Stages of Developing Business Relationships in Brazil

Major Stages or Variables of Business Relationship Development in Doing Business in Brazil

Executive Summary

The study aims to examine the stages and variables involved in developing and maintaining business relationships in Brazil. The paper investigates all the stages for developing business relationships as well as the objectives of each business relationship stage. Moreover, the study investigates the necessary cultural and linguistic requirements for establishing business relationships in Brazil. Therefore, this study addresses the issue involved in establishing successful foreign business relationships and the stages of business relationship development.

Major Stages of Doing Business in Brazil

Introduction

Brazil is a developing nation with vast resources ranging from agricultural products to industrial raw materials. The Brazilian economy is an emerging market due to the continued rapid growth of industries and the manufacturing sector. Therefore, this makes the country a viable market for foreign industries to seek a share, through business relationships with local companies in Brazil (Arnold & Quelch, 1998, pg.7). In the United Kingdom, there is much uncertainty after the Brexit vote. Most companies in the UK are forced to source supplies from other parts of the world due to the changing business relationship with the other European Union States. The events following the Brexit vote have forced many companies to source for supplies from other parts of the world (Baylis et al., 2017, pg.1). In this case, a UK Auto manufacturer intends to source supplies of auto components from Brazil, a country with a very unique culture in its business undertakings.

Stages of Business Relationships

Pre-Contact

At this stage, there is no interaction between the two company and the suppliers intend to work in Brazil. Therefore, there is a need to investigate thoroughly and analyze the Brazilian market to understand the cultural affinity of their suppliers. In addition, there is a need to evaluate the business reports of the suppliers and the perception of the company, as well as how it conducts its businesses in Brazil. At the Pre-Contract Stage, it is necessary to indirectly ask about the position of the intended suppliers as well as indirectly evaluating tier business relationships with other clients. Lastly, investigating the supply chain and the companies’ capacity to handle the supplies of auto components to Europe for our company is also vital (Dowell et al, 2015, pg.119).

Objectives. The objective of this stage of the business relationship is to gain enough information about the foreign supplier. The primary aim is to collect information about the other business and evaluate its experience, how it operates, and its corporate culture. Another objective is to establish a predetermined trust with the business by evaluating the collected data. Therefore, building a predetermined level of trust will help to identify the strengths of the company before making any engagements. The other aim is to understand the uniqueness of the two businesses with the goal of creating mutual understanding between them.

Initial Interaction

In this stage, the prospective partners have to organize business meetings to interact and push for a substantial alliance. The stage involves a series of several meetings between the companies over a specified period. The stage is a mutual process, and therefore, both parties have to identify the synergy and push for the business opportunities that would exist due to the creation of the partnership. Communication is a useful tool at this phase since every party needs to present their business essentials: goals, objectives, and priorities; to identify whether they would co-align to benefit each other’s venture (Houman, 2001, pg.164). The Brazilian supplier has to present their priorities to our company, while explicitly explaining how they intend to advance the intended business relationship with our company.

Objectives. The objective of this stage is to evaluate the costs and benefits that would arise to both parties in case the contract is entered into. An understanding of each parties’ business is conducted to evaluate how our company will benefit from the contract. Another objective involves the evaluation of the transactions that would occur in case the business relationship was actualized. Moreover, every company evaluates its capability to conduct business with each other. For example, the Brazilian company showcases how it will deliver the supplies of auto components, while our company explains how it will pay for the supplies.

Development Stage

The business relationship is developing, since the parties have gone through both the Pre-Contact and the Initial Interaction Stage. They start to focus on the primary objective of the business relationship, which is the acquisition of auto supplies from Brazil. The focus shifts to the supply of auto components from Brazil to the UK. Trust is building up, and the business is satisfied that the relationship will be a milestone since there is a positive attitude towards each other. Cultural affiliations are growing as each party gets to understand each other effectively to advance the relationship (Swift, 2017). The stability of the business relationship is set on frequent meetings and communications are formal to sustain the business relationship. The primary challenge at this stage is the negative knowledge that would destroy the business relationship (Dougherty, 2014, pg.19).

