PESTEL Analysis

Political and Legal (Thao) 1. Government type Federal republic with 26 states and 1 federal district 2. Civil law 3. Freedom of press Brazil has a vibrant democracy with strong constitutional guarantees of freedom of expression 4. Crime remain pressing problems Brazil had the fourth-highest murder rate among the worldd s larger countries, behind Venezuela, Russia and Colombia. The main reason is the inequality of income distribution (or gap between the wealth and the poor) 5. Murder and conflict were among major concerns but now have been decreased due to the effort from government and the change in society. The most pressing areas are Bahia, north amazon, Bahia, Rio de Janeirod s 6. Political pressure group Labor unions and federations; large farmers' associations; religious groups including evangelical Christian churches and the Catholic Church

Economical (Amir) 1. GDP (purchasing power parity) GDP (PPP) of Brazil has grown through the years which indicate the growing purchasing power of people. 2. The rate of poverty in Brazil is not high compared to other South American countries. 26% (2008) 3. Inflation rate (consumer prices) Inflation rate of Brazil among South American countries and even the world is low which means that purchasing power of people wouldnd t be very low in future. This factor is important due to the long term profits of the firm in Brazild s market. 4. One of the fastest growing emerging markets in the world Fifth largest cosmetics market in the world 5. Growth in consumption of cosmetics Skin care is the market leader in Brazilian cosmetic market where CAGR during 2008-2011 was 22 per cent. And 15.49 per cent growth in consumption of cosmetics during the same period (RNCOS market research Company) 6. Raising income 7. Brazil VAT: 17-25% Main market players: Avon, Ld Oreal and Unilever 8

References: https://www.cia.gov/library/publications/the-world-factbook http://www.cosmeticsdesign.com/Market-Trends/Brazil-cosmetics-marketremains-a-hot-spot-for-investors Sociocultural (Bella) 1. Rich in culture and custom Diversified regions contribute to multicultural mixture of Brazilian culture. Festival like Carnival, the emblematic of the national spirit, is held every year, indicating a large demand in cosmetics market. 2. Value of beauty The ideal standard of beauty in Brazil evokes Brazilian women to care more about their body, e.g., skin, hair. Since the value of beauty is of significance, customers are willing to spend more on beauty products with natural ingredients. (Goldenberg) 3. Less Languages barrier Although the official and most widely spoken language in Brazil is Portuguese, English together with other language, e.g., Spanish, German, Italian, and Japanese are also used as less common languages. 4. Large Population, a broad potential targets The population of Brazil is 203,429,773, ranking 5 th in the world, among which, people aged 15-64 occupies 67% (female 68,809,357), presenting a huge potential targets in cosmetic market. 5. Young median age The total median age in Brazil is 29.3 years, with female 30.1 years and male 28.5 years respectively. 6. High rate of Literacy Due to 14years of school life expectancy per person, the literacy rate of Brazil is quite high, 88.6%. As a result, customers could have a better and correct understanding towards healthy products. 7. High urbanization population Urban population represents 87% of total population, cities such as Sao Paulo (19.96 million) and Rio de Janeiro (11.836 million) could be more likely to be the main target markets. 8. High unemployment rate (17.8%) in South America Although unemployment rate in Brazil is relatively low among South America countries, it is still high compared to the world, with the rank of 65, which influences customersd purchasing power.

Reference GOLDENBERG, M. 2009. The Body as Capital Understanding Brazilian Culture. Journal of vibrant [online]. 7(1), [Accessed 09 February 2012], pp. 220-238. Available from: http://www.vibrant.org.br/downloads/v7n1_goldenberg.pdf CIA. 2012. The world facebook [online]. [Accessed 08 February 2012]. Available from: https://www.cia.gov/library/publications/the-world-factbook/geos/br.html

Technological (View) 1. Top 10 of most industries in the world 2. The 4th biggest TV network in the world More than 100 TV channels operating 3. The 5th biggest mobile phone market in the world Mobile cellular telephone subscribers: 202.944m 4. The largest online market in Latin America Internet users : 40.5 million users (20% growth from 2010) 5. Telephones main line in use: 42.141m ? 6. Paved airport : 726 , the most airports in Latin America 7. Railways : 28,538km 8. Roadways : 1,751,868km, the longest roadway in Latin America A road construction is expanding and the existing routes are being improved. So The postal service is generally adequate and in major centers messenger services are widely used (It hints about home delivery products) 9. Waterways : 50,000km, it still remains risk for piracy and armed robbery Due to the current deficiencies in rail and sea transport, a very considerable amount of freight is transported by highway throughout the country 10. Infrastructure 2014 FIFA World Cup : US$ 11.3bn has been pledged by federal governments, states and municipalities involved, to be invested in construction of transport. 2016 Olympics : US$ 14.4bn has been budgeted to prepare Rio de Janeiro to host 2016 Olympics, with much of this expected to go towards infrastructure.

Sources: http://www.uhy.com/media/PDFs/doing_business_guides/Doing%20Business%20in%2 0Brazil.pdf www.businesswire.com/news/home/20110209006135/en/Research-MarketsBrazil-Infrastructure-Report-Q1-2001 https://www.cia.gov/library/publications/the-world-factbook/goes/br.html

Environmental (Ko) 1. No true dry season with tropical temperatures Range from Min(above the 10 ) to Max(around the 38 ) throughout the year and humidity is high in general. 2. Highly influenced by the weather Skincare productsd sales, especially moisturizing products, are usually in higher demand in winter and dry weather. 3. Strong sunlight Strong sunlight and Braziliand s frequent suntan make the skin dry and aged easily. Honey is famous for an anti-aging remedy to stay in healthy in a natural way

(Opportunity for Anti-ageing and anti-wrinkles products) 4. Strong preference on eco-friendly product Prefer the products which come from the environmentally friendly process CHENG, Y. S., K. W. LAM, K. M. NG, R. K. KO, AND C. WIBOWO. 2008. An integrative approach to product development-A skin-care cream. Computers and Chemical Engineering[Online]. 33, [Accessed 9 February 2012], pp.10971113. Available from : http://www.sciencedirect.com/science /article/pii/S0098135408002068 COSTA, M. C. D., R. DELIZA, A. ROSENTHAL, D. HEDDERLEY, AND L. FREWER. 2001. Non conventional technologies and impact on consumer behavior. Trends in Food Science and Technology[Online]. 11(2000), [Accessed 9 February 2012], pp.188-193. Available from : http://www.sciencedirect.com /science/article/pii/S0924224400000522 FAROOQUI, T. 2009. Honey: An Anti-Aging Remedy to Keep you Healthy in a Natural Way. 22 February. The Science Advisory Board[Online]. [Accessed 9 February 2012]. Available from : http://www.scienceboard.net/community/perspectives.228.html BRAZIL TRAVEL GUIDE. Climate, temperatures and rain in Brazil [Online]. [Accessed Accessed 9 February 2012]. Available from : http://www.braziltravel-guide.com/Brazil-Map-Weather.html