Banco do Brazil, from Brazil to the world Case Solution & Answer

Banco do Brazil, from Brazil to the world Case Solution 


There would be a threat that, any regulatory changes in the country would affect the international expansion of the bank. If the competition from foreign banks is intensified.It would be an increased threat that,foreign banks would enter the Brazilian market as well, this would make their domestic market saturated, and competition would be increased as well. In order to deal with the domestic competition, the bank has to make efficient decisions in terms of strengthening their business. So that, the inherent risks would be mitigated in the case of any foreign or international expansion.

Industry analysis:        

Political factors:

Brazil is one of the country having a stable political environment.There is no such political instability apparently seen that would hinder the growth opportunities and investment decisions of the banks, working in the financial environment. The political environment can be assessed as volatile.Some precautionary measures in terms of political mis balance should be taken into account, while going for any venture by any unit of the industry. Corruption is one of the major issues in Brazil, opening any venture requires additional payments to the government officers. The domestic expansion may require an additional amount of capital, to deal with such instances.

Environmental factors:       

The economic environment of the industry, in the country is moderate and feasible for growth.The gap between the rich and poor is decreasing in Brazil, it means that the economy in Brazil is growth oriented. There is less risk of domestic currency inflow, since the central bank has controlled the policies for valuing currency. The tax imposed by the government is generally high.Plus the domestic practices would require a higher proportion of income, to set aside for tax purposes. In order to consider the opportunities for internationalization, such countries are preferable where the tax structure is not so rigid. The banking sector should consider internationalizing in the respective domains, considering the countries are having tax treaties.

Social factors:

The majority of the population in Brazil, consists of those individuals that come under middle class.There are huge opportunities for the people, because expansion would create job opportunities for the individuals, having the competency and urge for performance. The enthusiasm of success is present in the working individuals of Brazil. Banking sector can easily create value, by using their productive employees efficiently.

Technological factors:

Technologically, Brazil is not so much equipped, in comparison with US and Russia.The technological investment is not worthy enough, to inculcate the massive changes that are happening in the world banking nowadays. Banking sector would get more financial fruits by effective performance in those countries, where technology is progressing with high-tech machines and fully automated error free banking softwares. That are used for dealing with the customers, and regulating the everyday performance of any institute.

Legal factors:

During 1994, there were many measures that were undertaken by the Brazilian government, in order to make the macroeconomic condition of the country better. The initiative that was taken by the government is called real plan,which had removed the effects of inflation.Moreover, allowed the middle-class economy of the country to grow and make their contribution visible, to the whole Brazilian economy. The laws that were supportive enough for the banking sector, have been passed to facilitate the economy, by utilizing the pros of the banking sector.

Potential threats and opportunities:

Analyzing the banking sector, the porter five forces model would help to analyze the potential threats, opportunities and relative powers of the players involved in the process.

The threat of new entrants is relatively low for the bank, as the bank is operating since decades and is owned by government.Private sector banks would not impact the performance of the bank, because the new entrant would face the immense competition in the banking sector.So bank such as bank do Brazil, eventually has strong roots and expansion network throughout the world. The new entrant would possibly affect the performance of the bank domestically, but during international expansion, the strong name of the bank would help them to continue at a good pace.

To avoid that threat and protect the domestic performance of the bank, the government should protect the banks from foreign competition, by imposing strict laws for the foreign investment in Brazil. Furthermore, Brazil should move to those countries, where there are lenient laws for foreign investment and expansion.

Here the customer plays the key role in the success of any organization. The bank should take effective measures to make sure that, the service level at any respective branch off the bank should not be compromised at any cost. As the bank is considering international expansion, the only sustainability measure that they should opt for, is by making their services and performance much better than the banks already present.So that, it would bring greater impact on the people of the respective country.

To gain the customer’s loyalty and confidence, there should be an effective use of technology.So that, the customers would not switch the bank, when they opt for international expansion. The domestic performance should not be compromised……………..

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