Objectives.

At this stage, the primary objective is to build trust and establish the costs and benefits of the business relationship. Each party has to strengthen its communication to build trust with each other. Also, they have to present how each other would benefit from the business relationship. For example, in this case, the UK Manufacturer intends to obtain a supply of auto components from Brazil. The UK Manufacturer needs to be satisfied that the Brazilian company will deliver and the transactions that would be involved during the course of the business.

Maturity Stage

The business relationship has grown, and the main issues at this stage involve the improvement, satisfaction, and survival of the relationship. The stage indicates that the relationship between the parties is sufficiently reliable as the businesses are aware of each other and how they would impact on their development. Each party evaluates the strengths and weaknesses of the business relationship to identify how it would maximize benefits from the other party. The evaluation of the strengths and weaknesses builds on satisfaction and trust, as well as the acceptance of the business relationship and thus the companies will be able to transact with each other. In Brazil, cultural awareness, competence, and job quality are the main factors at this stage. Therefore, the UK manufacturer needs to be aware of the cultural affiliation of the Brazilian company and their ability to perform (Batonda & Chad, 2003, pg.1457).

Objective. The parties intend to improve and strengthen business relationship as well as build satisfaction that the business relationship will work. Evaluation of the relationship is done through analysis of internal and internal factors that would affect the business. Through this, the companies will be able to build trust and satisfaction that each party will perform adequately. Therefore, our company is fully aware of the Brazilian cultural situation and the ability of the Brazilian company to deliver supplies to the UK and how it would be done.

The Variables of Each Business Relationship stage

Stage

Variables

Pre-contact

Cultural affinity, Trust, skills, and satisfaction, communication

Initial interaction

Culture, job quality, reliability

Development

Culture, job quality, reliability, commitment

Maturity

Trust, cultural affinity, goodwill, communication, commitment

Pre-contact Stage

Cultural Affinity. The UK Company wants to know if it would like the Brazilian culture. Everyone likes the Brazilian culture especially football and beauty products. Therefore, this factor determines whether the UK Manufacturer would be willing to work with the Brazilian company relying on its cultural setting (Livermore & Soon, 2015, pg.81).

Trust. The company intending to form a business relationship evaluates information about previous engagement between the Brazilian company and other clients to evaluate if the business relationship was trustworthy before interacting with the company. The company needs to consolidate all facts before entering into the business relationship.

Skills and Satisfaction. Evaluation of past experiences and the business relationship of the supplier. The business needs to know if the company can perform as well as it needs to accept the business will perform effectively without any interferences. Moreover, satisfaction builds on trust and commitment of the company.

Communication. Communication is the most important factor between the parties thus it is regarded as a tool for establishing a business relationship. In this case, effective communication will strengthen the business relationship between the parties.

Initial Interaction Stage

Culture.

Cultural affinity is crucial at this stage of the business relationship. Everyone needs to know if they have a unique cultural likeness between the intending business relationships thus cultural likeness will help in promoting the business relationship (Daniels, Radebaugh, and Sullivan, 2009, p.4). Also, it aids in communication thus evaluating the linguistic differences thus the company has to prepare how they would communicate (Ford, 1980, pg.339).

Reliability.

This factor determines whether the business relationship is worthwhile such that the parties in the business relationship will be able to perform the terms of the relationship. The UK Company wants to know if it could rely on the Brazilian company for delivery of supplies within a specific period for a certain period.

Job Quality. Job quality determines if the relationship will succeed at this stage. The companies exchange on major competencies and ability to offer quality services thus the UK Company would be swayed to prosper the business relationship with the Brazilian Company.

Development Stage

Culture.

Culture determines how the two businesses will be progressing the relationship. Each company is aware of the culture of each other thus they can establish a business relationship. Al

Job Quality. Job quality acts a strength for the supplier since it determines if the company will be able to deliver quality products and services. Lack of job quality will create dissatisfaction in the business relationship thus the business may fail to progress to the maturity stage.

