Pestel Analysis

Coffee has been grown for centeries back to the days of when it was discovered in the

forest of ethiopia. For this report I will examine the exportation and trade of coffee between

countries. Specifically between countries that have rich cultures like Brazil and Indonesia, and

see if it is convenient for these countries to enter into the world market. I find Coffee to be a

dominant product in today's world market since nearly all countries look to obtain such a

desirable and often used product by worldwide consumers. The real expansion of coffee came

because of the new world in the 1700s when coffee houses started to pop us thanks to English

culture. Soon coffee started to replace regular breakfast drinks, and so the demand for the sought

after product began so much so that Thomas Jefferson called coffee the favorite drink of the

civilized world . The fierce competition to cultivate coffee created a productive trade market ,

and opportunity to create wealth for many countries. Countries like England charged huge taxes

on coffee that created lasting effects on the world , one event being the Boston tea party that

essentially started our country's cry for independence. Since becoming a full fledged adult in the

last five years I have seen the coffee craze myself. People need their coffee to function in the

morning , as my wife likes to say everyday. Students like myself sometimes work long hours and

then head to school to continue their education , and something about the caffeine in the coffee

really helps students or workers keep our day going. As I type this report I am staying in a hotel

in time square called the michelangelo, and I can see outside my window a line that stretches a

few blocks down the street just to get their coffee from a place called gregorys coffee.I think

people not only want coffee for the boat of energy it give you, but because coffee has become so

exotic in today's world that you can get really creative and mix it with other drinks . The taste of
coffee has now become really addicting as well because of all the combinations and taste that

have been made. The coffee craze is alive and well in this country and many others.

Brazil is a leader in the production of coffee due to its large plantation area. The sheer

size of the country allows for agricultural growth in this sector. The weather and geographical

location of the country have made Brazil a country that has many forests and pastures to grow

coffee . Brazil's recent Investment in technology such as clonal coffee planting has allowed for

the growth of the economy to grow. Brazil's coffee is considered to be one of the world finest

because of its low acidity . For this reason , it is appealing for other countries to import coffee

from brazil. The healthy aspect of a food is tantalizing for consumers that are looking for an

upgrade in food quality. The United States might view this as a good reason for importing so

much coffee from brazil. Statistically speaking Americans import 22% of all coffee exports.

Countries like Germany will import 18% of the Brazilian exports, and others like Italy import at

9.5%. Brazil continues to have a mass appeal to global markets across various regions.

Brazil's government believes heavily on the idea of liberalization, which is a broad term

that refers to the practice of making laws, systems, or opinions less severe. Brazil wants to

eliminate certain restrictions that make it harder for trade to happen. The removal of controls by

government restrictions make it easier for a country like Brazil to trade with prominent countries

like the United States and world powers that it already deals with.That being said there have

been controls still set in brazil that have allowed for the growth of business in brazil.Among

measures recently adopted to balance the economy, Brazil made reforms to its social security

(state and retirement pensions) and tax systems. These changes brought a noteworthy addition: a

Law of Fiscal Responsibility which controls public expenditure by the executive branches at

federal, state and municipal levels. At the same time, investments were made towards
administration efficiency and policies were created to encourage exports, industry and trade, thus

creating windows of opportunity for local and international investors and producers . With these

alterations in place, Brazil has reduced its vulnerability: it does not import the oil it consumes; it

has halved its domestic debt through exchange rate-linked certificates and has seen exports grow,

on average, by 20% a year. Governmental trade barriers are not always viewed as useful to trade

considering that the name “free trade” explicitly defines itself as free and clear of external

factors. But we know there is no such thing as real free trade, and it seemingly looks like the

limited controls that the Brazilian government has implemented have improved Brazil's

economic picture. I believe this only helps the state of conducting business externally.

Another plus for the continued growth of the coffee industry is the fact that labor prices

are not at a premium. Labor is cheap in Brazil and a company can hire many workers for really

cheap. In regards to pay for the workers, it can bring up social and cultural issues for the people .

Brazil is decades from wage equality and the poverty percentage is high.

When it comes to Brazil's economy I'd like to take a closer look at its internal business

that affects its monetary systems and overall business within the country itself. I like to relate

business to a quote that I always hear which is “a house divided cannot prosper.”What I mean

by that is that I feel countries that have strong fundamental principles in business, and can

handle their own business have good and extra motivation to extend their business to other

countries, because their income and internal affairs are already solid and prosperous. After all,

we are talking about the exportation of coffee from one country to a myriad of other countries.

So where does Brazil currently stand in the world market at this time ?

