Analysis of Peckerman Model in Brazil and Argentina
GM 6030 A3 Regional Business Environment: Latin America MIDTERM EXAM
The success of any business venture in Latin America depends on the ability of the company to find a country that will provide the right amount of incentives and benefits but that will also have a continued political stability and guarantees for property rights and investment security. Our analysis will evaluate the probability that Brazil and Argentina, as the possible site selections for K-FIT, will have this kind of business friendly environment and will enact market oriented reforms. We’ll evaluate the aspects in both countries that make them adequate or not to invest in them. We’ll also provide a recommendation of which country and region within them we see as the best option to set up operations. Argentina Argentina is a democratic republic organized as a Federation of 23 provinces and the Capital City of Buenos Aires. It has a total population of 42.19 million and has an area of approximately 1.07 million sq. miles in the southernmost part of America (Buckman, “The World Today Series 2012 Latin America” p. 35). To understand the current business environment in Argentina and the prospects of market friendly reforms going forward, we have to understand its cultural legacy and the way its society is structured. Since its beginnings as a nation, and even before it got its independence from Spain in 1816, Argentina’s society has been polarized between the “people from the Interior” that lived in the inland provinces and the “Porteños” or people from the city of Buenos Aires located in the eastern coastal area. The “interior people” are predominately Indian and Spanish descents that subsist from agricultural and cattle raising activities. Most of them are poor peasants that work in huge land extensions known as “Estancias” owned by powerful landowners. The “Porteños” are predominately European descents that established a society dominated by an elite class of entrepreneurs that seized
The success of any business venture in Latin America depends on the ability of the company to find a country that will provide the right amount of incentives and benefits but that will also have a continued political stability and guarantees for property rights and investment security. Our analysis will evaluate the probability that Brazil and Argentina, as the possible site selections for K-FIT, will have this kind of business friendly environment and will enact market oriented reforms. We’ll evaluate the aspects in both countries that make them adequate or not to invest in them. We’ll also provide a recommendation of which country and region within them we see as the best option to set up operations. Argentina Argentina is a democratic republic organized as a Federation of 23 provinces and the Capital City of Buenos Aires. It has a total population of 42.19 million and has an area of approximately 1.07 million sq. miles in the southernmost part of America (Buckman, “The World Today Series 2012 Latin America” p. 35). To understand the current business environment in Argentina and the prospects of market friendly reforms going forward, we have to understand its cultural legacy and the way its society is structured. Since its beginnings as a nation, and even before it got its independence from Spain in 1816, Argentina’s society has been polarized between the “people from the Interior” that lived in the inland provinces and the “Porteños” or people from the city of Buenos Aires located in the eastern coastal area. The “interior people” are predominately Indian and Spanish descents that subsist from agricultural and cattle raising activities. Most of them are poor peasants that work in huge land extensions known as “Estancias” owned by powerful landowners. The “Porteños” are predominately European descents that established a society dominated by an elite class of entrepreneurs that seized