Reliability. This factor evaluates the commitment of each company in the business relationship. Whether a company will be able to comply with the terms of the business relationship or not. If a company is committed it becomes reliable whereas where there is no commitment, there is no reliability thus challenging to develop a business relationship (Ford, 1980, pg.342).

Maturity Stage

Cultural Affinity. The maturity stage is influenced by cultural affinity since a business relationship is a mutual effort thus for it to progress there is a need to be aware of each other’s culture. It involves understanding each other’s language for effective communication as well as incorporating culture on how you run business since it would facilitate employment opportunities for both cultures in the business relationship (Johnston & Marshall, 2016, pg.1).

Trust.

Mutual trust is essential at this stage since without it the business relationship will fail. Trust creates satisfaction in that it is believed that every party will continue to deliver within the agreed period without cutting down on any ties between them. It establishes the strength of the business relationship and eliminates weaknesses (Marion et al., 2015, pg. 167).

Commitment.

The commitment of the parties in the relationship determines the success through the maturity stage. The supplier has to be committed to the delivery of auto component in time to avoid delays as well as the UK Manufacturer has to be prompt in payment of the supplies. Therefore, commitment will ensure the business relationship succeeds the maturity stage.

Goodwill.

As the business relationship matures, goodwill sets in between the parties due to the high level of trust and commitment between the companies. Therefore, the company continues to prosper since there is established goodwill between them. Without goodwill, the business relationship is destined to fail. Goodwill acts as an internal factor of the business relationship.

Networking or Communication. Communication acts as a significant driver between the parties in the business relationship. Without communication, the business relationship is likely to fail, since it has to be regular enough to strengthen business relationships (Doorley & Garcia, 2015, pg.1). Here, the companies communicate on how to advance the business as well as discuss modes of payment and address other issues that would affect the business relationship.

The Cultural and Linguistic Requirements in Brazil

Communication.

Portuguese is the official national language in Brazil. Therefore, there is a need to conduct all business and communications in Portuguese since it is the official language in the country. All business documents have to be prepared in Portuguese as well as the terms of the business relationship (Jandt, 2017, p. 76). Therefore, the UK Company will need interpreters or emphasize on its management to familiarize itself with the Portuguese language. The knowledge of Portuguese will make a transaction of business more comfortable and fast, thus minimizing any delays that would arise as a result of the language barrier. Therefore, eliminating the language barrier will strengthen the business relationship. However, the business culture is friendly as most of the business people use English. Therefore, communication will be easy between the UK manufacturer and the Brazilian Supplier of auto components.

Relationship and Respect. The Brazilian culture values a sense of belonging into a group than emphasizing on individual preference. They believe working in groups breeds peace and respect among the people. Therefore, there is need to build long outstanding relationships strengthened by trust in order to build strong business relationships. The people are very respectable and are considered polite and warm thus making it easy to establish relationships.

Brazilians value long-term commitments and base their business relationships on trust. This is because one party has to be aware of the experience of the other before building any relationship. Henceforth, there is a need for commitment to build trust and develop strong business relationships in the country. Moreover, business relationships are based on personal relationships in Brazil, in comparison to those of companies. Therefore, it is essential for the UK Manufacturer to build relationships with the local people to foster a long-term business relationship, which would involve community activities (Moreira & Alves, 2016, pg.224).

Negotiation.

Negotiations depend on the attitude and style of the parties. There is a need to be a strong relationship, which is very committed to the business relationship as most business commitments are realized for long-term benefits. Therefore, negotiations are linked with the desire to continue being in business for a long time. Also, negotiations are very aggressive and aim at winning the business partner that can establish long-term relationships.

Negotiations are literally slow since Brazilians want to gather all information about any business venture, especially with foreigners. Most business people from Europe dislike these cultures since it lags down business negotiations. Hence, they view it as irritating and time-consuming. In overall, patience for them is vital in business negotiations despite stalling the business decisions of other parties.

