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Economic and Financial

The Economic and Financial of Bang Energy

The economic and financial analysis section exposes the viable aspects of the Brazilian economy that increase the chances of Bang Energy being successful in the country. The energy drink can secure a wide market in the country since it has a high per capita income. The drink producers can also establish centers for production without incurring excessive costs that do not match the revenues or are generated from this market. The country has promising social-economic indicators that can be used to point to the advantages of the country as an investment destination. The distribution of the population in urban areas can be used to create market niches for the product. Targeting large urban areas will increase access to the customers that can afford the product. Urban dwellers also have the highest level of disposable income, justifying the market niche.

Physical Environment

Brazil spans across a wide area along the eastern side of the South American continent. The country is the fifth-largest in the world and the third-largest in the Americas. The country comprises of different types of topography, spanning from mountain to plateaus. Additionally, it is situated in different time zones. The Eastern Time Zone makes up the national time zone of the country. The country’s elevation ranges from 660 feet to 2600 feet above the sea level (“Brazil Geography: Introduction,” 2016). The southern part of the country is outside the tropics, while the northern part is within the equator. It has different climate zones with the majority of the regions being within the equatorial climate belt. The elevation contributes to the development of different watersheds. The rugged parts in the southeast make up the major water catchment areas, even though there are also other catchment areas originating in the regions. Brazil has dense river systems, which flow into the country and its neighbors.

It has a diverse climatic range. In some parts of the country, the climate is temperate. They are secluded in the regions outside the tropics. The majority of the country experiences a tropical climate. Other subsystems found in the region include equatorial, semi-arid, temperate, and highland tropical (“Brazil Geography: Introduction,” 2016). Different climatic conditions contributed to different environments. Therefore, the country has a range of constantly changing climatic conditions as one progresses from one part of the country to the other. The climatic conditions are impacted by the elevation and the location concerning the equator. Brazilian climate eliminates the probability of a dry climate. The majority of the country has adequate precipitation. Most of the country is covered by rainforests. However, there are small settlements in different parts of the country and larger cities spanning across the country. The countryside is filled with farmlands, but they only comprise a small part of Brazil.

Socioeconomic Indicators

Employment is a social-economic indicator that can be used in assessing a country. The most common occupation in the country is the service industry. The majority of the people are employed with only 6.2 percent of the population being unemployed. A significant portion of the workforce is in the service industry, accounting for over 50 percent of the workforce (“Brazil,” 2016). The high rate of employment corresponds with the high per capita income.

Income is a socioeconomic indicator. Most people in the country are gainfully employed in different sectors. The main sources of employment include tourism, manufacturing, agriculture, and the service industry (Andrade & Garcia, 2015). The per capita income in the country is high, indicating considerable purchasing power. Introducing fast-moving consumer goods such as Bang energy drink holds a high prospect of consumption. However, the income distribution differs, with most of the urban dwellers having the highest rates of income. Considering the income distribution can inform an entrepreneur about the best regions to introduce the product.

Education is a socioeconomic indicator. The country also has high education rates. The rates of literacy are increasing among the youth. The southeastern parts of the country have the highest rates of literacy. Literacy rates indicate the level of progress in the country (Carnoy et al., 2013). A significant part of the country is literate with the majority of the illiterate population being concentrated in the interior of the country. The product is more likely to be consumed by literate individuals than by the illiterate ones.

Brazil has a large population. The majority of people live in cities, while some of them live in rural regions. The population of the country is approximately 200 million people. The population per square kilometer is 22 inhabitants (Central Intelligence Agency, 2016). The majority of Brazilians are women. even though the ratio of men to women is close. The majority of the Brazilian population is urban. This accounts for over 80 percent of the people (Central Intelligence Agency, 2016). The concentration of the population is in the southeastern parts, followed by the northeastern parts. Vast regions make up over half of the land size of the country, but they only have fifteen percent of the population.

