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Kristina Erikson

Entering the Brazilian Market: A guide for LEAN Consultants

ISBN: 978-3-8366-8273-2

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Produktart: Buch
Verlag: Diplomica Verlag
Erscheinungsdatum: 11.2009
AuflagenNr.: 1
Seiten: 118
Abb.: 33
Sprache: Englisch
Einband: Paperback


Especially during the last two decades consulting companies established themselves in the international marketplace. In times of globalization particularly emerging economies, such as Brazil, are experiencing an upward trend and join the global players. The term LEAN consulting became frequently used in this context and plays a major role in the Brazilian consulting market nowadays. This study develops recommendations for the market entry of management consulting companies into the Brazilian market. The implication of the term Lean in the context of the consulting business and its future potential in Brazil is examined, supported by an evaluation of the target market. The outcome of the theoretical part is then being compared with empirical findings which are conducted via a Delphi Study. The empirial part clearly identifies that the most promising strategy for doing business in Brazil is intensive networking and new ventures should enter the market only with professional support from Brazilian partners who are more familiar with the peculiarities of the market. These and other interesting facts are delivered at the end of the study, providing a guide for new potential consulting businesses that want to enter the Brazilian LEAN market.


Text Sample: Chapter 3, Market Evaluation: Today’s marketplace is very competitive. In order to successfully place a company or a product in a new market its potential needs to be assessed first. The market evaluation uses information given about the market and helps to determine feasibility of a potential market and the competitive landscape. The aim is to compare different regions and sectors to find the strongest opportunities. This will reveal a strategic roadmap to the market entry. The Brazilian market has an enormous potential and growth is foreseen in the country for the next years. This chapter will provide an overview of the regions and branches in Brazil, pointing out the ones with the highest capability to be the future market for a management consulting company. The industrial sector is the most important one in this country and the focus of the strategy will lie on the branches present in this sector. A market segmentation presenting the biggest companies – measured by revenue – will provide the benchmark for potential growth and allows us to focus on prospective customers. The ‘three-sector-theory” of Brazil: According to the ‘three-sector-theory”, developed by Jean Fourastié, the economy can be categorised into three different sectors of economic activity: the agricultural sector – the primary sector (commodity producing sector), the industry sector – the secondary sector (or goods-producing sector), and the service sector – the tertiary sector (or non-goods producing sector). The aim of this theory was to explain the transition from the agricultural to the industrial society and later on to the post-industrial service society in the 20th century. It is assumed that the three sectors have different opportunities to adapt to technological progress. Through the application of new technical procedures, the productivity in the primary and secondary sector increases while, at the same time, less manpower is needed and also the demand for these goods decreases with increased productivity. The excess manpower and demand, in turn, will be absorbed by the tertiary sector. The problem is that this theory assumes no influence by outside factors and therefore cannot be applied to any economy without precaution. In 2006, the agricultural sector accounted for 36% of the GDP worldwide, the industry sector for 22% and the service sector for 42%. In Brazil the distribution in the same year is considerably different, with the agricultural sector accounting for 5.5%, yielding coffee, soybeans, wheat and rice as the main products. The industry accounts for 28.7%, with its main products being textiles, shoes, chemicals, cement and iron ore. The services sector makes up 65.8% of total output. The GDP growth rate by sector in the years from 1997 to 2007 has been subject to fluctuation especially in the agricultural but also in the industry sector. The service sector has been rather stable during this period. The three-sector-theory is based on the assumption of above-average growth of demand and below-average growing productivity in the tertiary sector. The current situation in Brazil and in the global context shows a strong tertiary sector, followed by the secondary and the primary sector. This supports the three-sector-theory of the shift: agriculture > industry > service sector. Although the service sector is the strongest sector in the economy, both by total GDP and by year-over-year growth rate, it is a non-good producing sector, which makes it uninteresting for a management consulting company as they are concentrating on the industrial sector where production takes place. The