These companies need to compete intensely with the supermarkets, which is becoming increasingly difficult in terms of price without compromising product quality; as the supermarkets can afford to make smaller margins over a wide range of products. The current economic downturn is adversely affecting retail sales, reducing growth potential and increasing exit barriers, which enhances rivalry. Overall, rivalry with respect to the furniture and floor coverings retail market is moderate.
General Brazil Pestle Analysis
Brazil has come out to be of the best market to invest (Griffin and Pustay, 2009) the economic reforms implemented after 2003 led to increases in real per capita income, and an improved income distribution. Real per capita income increased 14% from 2004 to 2007 and the inequality in the distribution of income, measured by the Gini coefficient (which ranges from 0, which reflects equality, to 1, which indicates inequality), diminished from 0.6 in 2000 to 0.5 in 2007.
The Brazilian economy was not affected by the global financial crisis as the country's economy is tightly regulated with orthodox macroeconomic policies. The country's growth rate increased in 2008 to reach 5.9%. Moreover, Brazil is the founder member of Mercosul regional integration which for instance, are responsible for 75% of South America's GDP and it is the world's fourth-biggest integrated market. The economic reforms, liberalized foreign investment to most sectors have been considered to be responsible for the current economic.
However, despite its high profile, Brazil still suffers from corruption. According to Transparency International's Corruption Perceptions Index for 2008, "Brazil is ranked in the 80th place out of 179 countries". Because corruption is perceived to be very strong in Brazil, the majority of businesses are expected to encounter corruption when proposing contracts to governments. Moreover, deforestation caused by multi-nationals is making serious harms to the Brazilian rainforests. As the demand for environmentally friendly companies in Brazil and around the world continues to rise, companies such as IKEA can certainly expect to have its CSR scrutinised before receiving any license for operation.