Brief Base in the U.S.: McCarran International Airport.

The city and country selected: San Paulo, Brazil.

Introduction

Brazil remains one of the most influential countries in South America. Its economy has been rising over the last few years and the country continues to be regarded as one of the largest democracies in the world. The country has in place a democratic federal republic form of government and its current president is Michael Temer. It is important to note that although the country still experiences a wide gap between the rich and the poor, various policies have been adopted by the government in recent times to remedy the situation. With a population of 208 million, the country ranks as number 5 in a country comparison index - according to population comparison estimates done by the Central Intelligence Agency (CIA) - effectively making it one of the most populous countries in the world.

PEST Analysis

In basic terms, “PEST analysis concentrates on four important factors in an environmental scan – Political, Economic, Social and Technological factors” (Walters, 2006, p. 208).

Political Factors

It is important to note, from the onset, that corruption has been an issue of concern in the country. Subsequent governments have attempted to slay this particular dragon but it seems the political will to do so has not been strong enough. The country has not experienced serious political turmoil/instability in recent times but it should be noted that it remains prone to politically instigated violence. There have been instances of protesters clashing with the police in the streets but the situation has not spiraled out of control.

Economic Factors

Being the 8th largest economy in the world and thanks to a large population and a huge workforce, the country has potential for growth. Data from the Organization for Economic Co-operation and Development (2018) indicates that the county’s economy has started to rebound after experiencing a decline in 8 consecutive quarters. Last year’s foreign direct investments figure for the country fell by 10% in comparison to that of 2016 (Trading Economics, 2018). However, in comparison to countries in the same region, the FDI figure for Brazil is still impressive. The relevance of FDI inflows cannot be overstated to the country especially when it comes to the enhancement of productivity growth.

The country has a rich ethnic and religious composition, and Portuguese is both the most spoken and official language. It is important to note that although the country has one of the largest populations in the world, the population growth rate has been slowing since the 1960s (CIA, 2018). This has been attributed to the country’s “rapid fertility decline since the 1960s” (2018). The median age of the country is 32 years (for both sexes), and the urban population is estimated at 86.2% of the country’s total population (CIA, 2018). It should be noted that the company has a stably growing middle class.
Technological Factors

In recent times, the country has experienced what appears to be a technology boom, after a slump. In essence, the country’s IT sector is projected to experience significant growth in the current year. Heng, Heermann, Samaranayake, and Sath (2018) point out that there has been sustained push for the setting up of technology centers across Brazil by elected officials. This will further promote the country’s standing as far as technological advancement is concerned.

Five Forces Analysis

In conducting the Five Forces analysis, within Brazil’s airline industry, we shall be seeking to understand the various factors that are likely to affect the airline’s profitability. In that regard, therefore, this analysis will come in hand as a strategy tool.

Competitive Rivalry

Some of the major players in the Brazilian airline market include Latam and Avianca Airlines. Others players include Virgin America, JetBlue, Gol and Azul Airlines. It is important to note that the country’s airline has in recent times been focused on consolidation. This is more so the case given that the two largest players are a consequence of mergers, rebranding, and acquisitions - with Latam having come about after Brazil’s TAM merged with LAN Airlines from Chile; and Avianca (previously OceanAir) having been a consequence of a rebranding undertaking after its parent company merged TACA Airlines with its Columbian Airline company named Avianca. Going into the future, we are likely to have very few large airlines operating in this space…