent on their evaluation of the future performance of their business in Brazil, while additionally policy risk management strategies and additional service offers by the companies are recommended. Apart from these propositions, the case study analysis revealed that the political and economic instability did not particularly hamper German companies in their decision to enter the Brazilian market. KEY WORDS: Market Entry Decision; Market Adaptation Strategy; Brazil; Volatile Markets.

EducationsMSc in International Marketing and Management, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2016
Number of pages94
SupervisorsTorben Juul Andersen