Political and Financial Assessment of Brazil Short Term Exploitive Firms – Political RiskGovernment and Political Stability Studies that was conducted to evaluate the manner at which Brazil is conducting her business activities and the political stability of the country has revealed remarkable improvements. As a result, corporations have been encouraged to invest in Brazil at least for a short time (Brazil Analysis, Research & Forecasts, 2014, October 7). Legal System Business ethics issues have been raised in Brazil, some of them are related to individual freedom while others are related to the manner at which business are carried out.
In addition, it is very difficult to obtain operating legal documents such as license in Brazil. In particularly, it takes unreasonable 400 days to obtain an operating license. In this case, it is unrealistic for an investor who would wish to invest for a period less than one year (Brazil Analysis, Research & Forecasts, 2014, October 7). View towards Foreigners In Brazil, local consumers expect corporations to involve the community in their business operations.
Furthermore, they also want the corporations to collaborate with both the government agencies and nonprofit organizations to improve the living standards of the Brazilians. Therefore, short term cannot realize these demands since the risks of exploitive firms are high (Brazil Analysis, Research & Forecasts, 2014, October 7). Crime and Violence Recent study that was conducted by United Nations Office on Drugs and Crime revealed high crime and violence rates as compared to other countries.
This trend is not expected to improve even though efforts to reverse it have been put in place. Consequently, it damages the Brazil Image as an investor’s destination in the near future (Brazil Analysis, Research & Forecasts, 2014, October 7). Short Term Exploitive Firms- Financial RiskTax Regulation For exploitive firms, tax rate is ridiculously high and complicated in Brazil.
Firms are required to pay a percentage of their net income to the government. Additionally, they are indirectly forced to hire specializing lawyers to help them avoid trouble (Brazil Analysis, Research & Forecasts, 2014, October 7). Banking System Currently, corporations have more freedom to operate in the local banks than before.
Consequently, foreign corporations can diversify their business operations in order to spread risk. Experts have projected an increase in demand for the year 2015; therefore, corporations should not be worried (Brazil Analysis, Research, & Forecasts, 2014, October 7). Exchange rate Although a decrease in interest rate always stimulates the economy growth, it hinders investing by foreign corporations. Reasoning behind it is that the corporation will have to pay more for the amount borrowed when the local currency has depreciated (Brazil Analysis, Research & Forecasts, 2014, October 7). Interest Rate and GPD Both the interest rate and exchange rate have an impact on GDP.
Recently, the Central bank announcement of raising the interest rates by 0.25% was welcoming news to the corporations. Consequently, they will benefit from both lending money and buying government instruments (Brazil Analysis, Research & Forecasts, 2014, October 7). ReferenceBrazil Analysis, Research & Forecasts.
(2014, October 7). Business Monitor. Retrieved November 18, 2014, fromhttp: //www. businessmonitor. com/brazil