Brazil has witnessed a significant increase in the number of people who live in the region. The infusing of Europeans into the country contributed to the increment of the population. Other significant increases, such as the decline in mortality rates, contributed to the growth of the population from the period when the first Europeans settled in the country. The country is nearing the completion of the demographic transition with the population decline promising to start in 2050 (“Brazil,” 2016). Literacy and illiteracy of the population correlate directly with poverty rates.

A significant part of the population is white. Other races found in the country include Latinx, Black, Asian, and indigenous (“Brazil,” 2016). The country has different tribes, most of which have not been recorded or contacted. The majority of the country comprises of white people. The whites are more visible in the country since Brazil has had miscegenation since the arrival of the Portuguese. However, racial and ethnic affiliations do not necessarily define the majority of the people in the country. The social class defines Brazil more evidently. The high-income disparity is manifested among different races. However, there is also an element of classism in the country, whereby people identify more with their class than their racial and ethnic affiliation.

The majority of the country has been impacted by urbanization. Most of the people have opted to reside in urban areas as opposed to residing in rural areas. The main cities in the country account for almost a quarter of the population. The largest city is Sao Paulo, which has over 21 million residents, followed by Rio de Janeiro, which has a population of over 12 million people. Other cities in the country average at 2.5 million residents and account for a combined 84 percent of the population (“Brazil,” 2016). Brazilian culture and language are strongly influenced by technology.

Monetary and Financial Systems and Mechanisms

Brazil is one of the largest economies in the world. It is the largest economy in Latin America and the eighth largest in the world, according to the market exchange rates (Central Intelligence Agency, 2016). The country enjoys a mixed economy that has abundant resources. The country had experienced a growing economy before the recession in 2008. However, the country started feeling the brunt of the recession in 2014 (Central Intelligence Agency, 2016).

Brazil has been increasing its presence in the international financial market. The country has successfully grown numerous sectors of the economy, which has increased its influence as a BRIC country. It exports aircraft, agricultural products, automobiles, and electronics. The increased production capacity of the country has placed it firmly in the same scope as other world economies. It has also validated its increased presence in the BRIC arrangement.

The country uses the Brazilian real as its currency. The real was pegged against the dollar in 1994, making its response to the changes in the American market. However, the changes in the American market led to the exposure of the real to the same effects that could affect the dollar. For instance, the East Asian financial crisis of 1998 led to adverse impacts on the currency (WTO, 2016). The country changed its monetary policy to the managed float and later revered to free float.

The country was capable of developing in the decades before the global financial crisis due to the injections that it received. For instance, the country received 30 billion dollars from the International Monetary Fund in 2002 (WTO, 2016). The amount was instrumental in increasing the country’s development. Brazil has also been enjoying a steady inflow of direct foreign investments. The increase in direct foreign investments has resulted in the loss of the value of real as compared to the dollar.

The country’s economy is adversely affected by corruption. Experts have identified the issue of corruption as the major detriment to Brazil’s ability to develop. The rates of corruption are so high that local firms have noted it as one of the major limitations to the ability of the country to be productive and effective in its work. Therefore, the rates of corruption have impacted the ability of the country to develop further. The losses from corruption also affect transparency in the financial system (WTO, 2016). The funds taken from the government projects are often withdrawn from the financial institutions in the country. Consequently, the rates of corruption are directly related to the sanctity of the financial sector in the country.

Structure of Economy and Indicators of Economic Performance

The Brazilian economy is liberalized and based on the capitalistic model. Investors can opt to invest in any sector of the market as long as they adhere to the requirements set by regulatory authorities. The country has a diversified economy, comprising of manufacturing, services, and agricultural products. The country has been able to develop a robust economic system based on the manufacturing model. Diversification of the economy was informed by the desire to create a system that would be stable and less reliant on agriculture. However, Brazil still relies significantly on agricultural products. Most agricultural products are sold after being refined or processed (Central Intelligence Agency, 2016). Additionally, the country has invested in the energy sector. Leading companies, such as Petrobras, have been instrumental in the exploration and refinement of petroleum oil. Brazil also works on the creation of an energy reliant system with significant investments in renewable energy. The country consumes most of the energy that it produces, making it one of the most self-reliant countries.

