Pestl Analysis and Swimwear Industry Review Essay Example

starting in 2003 and his second beginning in 2007. While supporting developing nations like China, India, and South Africa, Brazil managed inflation rates, reduced government spending, and promoted global trade participation through organizations like the World Economic Forum and G8 that advocate for free trade agreements and elimination of anti-competitive subsidies. Since becoming a member of the World Trade Organization in 2002, Brazil took legal action against the United States for unfair subsidy practices towards cotton growers resulting in annual sanctions of approximately $295 million imposed on American goods due to their inability to eliminate illegal subsidies.The main focus of the Lula administration was to combat poverty by introducing social programs such as Bolsa Familia. This initiative improved living standards as it provided support for education, clothing, and food. However, corruption is still a significant issue in Brazil due to high crime rates and a considerable wealth gap between the rich and poor. Ongoing investigations into government corruption allegations since 1995 have led to job opportunities and pay raises for Senate staff; yet, transparency has remained problematic with Brazil ranking at 80 out of 180 countries on Transparency International's Corruption Perception Index in 2008.

Despite these challenges, Brazil has become Latin America's largest economy with a population of 192 million people and GDP of USD1,314 billion in 2007. The country has diverse exports from agriculture, mining, services, and manufacturing sectors that have helped reduce the impact of the global financial crisis. Economic data suggests that Brazil is recovering well according to Lopez (2009). The Bovespa index BVSP grew more than 55% during the current year while second-quarter GDP increased by one percent compared to the previous

quarter. Expectations are for further growth between two to three percent in the third quarter. From January until August 2009 alone, trade surplus totalled USD19.9 billion - an increase of approximately18.7% over last year due to higher imports/exports levels being realized within this period.Field (2009) identifies various factors contributing positively towards Brazil's economic outlook, including export conditions due to Reais depreciation following Lehman Bros' collapse, Central Bank of Brazil facilitating foreign debt repayment for companies, state-owned development banks increasing lending activities and relatively low exposure towards international trade. Although August's exports and imports were lower than last year, Australia ranked at number thirty-five regarding import goods while it stood at thirty-one concerning exporting goods in 2008 (Department of Foreign Affairs & Trade 2009). Australia's economic relationship with Brazil has grown steadily over time with a focus on the mining, agribusiness and services sectors. Two-way merchandise trade between the countries amounted to A$1.3 billion in 2014. Mercosur is considered as one of Brazil's most important economic groups consisting of Southern Cone Common Market established by Argentina, Paraguay,Uruguay,and Venezuela soon enforcing common external tariffs on non-members while gradually reducing tariffs between members on most products.Australia exports coal, nickel ores and medicaments to Brazil while importing aircrafts, animal feed, pulp waste paper, fruit juices and pig iron. With only about six percent of the population aged over sixty-five years old, Brazil has a predominantly young population where football is a popular sport played in public pitches even in less privileged or rural areas. FIFA's Project Goal has made indoor football societies increasingly popular among low-income urban males as well as high-income ones by constructing indoor football courts with

artificial turf. Television plays a vital role in marketing products through sponsorships of soccer teams and soap operas while Nickelodeon reports that Brazilian children enjoy watching TV shows on DVDs and listening to music which is also very popular amongst all age groups. The widespread use of internet and mobile phones have led to the growing popularity of social networking sites and text messaging. Brazilians enjoy activities such as dining out, shopping at malls, going to cinemas or parks/beaches, and hosting barbecues. Clothing and home decoration markets are driven by emotional consumption where consumers buy products that satisfy their emotions rather than just fulfilling a need.Euromonitor International presents a chart depicting the increase in consumer spending on various products between 2002-2007, including fashion items such as bed linen, furniture, jewelry, shoes, accessories, decorations, nutrition and cars that cater to their desires for style, sensuality and satisfaction. In Brazil, more than 53 million people use the internet with almost 23% of households having access. Although higher-income groups tend to use the internet more frequently than lower-income consumers; demand for computer access among those with less income is growing. To make computer access affordable for these individuals, the government implemented programs like PC Conectado in 2005 which offers reduced prices and payment plans on computers with internet access. The aim was to sell one million machines at R$1,200 each through instalment payments ranging from R$50-R$60 per month while also providing monthly internet access for R$7.50 for up to 15 hours. Moreover, in 2006 tax deductions were introduced on computers priced below R$2,000 resulting in a decrease of overall cost by up to 30%. According to a study

