2024-HX05-INB10002-International Business Operations

2024 HE Semester (May)

Assignment 3
Final assignment

Date of Submission: 4/8/2024

Name: Tran Van Nhat Khoa

Word Count: 2491

Table of Contents
I. Introduction.......................................................................................................................................3
II. Body................................................................................................................................................4
A. Legal, economic, political & cultural environment..........................................................................4
B. Home and host nation relations........................................................................................................8
C. Market entry, growth, barriers and enablers....................................................................................8
D. Staffing considerations in the foreign markets and Marketing strategy.........................................10
E. Sustainability related considerations..............................................................................................11
F. Business forms...............................................................................................................................12
G. Risk factors....................................................................................................................................13
III. Conclusion....................................................................................................................................13
IV. Recommendations........................................................................................................................13
V. References........................................................................................................................................14
Abstract
The document focuses on facilitating the strategic expansion of 'Fragrance Ambrosia' into the
markets of Brazil and the USA. It provides a comprehensive exploration of the legal, economic,
political, and cultural dimensions of these nations. The report aims to equip the CEO with
actionable insights for effective market penetration and navigation, covering aspects such as
market entry strategies, staffing considerations, marketing strategies, sustainability, and risk
factors. By drawing upon comprehensive academic research and real-world insights, it seeks to
serve as a strategic compass for 'Fragrance Ambrosia' in their pursuit of international expansion.

I. Introduction

This report is designed to facilitate 'Fragrance Ambrosia's' strategic expansion into the vibrant
markets of Brazil and the USA. It provides a profound exploration of the legal, economic,
political, and cultural dimensions of these nations, reflecting on the interrelations between home
and host countries. With a focus on market entry strategies, growth dynamics, barriers, and
enablers, this report aims to equip the CEO with actionable insights for effective market
penetration and navigation. Additionally, staffing considerations, marketing strategies,
sustainability-related aspects, business forms and risk factors will be thoroughly examined to
craft prudent and high-impact recommendations. By drawing upon comprehensive academic
research and real-world insights, this report seeks to serve as a strategic compass for 'Fragrance
Ambrosia' in their pursuit of international expansion.

II. Body
A. Legal, economic, political & cultural environment
a. Legal
Fragrance Ambrosia, an Australian luxury perfumery, is considering entering the USA and
Brazil markets. This report presents the key legal considerations for market entry, taking into
account regulatory

In the USA, Fragrance Ambrosia must adhere to stringent regulatory requirements set by the
FDA for cosmetic products. Compliance with ingredient safety and labeling regulations is
critical (Sfreddo, 2018). Furthermore, the company needs to prioritize securing trademarks,
copyrights, and patents to protect its unique fragrance formulas and designs. As distribution
channels and partnerships are established, meticulous attention to contractual agreements
aligning with US commercial laws is imperative.

Fragrance Ambrosia will need to navigate Brazil's stringent cosmetics regulations, which require
product registration with ANVISA. Understanding and complying with import regulations,
including customs duties, taxation, and foreign exchange laws, is vital for successful market
entry (Chris, 2020). Intellectual property protection is also essential due to the complex legal
landscape in Brazil.

b. Economic

In economic, the USA presents an attractive market with substantial growth potential for luxury
perfumery, characterized by a large affluent consumer base and high purchasing power. The
stable economic conditions in the USA, evidenced by consistent GDP growth and strong
consumer spending, create a conducive environment for market entry (Deloitte, 2024). For
Fragrance Ambrosia, monitoring currency exchange rates and understanding trade policies will
be crucial in managing currency risk and navigating international trade complexities.

