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Italian Business Environment and Culture

International Business- Italy

  1. Italy business environment and culture

 

Italy is currently recovering from the global economic crisis and is taking steps toward a positive GDP. Boosted by low oil prices and a more competitive euro, Italy is expected to have a positive GDP next year with annual growth of 1%. With upcoming tax cuts and labor reform, consumption is expected to grow steadily and push the service based economy forward.

In terms of the political environment, Italy is presented with a few challenges that tend to hinder the business environment. First, the labor market is highly inefficient because of stringent hiring and firing policies amongst other issues. Labor reform has been recently passed and will include incentives to hire youths to curb the 40% youth unemployment rate. Second, Italy struggles to control private action from the mafia that causes further market inefficiencies. A third hurdle for Italy is the rampant tax evasion that results in higher taxes that are essentially expected to not be paid in full. Finally and arguably most important when considering foreign investment is the debt crisis which is now 135% of GDP. Defaulting on their enormous debt would have profound impacts on the Italian market and society as a whole.

However, Italy has a Foreign Investment Index (based on economic stability, growth, economic risk, and business and investment climate) of 8/10. For comparison, the United States has a 9/10. Italy is widely considered to be a highly transparent country with a favorable business environment.They have a skilled labor force with a very large pool of qualified applicants to choose from. For Walmart, there is a large need for intro level workers that would stay on staff for a long time. This need could be served by the enormous population of youths looking for work.

 

  1. Italy in the global economy

Italy is primary divided into two parts. The Industrial north and the agricultural south. The Italian economy is driven in large part by the manufacture of high-quality consumer goods produced by small and medium-sized enterprises, many of them family-owned. Italy also has a sizeable underground economy, which by some estimates accounts for as much as 17% of GDP. Italy’s economic growth and labor market conditions are continuing to deteriorate the unemployment rates are rising.Additionally, Italy is the third-largest economy in the euro-zone, but its exceptionally high public debt and structural impediments to growth have left it vulnerable to scrutiny by financial markets.

  1. Walmart’s global strategic position

 

Walmart is the world’s largest retailer and intends to exponentially enlarge its retail network through the expansion of stores in the international market. In 2015 the company invested (US)$3,936 million in its Walmart International segment. It opened 183 new stores in international market including 91 stores in Mexico, 29 stores in Central America, 24 stores in Chile, 17 stores in Africa, 16 stores in the UK, six stores in China, five stores in Canada and one store each in Argentina and Brazil. Additionally Walmart is expanding its supercentres in Canada, thus expanding its multiple access points for the Canadian consumers.

 

  1. Recommended penetration strategy ( Complete this part) – 2 paragraphs maximum not more

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Category: Sample Questions