conducted by the Brazilian Chamber of Electronic Commerce in 2007; children and young adults constitute a significant proportion of internet users in Brazil.The typical e-consumer belongs to class A or B and is male aged between 25-49 years old;71% respondents surveyed fell within this age range while only 5% earned less than R$1,000 per month.As internet access becomes more widely available to lower income groups, it is expected that transaction values will decrease. Currently, electronic sales primarily focus on consumer electronics and media products. However, it is projected that other categories such as cosmetics and food/drinks will also become popular as customers become more comfortable purchasing higher-end items online. Brazil operates under civil law principles based on statutory laws outlined in the constitution which defines the government's functions and powers. The judiciary consists of federal and state courts with federal courts handling matters related to the government or foreign states/international institutions while state-level courts cover most other issues from private litigation to commercial disputes. In Brazilian law, precedents are not binding but hold weight and can be used to apply general principles. Judges make rulings which may lead to appeals causing delays whereas juries only preside over cases involving serious crimes like murder. Since 1996, arbitration has been an option for contractual and commercial disputes while foreign investment must adhere to established guidelines regarding profit remittance and capital repatriation by registering with Brazil's Central Bank. Foreign ownership restrictions in Brazil are minimal except for rural land, press and broadcasting, banking, and insurance although there may be some changes soon.There are two types of companies in Brazil: the limitada, which requires at least two partners with

limited liability, and the sociedade anonima, which is similar to an Australian company with multiple shareholders. The Consolidation of Labor Laws-CLT outlines employee rights such as limits on work hours, annual leave, profit sharing, parental leave, and pensions. Strict immigration policies require foreign firms to invest a minimum of $200k into a Brazilian company per foreign citizen serving as a director or officer in order to safeguard employment and the economy. Imports must be electronically registered with SISCOMEX and are subject to applicable tariffs, duties, and taxes. Programs exist to aid companies in their research and development by offering tax reductions and waived regulatory requirements. Brazil's System of Competition Defense enforces anti-competitive laws through various governmental agencies. Strong intellectual property laws protect against trademark infringement as well as patent and copyright infringements. The National Policy Law for the Environment outlines guidelines related to liability for environmental protection during industrial activities. Despite relaxed foreign investment regulations, Brazil prioritizes exports over imports leading to barriers and restrictions that can range from import tariffs between 0% - 35%, while taxes may increase costs up to 100% of the value.Businesses in Brazil face challenges navigating 63 different taxes at the federal, state, and local levels. This results in approximately 2,600 hours per year spent on filing, paying or withholding taxes - significantly more than the OECD average of 202 hours. The additional personnel needed to manage tax declarations and dealings with agencies increases expenses. Moreover, tax evasion within the large informal sector poses difficulties for legitimate businesses who pay their taxes diligently but face competition from those who do not comply with taxation regulations. Calls for tax reform have

been made; however, significant opposition at local and state levels makes major changes unlikely soon.

The informal sector often pays higher salaries as they are not subject to income tax deductions. Indirect taxes for Brazilian businesses can amount up to 71.7% of profits compared to the OECD average of 47%. Powerful unions contribute to complex labor regulations and reduced productivity. Non-wage costs like social security payments, benefits, and payroll taxes make up 37% of an employee's salary - higher than both the OECD (21%) and regional (12%) averages.

Despite these challenges, disposable income per capita has grown annually by 12.6%, with consumption growing even faster at a rate of 15.6%. Over 41.5% of households earning less than US$2,500 in 2006 have a strong interest in durable goods while contributing to the rise in consumer credit.In 2005, sales for swimwear reached US$2.9bn, experiencing a growth of over 241%. The local market for swimwear is valued at EUR1.4bn and Brazilian brands dominate it. Only high fashion segments are available for foreign brands to enter the market. Major export markets include Holland, France, Portugal Spain and the USA with an annual export of over 1.7 million swimsuits while European exports average less than 10 thousand units per year (Newbery 2007). The North-coastal regions offer small and vibrant bikinis that provide minimal coverage; whereas South-coastal areas have a more conservative and European style prevalent. Swimwear brands are distributed through beach fashion stores, surf-shops, sports stores as well as some concept stores run by major brands (Newbery 2007). A branded bikini may cost around USD$40 while lower-end options can be found for as little as USD$10.