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Individual Business Report

INTRODUCTION

The textile industry in Brazil has a longstanding role in the development of economy. The industry accounts for $22 billion income representing the strongest growth sector of its economy. Such growth has indicated the importance of the textile industry and has further attracted businesses from many countries. This paper presents PESTL and SWOT analysis of textile industry for Brown Sugar Company which is interested to open one of its stores in Brazil along with establishing manufacturing operations in the country.

Brown Sugar is women’s wear store and located in Melbourne. The progress of the company lies in its belief in quality, fashion and customer service. The clothes of Brown Sugar are exclusively for the store and the fabric use for clothes are sources locally as well as off-shore. The products of company are produced in Australia thus the company is able to work close to seasons and respond immediately to customer needs and requirements. Considering the preference and structure of the company the next section presents PESTL analysis and SWOT analysis of Brazilian textile industry. Assignment Writer UK.

PESTL ANALYSIS

Country Overview:Brazil is located in South America and the world’s fifth largest country in size. Brazil is one of the most populous countries in Latin America and the fifth populous country in the world. With one of the largest population in the world, the largest cities are São Paulo and Rio de Janeiro. The economy of Brazil is the eighth largest economy in the world by nominal economy. The country is the largest seventh economy in the world by purchasing power parity.

Industry Overview: The textile industry in Brazil accounts for 3 percent of the world production and total sales of industry is average US$19 billion per year. The total export of the industry in 1998 was US$2.9 billion. Brazil has the largest operating facilities and attracts businesses from all over the world. Get professional writing services.

  • Political Environment

Political environment can greatly affect the business operations in any country and political instability can lead to failure of business therefore foreign businesses before initiating business in other country conduct environmental analysis (Haberberg& Rieple, 2008). According to the World Bank's'Governance Matters' Indicators for 1996-2008, Brazil has made a score of political stability and absence of violence in the country (Kaufmann et al. 2009). The score demonstrates that there is less violence and greater political stability in the country.  Moreover, the United States Department of Commerce 2009 in its report shows that there are problems regarding violence in urban areas due to increased drug trafficking and organized crime in the country. The violence has led the police crackdown that has been associated with violation of human rights in the country. Hire coursework writers for all your writing needs.

  • Economic Environment

The economy of Brazil has been estimated to grow as a result of significant economic growth. However, the economy in Brazil had to face certain economic problems such as inflation but government has introduced different programs that aim to reduce the inflation and poverty as a potential threat to economic conditions. According to current report of Brazilian government 2010 the nominal GDP exchange rate of the country is $ 2.1 trillion, GDP purchasing power parity is $2.194 trillion and annual real growth is7.5%.  Economic growth rate of country also affects the textile industry in Brazil. Other sectors that are associated with textile industry are telecommunication, transportation, commerce and trade. These sectors together contribute to development of textile industry as of service makes 66% of GDP and exports is accounted for --$202 billion. Overall economic growth led to further improvement in the business environment that increases public and private investment for the infrastructure of textile industry. Moreover, the exchange rate in 2011 was U.S. $1= 1.65 Brazilian reais. Order online essay writing services.

  • Socio-Cultural Environment

According to socio- cultural perspective Brazil is the country of mix culture and from its birth incorporates intense blend of culture. Traditional techniques and innovative designs are still associated with the natural beauties in the country along with the use of technological tools. The socio-cultural diversity reflects in the textile and apparel industry in Brazil. However, there are more than 30 thousand companies in the country that generates more than 1 million jobs with its vast and extensive production including weaving¸ yarns and fibers.

Brazil is among the 10 most important textile industry markets in the world and between the largest textile parks on the planet. It is the second largest supplier of indigo and third of knits. It is also among the five biggest producers of made-up articles and is one of the eight largest markets for yarns, filaments and fabrics (Abels& Klein, 2008). The socio-cultural diversity provides the textile industry with variety to use different segmentations. The textile industry in the country operates with cultural variety and multiple fabric treatment. Number of companies in the industry both small and large size companies share common attributes in environment for sustainable alternatives, producing necessary return for the industry. Get online thesis help from Assignment Writer UK

Technological Environment

With perspective of technological environment in textile industry, there are two different sectors: technical textile and non-woven. In Brazil local market is developing very fast as a result of increasing local textile manufacturer operating on such textile production. Textile manufacturing firms in Brazil operate on both woven and technical textile and around 200 companies are currently operating with 40,000 employees. In addition, increasing technological development has further enabled the textile sector in the country to expand the production value as of 2008 total textile production in Brazil was approximately 462,000 tons that valued 3.9 billion Brazilian Reais. The industry has further focusing on inventing the strengths of area by acquiring more new textile machines and increase textile production till 269 million US Dollars.

Legal Environment

Brazilian law is particular about providing protection and guarantee to foreign capital investment and other foreign business in the country. The central government has formulated certain laws for particular industry such as textile and apparel as these industries accounts for largest percentage in the total GDP of country’s economy (Schaffer& Agusti, 2008).  For textile industry there is special incentive such as there is no limitation on the repatriation of capital; reinvestment of profits is assumed a growth of the original capital for the purposes of the law (Beatty& Samuelson, 2009). There used to be prohibition on remittances for royalty and technical service payments between related parties but it was removed earlier than 1993. The profits tax rate and royalty remittances is also decreased from 25% to 15%. For assistance professional dissertation writers.

SWOT ANALYSIS

STRENGTH

  1. The textile industry in Brazil is an independent and self reliant industry with potential to utilize raw material that helps the industry to control high costs and reduces the lead time of the production.
  2. The low cost of production including low cheap man power and raw material provides competitive advantage for the industry.  
  3. Large use of machine and other technological tools has provided the industry with ability to give mass production.
  4. Brazil is one of the largest exporters of textile in international market and it contributes 25% share of the global textile market.
  5. The apparel industry of Brazil is the largest foreign revenue contributors and possesses 12% of the total export of the country.
  6. Brazil offers foreign business to invest into Brazil’s economy that is with growing economy and potential domestic international market.

WEAKNESS

  1. Brazilian textile industry is highly fragmented and depends on the local raw material.
  2. The industry in Brazil has lower productivity in different segments such as there is declining in mill segments (Schlessinger, 2002).
  3. There is not enough facility for transportation and communication that goes against the growth of the industry.
  4. There is no legal framework and infrastructure factor involved in labor law specifically in textile industry

OPPORTUNITY

  1. There is margin of growth for textile industry both in local and international market.
  2. There is vast opportunity in product development and diversification specifically delivering to international market.
  3.  Increasing purchasing power of international purchaser and elimination of international quotas restrictions.

THREATS

  1. There is tough competition in the existence of number of companies
  2. There is need to have constant quality improvement to meet the market requirements.
  3. There is geographical disadvantage for the industry
  4. Threats for the local market as a result of fluctuation in export demands
  5. Have balance between quality and price.

RECOMMENDATIONS

In the light of above PEST as well as SWOT analysis of Brazilian textile industry, it is highly recommended to Brown Sugar Company to initiate textile business in Brazil. The textile industry of Brazil is vibrant and fast growing industry since it is the company’s first foreign venture company must focus on making the most of the industry’s credibility. Moreover, there are some loopholes in the industry which should be given additional attention o avoid them such as lower communication and transportation quality. Other than that, positive quality of the textile industry can be very beneficial for the Brown Sugar Company to expand its business in international market. 


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