OBSTACLES AND CHALLENGES 14% Tariff 5-15% Industrial Product Tax (IPI) 18% Merchandise Circulation Tax (ICMS) 10 % Social Security tax ;1% miscellaneous.

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Presentation transcript:

OBSTACLES AND CHALLENGES 14% Tariff 5-15% Industrial Product Tax (IPI) 18% Merchandise Circulation Tax (ICMS) 10 % Social Security tax ;1% miscellaneous tax Total Duties and Taxes  48% - 58%

BRAZILIAN REAL vs. US DOLLAR Exchange Rate $1 US = 1.7 Brazilian Real One U.S. Dollar to Brazilian Real over 5-year

Purchasing Power Parity Analysis Shows overvalue or undervalue of currency Actual worth in terms of actual “things”. – Big Mac Comparison Big Mac prices= Real 6.4; Dollars 3.01 Implied PPP* of the dollar = 2.12(6.4/3.01) Actual dollar exchange rate (march 2008) is 1.7 (2.12/1.7)-1 = 26% overvaluation in Brazilian Real

NK Competition TESTO is the leader in Brazil Has 11 distributors throughout Brazil Kestrel does not have a sustainable competitive advantage – No wireless probe – Evaporation rate is not a useful measure in the Concrete industry

Product in Brazil Concrete industry sends lab samples Introductory stage “Trendy gadgets” rather than useful tools Brazilians are unaware of the added benefits of using a Kestrel. (4100, 4200, 4300)