Negotiations are very confrontational as the negotiators in the country may use threats and warnings. Their negotiation may involve emotional attitudes as well as walk-outs. Moreover, personal feelings are greatly involved and may influence business decisions.

Agreements and Contracts. Agreements and contracts are always written and extraordinarily lengthy and detailed. They consist of all information about a contract. The contracts are very necessary, despite the fact that Brazilians believe in just shaking hands and keeping their word on agreements.

Foreign companies and businesspeople are required to consult local legal officers for advisory and legal information about business transactions. Business laws in most countries are very complex and may be difficult for laymen to understand. Therefore, a local attorney is instrumental in business negotiations, which will help to reduce trust issues. The signed contracts are believed to be outstanding, and each party has to adhere to the terms and conditions in order to foster long-term business relationships in Brazil (Migueles & Zanini, 2016).

Initial Contacts and Meetings. Before advancing any contacts and meetings, there is a need to identify a local intermediary who would aid in bridging the cultural gap between the parties in a business relationship. The intermediary would either be the United Kingdom High Commission Office, trade associations, a Brazilian legal firm, or another local firm. Meetings should involve a group of people to strengthen the efforts of advancing the business relationship in the long term (Ferraro & Brody, 2015, pg.1). Moreover, meetings need to be conducted frequently among senior business leaders from both parties of the business relationship. It is crucial to use senior leaders since it will make the company in Brazil aware of the fact that the top executives are committed to future business meetings. Also, Brazilians view the punctuality of foreigners in business meetings as great goodwill in advancing business relationships.

The meetings are preceded by short informal talks where the parties interact and exchange a few matters. During meetings, officials are addressed by initials like Mr., Mrs., Miss, Madam, or Sir, as it is considered official and respectful. Moreover, the presentation materials have to be availed with bright visuals and pictures. Thus, the UK manufacturer needs to take note of the fact that meetings are significant to Brazilians. In addition, it is advisable to be punctual and the presence of executives is essential for building business relationships.

Greetings.

Women are greeted by kissing on both cheeks while for men it is advisable to shake hands. In addition, formalities like shaking hands is essential during and after business meetings. Also, hugs are used as a means of greetings in business meetings.

Women in Business. The Brazilian culture looks down on women in business. Thus, it is advisable for women to be very assertive and strong if they want to build business relationships in Brazil. Women are known to endure chivalry comments, but they need to be strong to develop their business relationships on a long-term basis.

Recommendations

Building Trust. Both companies willing to develop business relationships, have to come up with ways of building mutual trust in each other. This is because they intend to mutually benefit from each other, and therefore, there is a need for mutual commitment from both parties to build trust and ensure that there are long-term business relationships.

Cultural Awareness. The UK manufacturer has to be vastly aware of the culture of the Brazilians before advancing any business relations. The culture is complex despite being friendly. The Brazilian people are sometimes vague but they are good business partners. Therefore, cultural affinity needs to be developed to ensure business relationship development, as well as mastering Portuguese as the official business language (Nery-Kjerfve et al., 2015, pg.24).

Build on Communication. Communication is critical in building long-term business relations (Huoman, 2001, n.p). There is a need to conduct meetings with the Brazilian counterparts so as to strengthen the business relationship and build goodwill. Communication enables the Brazilians to understand why the business relationship is essential and why it is worth undertaking (Wegner et al., 2015, pg.152).

Conclusion

The study shows how to develop business relationships between companies. The study evaluated all the stages and variables involved in the development of business relationships. It is clear that commitment, cultural affinity, reliability, and job quality are some of the critical factors that enhance business relationships. Moreover, communication is essential, especially if one needs to advance business relationships in Brazil. However, it is imperative to understand the cultural and other requirements that help in building long-term business relations. Negotiations, agreements, meetings, relationships, and greeting are essential in building long-term business relationships in the country. All in all, there is a need to build communication, enhance cultural awareness and build trust to develop business relationships.

References

Arnold, D. J., & Quelch, J. A. (1998). New strategies in emerging markets. Sloan management review, 40(1), 7-21.

