Brazil: Corruption, Impunity, and Market Uncertainty - Essay Sample

Introduction

Corruption is noted to be one of the significant enemies of progress that affected Brazil as a market. A market where the seating president is at the brink of being ousted by the senate due to issues pertinent to corruption may not be an appropriate hunting ground for any investor, notwithstanding that several top leaders are alluded to be main perpetrators of the vice. When Rousseff was in record trying to shield former president Lula, thus perpetuating impunity. A plethora of both previous and current leaders was involved in corruption deals (The Economist). Street demonstrations constituting people complaining of a deteriorating economy is an additional red alert to 3P Turbo.

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Protests against the government are indicative of an unstable political platform whose days are unprecedented (Nelson & Booth 1). The choice to enter the Brazilian market in such awkward moments may be a decisive moment, 3P Turbo may not be privy to the whereabouts of incoming political leaders. They may revive the economy or even make it worse; the decision to penetrate the market may, therefore, end up being a lifetime blunder.

Economic Environment

The economic environment in Brazil is not encouraging in many ways. To start with, a substantial number of people among the population were unemployed as of 2016, three million more people from the 2015 tally of seven million (Nelson & Booth 1). High rates of unemployment signal an economy where people are likely not to afford commodities, citing a lack of disposable income. Additionally, a recession coexisted with other challenges such as inflation, which makes investment in the country riskier. Brazil’s economy was experiencing tough moments as of 2016. Since an encouraging 7.5 percent in 2010, the country grew from bad to worse. Budgetary issues were also not in order, exemplified by a 10.5 percent deficit of the 2015 GDP (Nelson & Booth 2). Investing in such a country may be detrimental as the company may suffer extortion, considering that state laws are not homogeneous.

The strength of the Brazilian Real is doubtful of improving. Since 1998, the currency has been fluctuating (Nelson & Booth 10). Thus, profit margins may be affected by fluctuating currency value. The inflation rate is also not promising. Since the year 2000, inflation levels have experienced fluctuations that are indicative of a weak economy.

Poor Economic Policies

To make the economy more favorable for investors, the Brazilian president delved in a price reduction strategy where she instructed the Central Bank and other entities to reduce interest rates and additional charges. While the idea appeared noble to her, the results provided an antithesis of her intentions; the economy continued to decline (Nelson & Booth 3). Before a workable plan is established in the country, it may require caution on the part of 3P Turbo. Brazil does not have a viable working economic system that would provide 3P Turbo with surety that things will be better in the coming days.

Competition

In addition to the political and economic issues existential in the Brazilian market, the competition was another stumbling block for 3P Turbo. Several producers of a similar product had already established their clientele (Nelson & Booth 7). 3P Turbo's only half sure client was FiatChrysler, which they had previously enjoyed a cordial relationship. The rest of the Brazilian market presented a new hunting ground for the company.

Works Cited

Roy Nelson and Lena Chua Booth. 3P Turbo-Cross border investment in Brazil. (2016).

The Economist. Corruption in Brazil: The scum that put politicians behind bars. https://www.youtube.com/watch?v=6eyBWX3hVaE&t=1s