The country can take pride in its exceptional economic performance. Its economy has been growing because of investments. The country has a gross domestic product of 2 trillion per year. This makes it the 8th largest country in the world, according to economic performance. However, even with the large GDP, it is incapable of attaining income parity (“Brazil,” 2016). The GDP per capita is 15,000, making it the 77th in the world. This is an indicator of income disparities. The rate of unemployment is 6.2% (“Brazil,” 2016). The robust service sector has been instrumental in the reduction of the overall rate of unemployment in the country over the years.

Labor and Infrastructures

The country has a large population mainly comprised of working-age individuals. Most of the people work in the service sector, with employment in the sector accounting for over 100 million workers (“Brazil,” 2016). The country also has a low unemployment rate, which is reducing each year. The increase in access to employment can be traced to the rapid rate of development that has been witnessed in the country over the years. Most of the people have adequate training to handle basic labor. Some of the training is provided in institutions of higher learning, while the rest is received during job training. Low literacy rates indicate high levels of education in the country, signifying the possibility of quality labor coming from the workers.

Brazil has made significant investments in infrastructure development. It has airports in all major cities (Sharma, 2012). It also has an extensive road network that is used to move passengers and freight from and to different parts of the country. Additionally, the country has a wide-ranging rail network used to move heavy products (WTO, 2016). Brazil has developed a pipeline project that is used to move petroleum from the oil wells to the refinement centers. In addition to the transport networks, the government has invested in increasing the ease of communication. Most of the country has Internet access and mobile connectivity.

Technology

The country is abreast of other developed countries as far as technology is concerned. Brazil is the home to Embraer, which is the third-largest producer of aircraft. Aircraft production technology has been on the increase. In fact, Brazil was the first country to produce an aircraft that ran on ethanol (Pao & Fu, 2013). Brazil has also made significant investments in the production of renewable energy. It has one of the largest hydroelectric power production plants in the world. Renewable energy production has led to the distinction of the country as one of the greenest in the world in terms of energy consumption (“Brazil,” 2016). Additionally, Brazil has invested in the production of automobiles, electronics, and refinement of agricultural products. The commitment to technology has enabled the country to attain unprecedented levels of development.

Trade, Investment, and Other National/Local Economic Policies

Brazil has an open trade policy. It is a major economic powerhouse on the South American continent. It has been and continues to be open to trading with its neighbors and other countries. Its commitment to trade and investments manifests in the increase of foreign direct investments. It has a favorable investment climate for any corporation that decides to open a base of operation in the country. National policies and local economies often increase the ease of opening a business or any other operation in the country. Moreover, it has a favorable tax policy, increasing the possibility of success.

International Economic Relations

Brazil has established numerous bilateral relations between itself and other relevant trading partners. These relations are based on mutual benefits for the countries involved. For instance, it has bilateral trade deals with such countries as Angola, Bangladesh, Australia, and New Zealand (WTO, 2016). These relations increase the chances of the county conducting its business in foreign markets. The decision to create bilateral trade relations has been made over the years in Brazil, as opposed to dealing with them as a block. The bilateral relations are more preferable since they also concur with the international relations policies of the country.

Relevant International Economic Organizations

Brazil is a member of the joint commission on economic and trade relations. It also participates in commercial dialogue. The country is a member of the consultative committee on agriculture. Being a large energy producer, it is a member of the strategic energy dialogue. These memberships increase their chances of being a desirable investment destination (“Brazil,” 2016).

Weighing scheme

Activity

Weight

Physical Environment (EF1)

0.05

Socioeconomic Indicators (i.e., Demographic Indicators of Economy) (EF2)

0.25

Monetary and Financial Systems and Mechanisms (EF3)

0.25

Structure of Economy and Indicators of Economic Performance (EF4)

0.15

Labor and Infrastructures (EF5)

0.10

Technology (EF6)

0.05

Trade, Investment and Other National/Local Economic Policies and Activities (EF7)

0.05

International Economic Relations (EF8)

0.05

Relevant International Economic Organizations (EF9)

0.05

Total

1.0