KELLY ROGAN 1

Environmental Analysis of Argentina, Brazil and Colombia

Kelly Rogan
Towson University













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Flying Dog Brewery Expansion into South America
Flying Dog Brewery has decided to expand into the region of South America. As the
marketing manager I have chosen the possible countries of expansion to be Argentina, Brazil and
Colombia. Within all of these countries many key aspects were taken into consideration for the
expansion. These key aspects include their economies, culture and country risk.
Argentina
Description
Argentina is ranked as the 33
rd
largest country in the world and the 2
nd
largest in South
America with a population size of 41.09 million people according to Nation Master (2012). Their
government type is a republic and they use a civil law legal system, which is based off West
European legal systems. Argentina is located in Southern South America bordering the South
Atlantic Ocean. Argentinas geographical location and temperate climate are two key aspects.
Culture
The culture of Argentina can be traced back to when the Spanish landed and the
population became largely increased with immigrants from Europe. According to Ferrads
(2001), There are no rigid food taboos, but Argentines in general are not very adventurous when
it comes to trying unusual foods, flavors, and combinations. If chosen, Flying Dog Brewery in
Argentina would need to stick away from unique and unordinary types of beer. The city of
Buenos Aires is widely known as a very European style city and their official language of
Spanish is called Castilian, which refers to the Spanish language in Spain. The language is a very
important factor for the marketing aspects, which need to be aware that some Latin American
Spanish words have a different or no significance in Castilian. The marketing of our product
must also take into account the popular symbols of Argentina. The most popular symbols in
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Argentina are football (soccer) and tango according to Ferrads (2001). Using marketing tactics
to advertise in football matches as well as selling and promoting the product in popular tango
places would be a good way to adapt to the culture and gain recognition of locals.
Country Risk
While analyzing the risk in each country I used the Country Risk Tier, which uses a
representative score of 1-5 in order to show A.M. Bests 2013 assessment of a countries Political,
Economical, and Financial system risk. Argentina received a score of 5, which indicates that the
economical and political risks are high and the financial system risk is extremely high. This high
level of economic risk is a major concern for Flying Dog Brewery and it could lead to lower
profit due to the currently estimated 20- 30% inflation (AMB Country Risk Report, 2013). The
high political risk as stated by AMB Country Risk Report (2013) is related to the large amount of
protests and strikes as well as the State price fixing, the high poverty and crime rates. The very
high level of financial system risk is due largely to the debt that Argentina holds. In order to
meet these debt obligations they will need to use large budget cuts or additional funding which
could cause inflation or raise unemployment. All of these risks could directly affect our business
profitability in a country, which is currently struggling in many aspects of their financial system
as well as political and economical.
Trade
According to Ferrads (2001), Argentinas major exports include industrial manufactures,
farming and livestock manufactures, manufactured goods, motor vehicles, steel, petroleum, and
animal feed. While some major imports include automobiles, electronics, plastics, and organic
chemicals. The agricultural industry is suffering with the elimination of trade barriers, making
the competition fierce to compete with the prices of imports.
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Brazil
Description
Brazil is ranked high as the 6
th
largest nation in the world and the 1
st
largest nation in
South America with a population of 198.66 million people according to Nation Master (2012).
The government type is a federal republic and they have a civil law system. They are located in
Eastern South America bordering the Atlantic Ocean and are slightly smaller size then the United
States of America. Their location as well as their large population and growing economy are key
reasons to move Flying Dog Brewery into Brazil.
Culture
Brazil contains a culture distinct from its surrounding Latin American countries.
According to Margolis, Fox and Bezerra (2001), The Northeast has the greatest proportion of
people of African descent, the South and Southeast are home to the bulk of Brazilians of
European and Japanese ancestry, while indigenous peoples live largely in the North and Central-
West. This vast amount of different cultures means that the marketing tactics would need to be
specified to each regions tastes and preferences. There is also a large difference in income levels
with the South being very wealthy and the North being very poor as mentioned by Margolis et al.
(2001). The areas of different income levels are something that must be taken into account when
choosing city locations for the brewery as well as where to sell the product. The well-known
symbolism in Brazil is Carnival as well as Soccer. Advertising during these events as well as
selling the product during these events would gain attention while adapting to the local culture.
Country Risk
Brazil has received a score of 3 on the Country Risk Tier rating system. Their economical
risk is low which was expected since they have had a high level of investors and economic
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growth. The economy has also gotten some help from hosting the World Cup and the Olympics.
The political risk in Brazil was rated moderate due to many different aspects. The country has
