Porter's Diamond

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After analysis of Brazil’s national competitive advantage using Porter’s Theory of Competitive Advantage, which focuses on four attributes of a nation that influence the environment where firms compete, it has been determined that although Brazil has grown exponentially, it is not a “competitive” society yet. Porter’s diamond focuses on a nation’s factor endowments, or the amount of resources a nation possesses to utilize towards production; their demand conditions, or the demand for their goods or services; their relating and supporting industries, because having internationally competitive suppliers and locally related industries can create competitive costs; and their firm strategy, structure, and rivalry. These broad components all contributed in decreasing Brazil’s competitive advantage.

Although Brazil’s key advantage is their abundance in natural resources, they do not fully utilize their competitive advantage. In order for a nation to compete nationally, they must also need to constantly generate, upgrade, innovate, and efficiently distribute their factor endowments. Their trading policies causes barriers that restrict

Brazil also has a workforce of more than 100 million. This seems like it would be a competitive advantage, however, their labor procedures lack flexibility. Their labor regulations, labor qualifications, and strict hiring/firing methods all act as barriers to keep workers in low-productivity divisions. Their confusing and detailed practices make it extremely difficult for employers to follow, resulting in many lawsuits that always side with the worker. Additionally, the government’s lack of interest in investing in education has led to a shortage of skilled or even qualified labor. According to Manpower...

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...ations. The process of starting up a business in Brazil is difficult and inefficient when examined side by side with national standards. Their strategy of limiting foreign equity is above average, greatly discouraging foreign companies’ desire to enter Brazil’s markets. They only allow a maximum of 20% foreign equity ownership in air transport, 30% max in media, and healthcare sector is completely closed to foreign capital participation. The difficulty for foreigners to achieve success or even acquire ownership in Brazil will hinder their competitive advantage. Brazil could greatly benefit from an increase in foreign equity ownership, which will help stimulate a more demanding market. Other disadvantages contribute in decreasing Brazil’s competitive advantage, like their complex taxing system, weak intellectual patent protection, and corruptible public institution.

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