FOOD RETAIL IN BRAZIL

International Market Entry and Development of Food Retail in Brazil



Executive Summary

This paper presents the insight into Brazil's Food Retail Market through the latest researches, reports and analysis. The food retail market of Brazil is very competitive. The competition is basically on the prices as the switching cost for customers is low and little differentiation exists between the brands. There are several opportunities for entering a foreign market. Each differs from others on dimension of level of control. Each form of entry strategy has advantages and disadvantages. The appropriate strategy depends upon the objectives of entry and resources that a firm has. The key to success will be to create a switching cost and differentiating its product.

Table of Contents

Executive Summary1

Introduction1

Brazil Food Retail Sector1

PESTLE Analysis2

Political Landscape2

Economic Landscape3

Social Landscape3

Technological landscape3

Legal landscape4

Environmental landscape4

Porter's Five Forces4

Buyer power5

Supplier's Power6

New Entrants6

Threat of Substitutes6

Degree of Rivalry7

Competitor Analysis7

Market entry strategy9

Recommendations9

Conclusion10

References11

International Market Entry and Development of Food Retail In Brazil

Introduction

The competition is getting diverse and boundary less these days (Korey, 1986; 34-42). Many developing countries including Brazil are seen as growing markets (Economist. 2012). It is expected in the coming years that food retail segment in Brazil is going to have rapid growth (Globaledge. 2010). The market entry is of the several options that are available to compete for a foreign company. The market entry strategy is dependent upon the objectives of business. The level of involvement in marketing in foreign investments depends on motivation which can be endogenous (inside the firm) or exogenous (outside the firm) (Piercy, 1982: 26-30). The penetrating process and developing a business in international environment is very difficult. This is evident from the fact that, 90% of the modern retail formats in Brazil have foreign ownership (Baily Cooper and Rodrik, 2003). These segments have light the hope for prosperity and injection of foreign investment into the business (WILLIAMS, PEHU AND RAGASA. 2009). International marketing is very different from the local marketing. The cultural, economic and competitive trends have to be identified in order to successfully place the products and services.

More detailed analysis of the market development in Brazil is to be elaborated via analysis of Brazil food Retail sector and PESTLE analysis combine, since the PESTLE is necessary for external environmental analysis and Food retail industry overview is to be seen in conjunction with it.

Brazil Food Retail Sector

The Brazil food sector is witnessing its prosperity years for some years now. Food retail in Brazil has gained double digit strong growth in the recent past. This trend of growing is likely to continue in the years to come. The Brazil Food retail sector had a compound annual growth rate of 20.2% in the period 2007 to 2011 (Marketline, 2012: 5). This unprecedented growth is the highlight of what is to come in future. Keeping in mind that, this growth of 20.2% is far more than US and Canadian market, that is 4.2% and 5.1% respectively. New businesses establish themselves in regions where the market is growing, so the new customers can ...