Brazil represents an emerging consumer market driven by a growing middle-class segment and
increasing urbanization. The fragrance industry in Brazil reflects promising growth prospects,
owing to rising demand. However, the country faces economic challenges such as inflation and
currency volatility, requiring a thorough risk assessment strategy to mitigate potential financial
impacts. Fragrance Ambrosia must understand Brazil's regulatory landscape and economic
policies to navigate trade barriers and minimize operational complications. Fragrance Ambrosia
can strategically capitalize on the economic opportunities in the USA and Brazil, fostering
sustainable growth and market relevance.
 c. Political

The political landscape in the USA plays a significant role in shaping the business environment
for Fragrance Ambrosia. Monitoring trade policies, tariffs, and regulatory changes is vital for
understanding the impact of political decisions on import and export activities (Erixon, 2022).
Additionally, understanding the diplomatic relationships between Australia and the USA is
crucial for anticipating and addressing potential trade agreement impacts.
Navigating Brazil's political environment is essential for Fragrance Ambrosia's successful market
entry. Political stability, trade agreements, and economic policies in Brazil can significantly
influence the ease of doing business and regulatory compliance for foreign companies. The
Brazilian Agreement on Cooperation and Facilitation of Investments introduces innovative
governance institutions and corporate social responsibility provisions, showcasing Brazil's
commitment to enhancing transparency and reducing investment risks, indicating that Brazil's
progressive international investment agreements can positively impact the ease of doing business
and regulatory compliance for foreign companies in the country (Monebhurrun, 2017).
Awareness of these factors will be critical in forming a comprehensive market entry strategy.

d. Cultural environment

The cultural landscape in Brazil is rich and diverse, influenced by the country's history,
traditions, and multicultural society. Brazilians appreciate personal relationships and value
emotional and sensory experiences. Fragrance Ambrosia should consider incorporating these
cultural traits into its marketing strategies and product offerings. Emphasizing unique scents and
creating a sense of luxury and exclusivity can resonate well with Brazilian consumers.
Understanding local customs, celebrations, and social norms is vital to forging strong
connections with the target audience in Brazil (Diallo, 2017).

The cultural environment in the USA is characterized by its diversity and individualism.
American consumers value self-expression and seek products that reflect their identity and
lifestyle. Fragrance Ambrosia should tailor its marketing approach to appeal to the diverse
American population. Understanding regional variations in scent preferences and cultural
nuances is essential to effectively engage with consumers. Highlighting the brand's Australian
heritage and commitment to quality while aligning with American cultural values of
individuality and self-care can strengthen its position in the US market. Aligning market entry
strategies with the cultural nuances of Brazil and the USA will be pivotal for Fragrance
Ambrosia's success in these markets. By embracing and leveraging cultural insights, Fragrance
Ambrosia can build a strong brand presence and establish meaningful connections with
consumers in Brazil and the USA, setting the stage for sustainable growth and success in the
global perfumery industry (Cerulo, 2018).
 B. Home and host nation relations
Australia and Brazil have established strong diplomatic ties, with Brazil maintaining an Embassy
in Canberra and a Consulate-General in Sydney. Additionally, Honorary Consuls representing
Brazil are located in Adelaide, Brisbane, Darwin, Hobart, Melbourne, and Perth. This mutually
beneficial relationship extends to various forums, including the United Nations, the G20, the
World Trade Organization, and the Antarctic Treaty. The two countries also collaborate on
numerous issues of common interest, and people-to-people links are rapidly growing,
emphasizing the increasing connectivity between the nations (DFTA,2023).

Australia has a better relationship with the USA. There is also a free trade agreement with the
USA (The Australia-United States Free Trade Agreement (AUSFTA)) which allows more
than 97 per cent of Australia's non-agricultural exports to the United States to be duty free
(DFTA, 2021).
Australia has a better relationship with the USA. There is also a free trade agreement with the
USA (The Australia-United States Free Trade Agreement (AUSFTA)) which allows more
than 97 per cent of Australia's non-agricultural exports to the United States to be duty free
(DFTA, 2021).
Australia maintains a strong and mutually beneficial relationship with the United States, further
solidified by the existence of the Australia-United States Free Trade Agreement (AUSFTA).
This agreement has notably led to more than 97% of Australia's non-agricultural exports to the
United States being exempt from duties, signifying a substantial advancement in trade relations
and economic partnership between the two countries (DFTA, 2021).