theory does not explicitly state the distribution of the different branches among the three sectors. Therefore it can be assumed that some branches that are interesting for the strategy could be assigned to the service sector, although in the following this sector will not be elaborated on. The importance of the industrial sector has been fully recognized by the development studies all over the world. The industrial sector – through its linkages with other sectors – plays a very important role in achieving rapid growth and development. Most modern and rich countries have a well developed industrial sector through their early industrial revolution. It is the most important driver of the economy and apart from the service sector – the non-goods producing industry – it constitutes the biggest sector and generates the largest profit share out of all. During the last years the industrial production in Brazil was subject to many changes due to the slow growth of the economy. The country has set up an agenda to become a competitive economy that is able to provide qualified goods in sufficient quantity and to create a greater number of high skilled jobs. Brazil is on its way to transform into an economy that is included in the knowledge society and recognized as one of the main platforms for the industry worldwide. Productivity: The level of productivity is a crucial part in the context of this thesis. It indicates the general market growth and its potential for the future. Since management consulting companies will focus on the industry it is important to know, if there is a need to enhance productivity. If so, then this need would likely translate into higher investments in this area and a greater demand for support services from the consulting industry. The level of labour productivity is the primary determinant on the nation’s GDP per capita growth. Brazil’s weak economic growth is due to the relatively slow increase of labour productivity. The latest performance study, conducted by the Conference Board, shows a labour productivity growth rate of 1.9% in 2007. Compared to the other BRIC countries, this is the poorest rate. Russia, India and China showed a much better performance with 6.3%, 6.7% and 9.8%, respectively. This can be ascribed to transitional reallocations of employees by large companies into emerging markets that consequently foster productivity growth in the respective country. Especially India and China play a determining role in this context, since wages in these countries are notably lower than in Brazil and also in Russia, hence companies are more likely to turn to the Asian countries to make new investments that lead to job creation. According to a study on barriers to growth in the Brazilian economy, conducted by McKinsey’s São Paulo office in 2005, there are two major root causes that lead to the relatively slower productivity growth. The first one refers to the modest per capita income, which promotes consumption of the lower-priced products and services. An example is the automotive industry, which produces primarily small and inexpensive cars. For the higher-priced vehicle section it relies on imports from other countries. The second cause is related to the first one – labour is cheaper than capital – which inhibits investment in new machinery that, in turn, would improve productivity levels. These barriers, however, will naturally fade once the government is able to resolve the social and economic problems by a policy shift. Labour and tax laws, price controls, product regulations, trade barriers and subsidies, among others, are present obstacles that limit productivity. Also, the unemployment rate, the level of inequality, the state of the educational system, are all factors that influence productivity levels and play a role in the performance studies. Potential markets for management consulting companies: After having identified the target sector and the level of productivity in the country, the next important step to defining a suitable market entry strategy is to determine specific markets in Brazil that yield the best prospects. Three different variables will influence the decision-making. These are the major Brazilian companies, the strongest regions and the most promising branches that are interesting for a management consulting company. Consequently, this will then lead to the establishment of the target branches as well as companies for LEAN business in Brazil and serve as a basis to formulate the entry strategy.

Über den Autor

Kristina Erikson wurde 1985 in Hamburg geboren. Nach dem Abitur verbrachte Sie ein Jahr als Rucksacktouristin in Australien bevor Sie 2005 ihr Studium an der englischsprachigen Fachhochschule IMC Krems aufnahm. Dort studierte Sie im Studiengang export-oriented Management internationale Betriebswirtschaft, Spanisch und Russisch. Während des Studiums ging Sie für ein Jahr nach Madrid um dort ein Praktikum und ein Auslandssemester zu absolvieren und verbrachte danach ein Semester in São Paulo, wo sie für eine Unternehmensberatung im Bereich LEAN Production tätig war. Seit ihrem Abschluss lebt sie in München und arbeitet bei einem Automobilhersteller.

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