Ikea is one of the biggest international firm, which has increased its profit by expanding its standardized products. Insofar, IKEA has created a whole culture around the world and has made furniture as a lifestyle.
We will talk about the Brazilian market, its strength and issues that will make profitable or not the IKEA entrance. We have developed four parts to well known the Brazilian market and its characteristics. In this way, it will possible to analyze the chances for IKEA for further expansion in South America.
I. Brazilian Macroenvironment or PESTLE analysis:
First of all, we are going to talk about the economic situation in Brazil. It is necessary to have an overview over the economy before entering into Brazil.
1. Economic Environment:
Brazil is a Newly industrializing economy and by this way, is the tenth world economic power by owning a large range of resources, which are exported all around the world. Insofar that Brazil from part of the big emerging markets.
The government of Lula da Silva restored the confidence of the markets thanks to the budget policies and monetarist restrictive establishment. The economic activity set out again with the rise: the growth rate was 0,5% in 2003 and 5,2% in 2004 because of the falling down of the Real that promoted Brazilian exports.
In 2006, the GDP was around 966,8 (billion $US), the GDP per capita was 5176,6 (billion $US) and the GNP was in 2005 $770,7 billion.
Brazil, according to the World Bank, is an Upper-Middle-Income country because of the GNP of $770,7 billion. Brazil has known a quick growth since its opening to the foreign market, an average of 2.5% since 1995.
Brazil supplies many foreign direct investments, the three principal investors are the United States (39%), Germany (36%) and Italy (10%). In return, Brazil import furniture’s machinery to provide those final products like wood table.
The Brazilian market for...