C. Market entry, growth, barriers and enablers

The fragrance market in Brazil exhibits promising growth potential driven by factors such as
increasing disposable incomes and evolving consumer preferences towards premium and niche
fragrances. Key opportunities lie in understanding and capitalizing on shifting demand trends,
exploring diverse distribution channels including e-commerce, and innovating product offerings
to cater to varied consumer preferences. However, challenges like regulatory complexities,
competition from established brands, and logistical hurdles require careful consideration. By
leveraging detailed insights from Euromonitor International's research on Fragrances in Brazil,
businesses can formulate informed market entry strategies, navigate industry dynamics
effectively, and position themselves strategically to capitalize on the market's growth prospects
(EI, 2024).
The fragrance and perfume market in the US are evolving with a projected CAGR of 6.34%,
influenced by changing consumer preferences for luxury and natural scents, particularly popular
among the younger demographic. Key trends include a rising demand for lighter fragrance
products and increasing sales of luxury perfumes. Competition in the industry focuses on product
range, pricing, and promotional activities, with a significant emphasis on increased advertising
and online marketing strategies. The presence of counterfeit products poses a challenge, but
opportunities exist in e-commerce retail and the demand for high-quality fragrances, suggesting a
positive outlook for market entry and growth in the US fragrance sector (Mordor Intelligence
Research & Advisor, 2024).
 D.Staffing considerations in the foreign markets and Marketing
strategy
When expanding into foreign markets, strategic staffing is paramount for the success of a
company's marketing strategy. It is essential to hire individuals with cultural understanding,
language proficiency, local market expertise, and global leadership skills to tailor marketing
messages, adapt branding, and align product offerings to resonate with the local audience
effectively. By bringing onboard staff who can provide critical insights, communicate fluently in
the language of the market, navigate cultural nuances, and lead marketing efforts globally,
businesses can enhance their marketing strategies and increase their chances of success in
foreign markets (Phillips, 2023).

USA Brazil
Staffing Standardize Localized
Marketing-Product Standardize Standardize
Marketing-Price Localized Localized
Marketing-Promotion Localized Localized
Marketing-Place Localized Localized
The key factor to be taken into account while staffing is cultural differences. Since both
Australia and the USA have low context cultures and comparable languages, they are highly
culturally compatible, hence a uniform approach is advised. It is recommended that a localized
approach be more suitable for Brazil due to its numerous peculiarities. This involves creating job
offers that align with local attitudes and values—for example, a long-term, fixed contract.

For marketing, different

markets have different
characteristics and values.
Customers in
different countries may place
different values on fragrance.
For example, in USA,
customers
may just perceive fragrance as
something to smell good;
For marketing, different markets have different characteristics and values. Customers in different
countries may place different values on fragrance. For example, in USA, customers may just
perceive fragrance as something to smell good while Brail also see fragrance as something make
them smell better but also fragrance is an expensive gift or a valuable collection. Understanding
the variations in consumer views and values across national borders is crucial when it comes to
marketing; as a result, a workable marketing communications plan should be developed in light
of this knowledge.

For the 4Ps, in both China and US markets, a standardized approach is proposed in product
development. A standardized product approach helps in economies of scale as well
as
In product development, a uniform method is suggested for the 4Ps in both the Brazilian and US
markets. Standardized product approaches facilitate economies of scale and standardize
processes, both of which are critical for cost reductions. Given the variety of fragrances
available, the organization may concentrate on its favorite scents from the large selection of
Ambrosia.

Price, promotion, and place are the other 4Ps that should be localized because international
environments differ from domestic ones leading to price ranges in different market being
different. It is important to adapt to local market prices to be competitive. For example, Prices
for Chanel perfumes in the US typically start around $108 for Chanel Coco Mademoiselle Eau
de Parfum and around $130 for Bleu de Chanel Eau de Parfum. In Brazil, prices may vary due to
taxes and import fees, but are generally higher than in the US as Fragrance Ambrosia’s price
when being imported in each country will be changed to be adaptable with American or
Brazilian’s average income.

