Essay About Impact Brf.Economic Domestic And Environmental Domestic

Strategy to Move from Exporter to Multinational Organisation
Essay Preview: Strategy to Move from Exporter to Multinational Organisation
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Analysis of PESTEL factors’ influence on BRF’s domestic and international* strategies:*Strategy to move from exporter to multinational organisationPoliticalDomestic:President Silva encouraged the BRF merger, demonstrating governmental support to increase national brands’ global success. The raised the cost of business, caused by corruption, poor infrastructure and excessive regulation, is limiting the effective competitiveness of exports (CS-4)International:The Middle East’s political volatility determines that it is not a viable option for expansion (CS-11). Corruption and Government interference in the Consumer Goods sector will determine BRF’s ability to expand elsewhere. High international trade tariffs and tax regulations could also negatively impact BRF.Economic Domestic:Positive economic growth, investment capital and disposable income growth (CS-2). Brazil’s strong currency threatens to undermine manufacturing and export competitiveness.International:The proximity and successful implementation of distribution networks in Argentina and Chile show that Latin America is a fruitful option for BRF internationalisation. China’s ability to match only 4% of consumer demand creates high opportunity levels for BRFProduct costs too high for African expansion (CS-11)SociologicalThe most influential factors were addressed within Stage 1’s Wiki (Appendix 1)Further factors include:Low unemployment and growing middle-class increase the market size for BRF’s mid-market and premium priced product mix Social media plays a critical role in influencing the public opinion. BRF can leverage this trend to build efficient marketing network.Technological BRF employed a sophisticated (IT) system to provide a consistent study and analysis of the market – this network ensures up-to-date competitor information to provide flexibility for BRF to adapt their product and pricing strategies (CS-6).However, further focus should be placed on using technology to lower production costs and to connect with consumers (eg. social media) for optimum operations outputs. Environmental Domestic: Brazil has the world’s largest renewable water supply and significant room to expand: currently utilizing only using 50 of its 300-400 million hectares of arable land BRF’s makes environmental investments to mitigate their environmental impact, including Investments in Forestry Plantations (BRF-46).International:Paris Climate Agreement (2016) will increase the financial impact on BRF’s production processes. Environmental pollution (air, land and water) regulations must be tightened under the agreement. Latin America’s climate is most similar to Brazil and therefore easier to transfer BRF’s current agricultural capabilities making it a viable expansion option. Africa’s arable land equates to only 9.6% thus limiting agricultural expansion (Gillison, A).Legal Domestic:Anti-trust law limits domestic market growth for BRFInternational:Intellectual property and patent laws will impact BRF if protection is limited. The impact of labour laws – e.g. minimum wage and working hours Opportunities BRF’s technology provides a greater customer service and thus will increase brand loyaltyLatin America provides a viable international expansion route. The proximity, cultural and climatic similarities will enable BRF to transfer their domestic experience. China’s inability to meet consumer demands. Economic growth increases consumer spending Threats Online consumer buying behaviour could threaten the existing physical distribution infrastructure.Paris agreement (2016) could threaten existing production processesAnti-trust law limits domestic growth.Word Count: 499References:Bell, D. Kindred, N. (2012) Brasil Foods, Harvard Business School