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WILEY INTERNATIONAL

Breceda, Patricia

1) Why would Wiley consider investing in Brazil? What are the advantages and disadvantages to locating its operations in Brazil?
Once hyperinflation subsided in the late 1990’s, Brazil was once again viewed as an attractive location for foreign investment, with forecasts predicting the nation’s economy would be the sixth largest in the world by 2015. For Wiley and its industry in particular, Brazil presents a large growth opportunity given its influence in the Latin / South American economy and the region’s projected growth rate of three to four percent in the coming years. Other advantages of locating operations in Brazil include: 1) The country’s technically skilled, highly diversified and flexible workforce, 2) Relatively low ratio of people to cars -- 9/1 vs. 2/1 in developed economies (meaning there is great room for growth), 3) The recent decline in high import tariffs, which will allow for centralization of production, 4) Increasing economies of scale, 5) The ability to source production to potentially large local markets as well as the entire region as a whole, and 6) The potential to expand and strengthen relations with the Brazilian government, which could yield significant benefits over time. Some disadvantages to locating Wiley operations in Brazil include: 1) The volatility of the Real, despite recent success in mitigating hyperinflation, 2) Political / financial risk surrounding tariff and non-tariff barrier increases, 3) The difficulty in acquiring local skilled labor, 4) The uncertainty of profitability, as profits have been impeded by aggressive pricing designed to gain market share, and 5) The high degree of leverage associated with supplier financing.
2) Based on the five-year life of the project, does this project look attractive for Wiley? Be prepared to support your answer.

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