experienced many protests that outline the problems within their healthcare, education,
transportation and the corruption in politics as stated in AMB Country Risk Report, 2013. The
financial system risk was rated moderate due to the large size of their insurance market and the
many changes they have made to reduce monopolies within the country.
Trade
Brazil currently imports and exports most with China and the second highest amount of
imports and exports are with the U.S. according to The World Fact book (2013). The World Fact
book (2013) also states Their largest amounts of exports are in coffee, automobiles, soybeans,
footwear and transport equipment. While their largest amount of imports include machinery, oil,
chemical products, transport equipment and automotive parts. The fact that Brazil does a lot of
business trading with the United States could be a good thing for the company in order to take
the business into Brazil.
Colombia
Description
Colombias government type is a republic and they use a civil law legal system
influenced by the French and Spanish civil codes as stated by The World Fact book (2013). The
population of Colombia according to the Nation Master (2012) is 47.7 million, which ranks in as
the 29
th
largest country in the world. Despite Colombias many years struggling with drug related
conflicts, Colombia maintains relatively strong democratic institutions characterized by
peaceful, transparent elections and the protection of civil liberties(The World Fact book, 2013).
Culture
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Colombia is a country that is uniquely divided into three different cultures in the areas of
the interior, the coastal regions and the countryside. According to Marquez and Broadfield
(2001), Only during elections, sporting events, and beauty pageants do the regional cultures
unite for a common goal. This dividedness could be a challenge if Flying Dog Brewery is
brought to Colombia. The language spoken is also the Spanish Castilian, which dates back to the
Spanish colonies. Colombia took the colors of the Spanish flag and incorporated them into the
flag, which they have today to show their full acceptance of their Spanish history.
Country Risk
The ranking of Colombia was given a score of 4 in the Country Risk Tier. Their
economic risk is at a moderate level due to their recent increase in domestic demand and moving
into the mining and oil sectors as stated by AMB Country Risk Report, 2013. They also stated
the political risk remains at a high level due to many problems such as the high unemployment,
high poverty rates, and income inequality. The security is a big concern due to the violent crimes
directly related to Colombias problem with narcotics as well as insurgent groups. The financial
system risk of Colombia is a high level but the supervision of the financial sector is improving as
mentioned by AMB Country Risk Report, 2013. The political risk is a main concern for Flying
Dog Brewery since the safety of our employees could be put at risk with the high amounts of
violent crime still existing in Colombia.
Trade
With the elimination of trade barriers, some food producers are finding it very difficult to
compete with the price of some imports, causing a crisis in the agricultural sector.
The economy in Colombia is mostly supported by their commercial agriculture exports in coffee,
petroleum, bananas, sugar, and cut flowers as stated by Marquez and Broadfield (2001). The
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struggles in the agricultural sector could lead to lower income levels, which would negatively
affect business profits.
Justification of Relevant Decision Criteria
Country Risk
The Country Risk is the first and highest weighing criteria for selecting which country to
enter Flying Dog Brewery. A company has more opportunities to thrive in a country, which is
stable both politically and economically. An unstable political environment full of corruption
could lead to many problems with getting building permits or alcohol licenses, which would be
crucial to enter the country.
Economy
The economy of a country is the second highest weighting criteria due to its crucial importance
and link to the income of the citizens and therefore the willingness to spend money. In countries
such as Greece or Spain the citizens, who are suffering due to the bad economy are not spending
their money as they used to in good economy times. Moving business into a strong economy is
crucial to the success of Flying Dog Brewery.
Culture
The culture of each country is the least high weight criteria since the 3 countries are all in a
similar region. The cultures are all distinctly different but since they are all in South America the
culture weighs the least due to the many similarities.
Country Selection Process
Each country was rated with a score between 1-10.
Country Risk
Argentina received a score of 1 due to their debt obligations, high poverty rates and high crime
rates. Brazil received a score of 5 due the their low level of economical risk but still a high level
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of corruption in politics and lacking stability in the financial system. Colombia received a score
of 2 due to their high crime rates, high poverty and high unemployment.
Economy
Argentina received a score of 3 due to their problems with inflation. Brazil received a high score
of 9 due to the large amount of recent growth in the economy. Colombia received a score of 6
due to the increase in domestic demand but also due to the crisis in the agricultural sector.
Culture
Argentina received a score of 5 due to their lack of adventuress and high ties to Spanish culture,
which historically prefers wine to beer. Brazil won a score of 7 due to their diverse culture and
many different tastes and likes. Colombia received a score of 4 due to the large differences in
cultures throughout the country and therefore a much harder job for the marketing department.