Brazil's economy is considered to be the third largest in all of the americas. Measuring its

gross domestic product , it is the 12th largest in the world by nominal GDP. From 2000 to 2012
Brazil was considered to be one of the fastest growing major economies in the world, with an

average annual GDP of 5% which made it for a while the sixth largest economy in the world.

Brazil still has so much potential when it comes to business opportunities, and proof of that is all

the billionaires that currently reside in brazil. Brazil has about the 7th most billionaires in the

world living there. I had just mentioned Brazil's GDP percentage increase , and I believe the

increase every year is because of all the agriculture. Brazil is the world's largest producer of

products like sugarcane, soy, coffee, orange, guaraná. It is one of the top 5 producers of maize,

papaya, tobacco, pineapple, banana, cotton, beans, coconut, watermelon and lemon; is one of the

top 10 world producers of cocoa, cashew, avocado, tangerine, persimmon, mango, guava, rice,

sorghum and tomato; and is one of the top 15 world producers of grape, apple, melon, peanut,

fig, peach, onion, palm oil and natural rubber. With so much agriculture, business opportunities,

and flow of income from companies I can see that if someone wanted to conduct business from

Brazil , they would not lack a good starting point . Analyzing Brazil's internal affairs and

business I would probably say they have a strong fundamental platform from which to derive

business from and keep the flow of money going internally . Like I stated before I feel like

countries that have a good economy at home , can look into possibilities of having success in

international business. From what I've researched Brazil has good reasons to engage in the export

of products like coffee.

Indonesia is another country where coffee production is at a high. In 2020 they exported

over 200 million dollars of coffee to the United states. In total the country of Indonesia has

exported over 800 million dollars of coffee to various countries. Indonesia has been exporting

coffee since 1711 and has been highly productive in doing so since then; however Indonesia has
had problems with certain areas of their country that provide cause to pause when considering

trading with them.

Some countries sometimes decide to place barriers on countries like Indonesia because of

their environmental practices. Due to the country's high population density, and growing

industrialism have caused bad air pollution and deforestation in western indonesia. At times

Indonesia is given lower priority for trade because of environmental issues. Statistically

indonisia is the world's third largest emitter of greenhouse gasses. For countries that place a high

value on environmental issues, exporting their coffee can cause higher tariffs on their product.

Even though Indonesia has had economic struggles in the past , they are still top five in coffee

production. Looking at Indonesia's economy separately apart from the production of coffee

making , I'd like to take a look at Indonesia's economy like Brazil's economy to see if the

production and exportation of coffee would be productive.

I have studied that Indonesia is an emerging market economy, as it is the biggest in

southeast asia. It is the 15th largest economy in the world by nominal GDP. Its national net

wealth also places it above world powers like Russia and countries like Sweden and brazil.

Looking at Indonesia's economy , agriculture is a big part of its GDP and its ability to play a part

in the coffee making business. Agriculture is a key sector which contributes 14.43% of GDP.

Currently in Indonesia 30% of its land is used for agriculture , and employs 49 million people

which is about 41% of its total workforce. As it stands currently the one area in which Indonesia

is highly dependent is for its palm oil. It is the world's biggest producer and provides about half

of the world's supply. With such a large portion of its country's workforce already working in the

agriculture side of the economy, Indonesia's potential for production of coffee is already there.
 When it comes to the product of coffee , if I were to make an educated recommendation

to both countries, as to if they are to launch the production and trade of coffee I would say that

they have a long history of producing the product already and nothing to me says that the

countries that they currently do business will waiver in demanding the product. Brazil is

currently the number one exporter of coffee, and Indonesia is number five. Marketing and selling

the product produces financial benefits for both countries regardless of the current governmental

structures , or shortcomings .

References

National Coffee Association. NCA. (n.d.). Retrieved February 11, 2022, from

https://www.ncausa.org/about-coffee/history-of-coffee

Coffee Industry in Brazil: Remains largest producer of coffee in the world. Bizvibe Blog.

(2019, June 1). Retrieved February 11, 2022, from

https://blog.bizvibe.com/blog/food-beverages/coffee-industry-brazil-largest-producer-worl

Uk.practicallaw.thomsonreuters.com. (n.d.). Retrieved February 11, 2022, from

https://uk.practicallaw.thomsonreuters.com/w-011-0773?transitionType%3DDefault%26co

ntextData%3D(sc.Default)

Wikimedia Foundation. (2022, March 17). Economy of indonesia. Wikipedia. Retrieved

March 25, 2022, from https://en.wikipedia.org/wiki/Economy_of_Indonesia

Wikimedia Foundation. (2022, April 25). Economy of Brazil. Wikipedia. Retrieved April

26, 2022, from https://en.wikipedia.org/wiki/Economy_of_Brazil