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Brazil and Venezuela: Economic and Political Environment Essay


Both Venezuela and Brazil are associated with complicated economic and political environment and significant barriers to sustainability of foreign enterprises. According to Cardenas (2014), in Brazil, the major issues are of the structural and infrastructural character, i.e., the “cumbersome” tax system, high labor costs, high cost of production and some other bottlenecks which may not allow firms to increase their competitiveness in the market.

Additionally, the shortages in the qualified labor force may result in low productivity, ineffectiveness, and decreased quality of service. At the same time, Venezuela is associated with significant financial risks due to hyperinflation, “shortages of currency and goods,” and high level of the economy’s dependence on oil and gas sector (Coface, 2017, par. 2). These weaknesses may create serious obstacles to the organizational ability to purchase necessary materials and other inputs and interfere with innovation endeavors.

When choosing between these two markets, Brazil seems to be a better choice for investment because more strengths in the local environment can be identified. While Venezuela is extremely vulnerable to external shocks (due to its dependence on loans from China, etc.), Brazil is more stable in this regard (Coface, 2017). Brazil is one of the largest global economies characterized by a high level of financial activities, increasing size of active population, and, therefore, a greater level of demand. Although it also means that the level of competition is higher in Brazil, if managed well, it may lead to organizational advancement due to the need for innovation and various value-adding activities.

Value-Adding and Value Proposition

Value can be defined as a ratio between benefits and costs (Kristianto, Ajmal, & Sandhu, 2012). The more functional and emotional benefits a customer gets, and the more an experience or purchase are associated with cost efficiency, the greater level of customer satisfaction can be achieved. Customer satisfaction, in its turn, has a positive effect on organizational sustainability and overall success. Therefore, the activities aimed at value creation and communication are very important for organizations.

Both value proposition and value-adding can be regarded as the initial steps in managing for stakeholders. Value proposition is essential for organizations as it allows them to attract potential customers. In this way, the value statement should cover as many potential benefits as possible to drive clients’ decision making. According to Peterson and Ferrel (2005), the issues of values, ethics, and the business are interrelated (p. 85). Thus, value proposition may also be regarded as a mean for stimulating stakeholder cooperation because “people who are attracted to the firm’s value proposition will be more inclined to work together to realize it” (Peterson & Ferrel, 2005, p. 86).

To achieve a high level of customer loyalty and stakeholders’ involvement, organizations should aim to add such values to their products and services which are meaningful to the members of the target consumer group. For instance, the integration of the principles of corporate social responsibility (CSR) in the corporate practices, as part of value creation, may lead to such desirable results.

The term “corporate social responsibility” (CSR) refers to a range of organizational activities aimed to benefit stakeholders, and society as a whole (Caramela, 2016). Ethical practices constitute the primary part of CSR. They include fair treatment of various stakeholder groups, i.e., employees, customers, stockholders, etc. Through compliance with professional and ethical standards and legal regulations, not only can organizations improve their performance, but also generate multiple benefits for consumers and the society as a whole.

References

Caramela, S. (2016). . Business News Daily. Web.

Cardenas, C. (2014). . IHS Markit. Web.

Coface. (2017). . Web.

Kristianto, Y., Ajmal, M., & Sandhu, M. (2012). Adopting TQM approach to achieve customer satisfaction. The TQM Journal, 24(1), 29-46.

Peterson, R. A., & Ferrel, O. C. (2005). Business ethics: New challenges for business schools and corporate leaders. Armonk, NY: Sharpe.

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IvyPanda. (2020, July 31). Brazil and Venezuela: Economic and Political Environment. Retrieved from https://ivypanda.com/essays/brazil-and-venezuela-economic-and-political-environment/

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"Brazil and Venezuela: Economic and Political Environment." IvyPanda, 31 July 2020, ivypanda.com/essays/brazil-and-venezuela-economic-and-political-environment/.

1. IvyPanda. "Brazil and Venezuela: Economic and Political Environment." July 31, 2020. https://ivypanda.com/essays/brazil-and-venezuela-economic-and-political-environment/.


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IvyPanda. "Brazil and Venezuela: Economic and Political Environment." July 31, 2020. https://ivypanda.com/essays/brazil-and-venezuela-economic-and-political-environment/.

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IvyPanda. 2020. "Brazil and Venezuela: Economic and Political Environment." July 31, 2020. https://ivypanda.com/essays/brazil-and-venezuela-economic-and-political-environment/.

References

IvyPanda. (2020) 'Brazil and Venezuela: Economic and Political Environment'. 31 July.

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