E. Sustainability related considerations

Fragrance encapsulation in fabric care products requires a focus on sustainable chemistry and
materials to address challenges such as limited biodegradability and demanding release
characteristics, as discussed in a recent review article (Bruyninckx, 2019). Although none of the
two nations where fragrance research is being conducted presently have standards,
measurements, or laws in place, the firm should keep this latest research in mind as it works to
create better goods in the future. Sustainability considerations for fragrances encompass the
sourcing of raw materials, the environmental impact of production processes, and the
recyclability or biodegradability of packaging, all essential aspects for promoting sustainable
practices within the fragrance industry (Bom, 2019). The business could try to implement the
circular economy idea, which might appeal to today's increasingly environmentally conscious
consumers (Conti, 2021).

F. Business forms
Upon entering the Brazilian market, 'Fragrance Ambrosia' would encounter substantial
opportunities stemming from a sizable consumer base and abundant natural resources. Brazil's
population offers a significant market potential for luxury fragrances. Additionally, the country's
wealth of natural resources can facilitate the sourcing and production of raw materials essential
for crafting exquisite fragrance products. However, 'Fragrance Ambrosia' must be prepared to
navigate challenges posed by Brazil's complex tax system and bureaucratic regulations, which
can significantly impact operational costs and compliance efforts. Understanding and effectively
managing these complexities will be critical to the success of the company's expansion into the
Brazilian market (Tetra Consultants, 2022).

As 'Fragrance Ambrosia' contemplates entering the competitive US market, it can tap into the
nation's status as a global innovation hub and its strong consumer spending power. Access to
cutting-edge research and technological advancements in fragrance development could offer a
strategic advantage. Moreover, the affluence and high consumer spending in the USA present
substantial opportunities for luxury products like fragrances (Conti, 2021). However, the
company must carefully navigate the competitive landscape of the US fragrance market,
requiring robust differentiation strategies and targeted marketing efforts (Porter, 2012).
Additionally, the complexity of the legal and regulatory environment in the USA demands
meticulous attention to compliance and strategic adaptation to local business practices.

G.Risk factors
The choice of entry mode into foreign markets is influenced by several factors, including
economic conditions, political stability, legal regulations, cultural differences, international
experience, product characteristics, resources and capabilities, time to market, market size and
growth, and competition. These factors collectively impact strategic decision-making for
companies seeking to expand globally. It is important for organizations to carefully evaluate
these aspects before entering foreign markets to enhance their chances of success (Zeqiri, 2011).

The COVID-19 pandemic has highlighted the significance of health-related risks in foreign
direct investment (FDI). Contrary to traditional assessments focusing on political instability,
investors did not previously emphasize threats like pandemics. Polish investors, for instance,
primarily assessed host country risks. Despite these oversights, global FDI has been significantly
impacted by the pandemic, with estimated declines of 30-40% according to UNCTAD forecasts
for 2020-2021. Adjusting to pandemic-related risks, regulatory changes, and supply chain
disruptions is now crucial for FDI strategies (Jaworek, 2020).

III. Conclusion
The report is crafted to guide Fragrance Ambrosia's strategic expansion into the dynamic markets
of Brazil and the USA. It delves deep into the legal, economic, political, and cultural aspects of
these nations while taking into account the interplay between the home and host countries. The
focus lies on market entry strategies, growth dynamics, barriers, and enablers, aiming to provide
actionable insights for successful market penetration and navigation. Staffing considerations,
marketing strategies, sustainability, business forms, risk factors, and recommendations are
thoroughly examined, aiming to provide a comprehensive strategic compass for Fragrance
Ambrosia's international expansion.

IV. Recommendations
For Fragrance Ambrosia's expansion into Brazil and the USA, it is recommended to tailor market
entry strategies to each country's unique dynamics through partnerships and key retail
relationships. Hiring local talent, implementing targeted marketing campaigns, emphasizing
sustainability, and conducting thorough risk assessments are crucial. Adapting to cultural
nuances, fostering strong relationships, and remaining agile in the face of challenges will be key
to successful international expansion into these markets.
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