Batonda, G. & Chad P., (2003) "Approaches to relationship development processes in inter‐firm networks", European Journal of Marketing, Vol. 37 Issue: 10, pp.1457-1484, https://doi.org/10.1108/03090560310487194

Baylis, J., Smith, S., & Owens, P. (Eds.). (2017). The globalization of world politics: an introduction to international relations. Oxford University Press.

Daniels, J.D., Radebaugh, L.H, and Sullivan, D.P. (2009). International Business: Environments and Operations (12th Edition). Pearson Education, Inc., Upper Saddle River, New Jersey. https://slideplayer.com/slide/9206760/

Doorley, J., & Garcia, H. F. (2015). Reputation management: The key to successful public relations and corporate communication. Routledge.

Dougherty, Jim (2014) “Five steps to building great business relationships,” Harvard Business Review. Retrieved on 12th of November 2018 from: https://hbr.org/2014/12/5

Dowell, D., Morrison, M., & Heffernan, T. (2015). The changing importance of affective trust and cognitive trust across the relationship lifecycle: A study of business-to-business relationships. Industrial Marketing Management, 44, 119-130.

Ejan, J. (2007). Marketing Communications. Thompson Learning, London. Retrieved on 12th of November 2018 from https://books.google.co.ke/books?id=Q09BAwAAQBAJ&pg=PA127&lpg=PA127&dq=Ejan,+J.+(2007).+Marketing+Communications.+Thompson+Learning,+London.&source=bl&ots=xgt0ea3Ihb&sig=QKQVE7hegF3suzj1siNXoUFviB4&hl=en&sa=X&ved=2ahUKEwi_l5XXns3eAhUK1hoKHZ6eDKMQ6AEwA3oECAUQAQ#v=onepage&q=Ejan%2C%20J.%20(2007).%20Marketing%20Communications.%20Thompson%20Learning%2C%20London.&f=false

Ferraro, G., & Brody, E. K. (2015). The Cultural Dimension of Global Business (1-download). Routledge.

Ford, David, (1980) "The Development of Buyer‐Seller Relationships in Industrial Markets", European Journal of Marketing, Vol. 14 Issue: 5/6, pp.339-353, https://doi.org/10.1108/EUM0000000004910

Huoman, P. Andersen, (2001). "Relationship development and marketing communication: an integrative model", Journal of Business & Industrial Marketing, Vol. 16Issue: 3, pp.167-183, https://doi.org/10.1108/08858620110389786

Jandt, F. E. (2017). An introduction to intercultural communication: Identities in a global community. Sage Publications.

Johnston, M. W., & Marshall, G. W. (2016). Contemporary selling: Building relationships, creating value. Routledge.

Livermore, D., & Soon, A. N. G. (2015). Leading with cultural intelligence: The real secret to success. Amacom.

Marion, T. J., Eddleston, K. A., Friar, J. H., & Deeds, D. (2015). The evolution of interorganizational relationships in emerging ventures: An ethnographic study within the new product development process. Journal of business Venturing, 30(1), 167-184.

Migueles, C. P., & Zanini, M. T. F. (2016). Doing business in Brazil. FGV Projetos.

Moreira, A., & Alves, C. B. (2016). Commitment-trust dynamics in the internationalization process: A case study of market entry in the Brazilian market. In Business Development Opportunities and Market Entry Challenges in Latin America (pp. 224-255). IGI Global.

Nery-Kjerfve, T., & McLean, G. N. (2015). The view from the crossroads: Brazilian culture and corporate leadership in the twenty-first century. Human Resource Development International, 18(1), 24-38.

Swift, Jonathan S. (2017) Understanding Business in the Global Economy. A Multi-level Relationship Approach. Palgrave McMillan; London.

Wegner, D., Verschoore, J. R., & Balestrin, A. (2015). The evolution of collaborative practices in small-firm networks: a qualitative analysis of four Brazilian cases. International Journal of Management Practice, 8(2), 152-168.