Country
Weight of
Country
Risk
Ranking
of
Country
Risk
Weight of
Economy
Ranking
of
Economy
Weight of
Culture
Ranking
of Culture
TOTALS
Argentina 3 1 2 3 1 5 3+6+5=14
Brazil 3 5 2 9 1 7 15+18+7=40
Colombia 3 2 2 6 1 4 6+12+4=22

I strongly advise Flying Dog Brewery to move to Brazil with the high total of 40 points depicting
their lower levels of country risk, strength of the economy and the high potential of the culture.


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Reference

AMB Country Risk Report. (2013). A.M. Best Company. Retrieved February 27, 2014, from
http://www3.ambest.com/ratings/cr/reports/Argentina/pdf

AMB Country Risk Report. (2013). A.M. Best Company. Retrieved February 27, 2014, from
http://www3.ambest.com/ratings/cr/reports/Brazil/pdf

AMB Country Risk Report. (2013). A.M. Best Company. Retrieved February 27, 2014, from
http://www3.ambest.com/ratings/cr/reports/Colombia/pdf

FERRADS, C. A. (2001). Argentina. In C. R. Ember & M. Ember (Eds.), Countries and Their
Cultures (Vol. 1, pp. 77-92). New York: Macmillan Reference USA. Retrieved from
http://go.galegroup.com.proxy-
tu.researchport.umd.edu/ps/i.do?id=GALE%7CCX3401700019&v=2.1&u=umd_towson&it=r&
p=GVRL&sw=w&asid=1aa309da5d106befc1a5c929ab3b78a7

MARGOLIS,, M. L., BEZERRA,, M. E., & FOX, J. M. (2001). Brazil. In C. R. Ember & M.
Ember (Eds.), Countries and Their Cultures (Vol. 1, pp. 283-301). New York: Macmillan
Reference USA. Retrieved from http://go.galegroup.com.proxy-
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p=GVRL&sw=w&asid=fac3d6677ffdc12c7083fa684642e21e

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MRQUEZ, S., & BROADFIELD, D. C. (2001). Colombia. In C. R. Ember & M. Ember (Eds.),
Countries and Their Cultures (Vol. 1, pp. 484-498). New York: Macmillan Reference USA.
Retrieved from http://go.galegroup.com.proxy-
tu.researchport.umd.edu/ps/i.do?id=GALE%7CCX3401700054&v=2.1&u=umd_towson&it=r&
p=GVRL&sw=w&asid=e1cee87d529c88fac614d0050979aa61

The World Fact Book. (n.d.). Central Intelligence Agency. Retrieved March 2, 2014, from
https://www.cia.gov/library/publications/the-world-factbook/geos/co.html

Top states for Argentina: Country profile. (n.d). NationMaster.com. Retrieved March 1, 2014,
from http://www.nationmaster.com/country-info/profiles/Argentina

Top states for Brazil: Country profile. (n.d). NationMaster.com. Retrieved March 1, 2014, from
http://www.nationmaster.com/country-info/profiles/Brazil

Top states for Colombia: Country profile. (n.d). NationMaster.com. Retrieved March 1, 2014,
from http://www.nationmaster.com/country-info/profiles/Colombia