Doing Business in Italy Essay

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Doing business in Italy is very different than in the United States. “Set to move onto a slow, but steady, path of economic growth;” Italy, at first glance, seems to be a promising business environment with projected increases in GDP per capita in the coming years, according to Business Monitor International (“Italy Autos Report” 30). However, there are many cultural, administrative, geographic and economic differences that make the business environment much different than that in the US. Generally dominated by domestic carmakers, mainly Fiat S.p.A., the auto industry in Italy doesn’t look very appealing for new firms because of the high barriers to entry. However, foreign carmakers like Ford have managed to penetrate the Italian …show more content…
Italy has been shaped by its history of constant warring and many rulers, which in turn has made Italians doubtful toward authority as well as giving them a strong ability to survive difficult situations (Welcome to Italy). Looking at Hofstede’s Cultural Dimensions (fig. 2) shows the differences between Italy and the United States. Italy has a higher power distance than the US, this can be shown by the formality in the office working environment, where first names are rarely used when addressing superiors (Welcome to Italy). The US is more individualistic while Italy is more collective. Uncertainty avoidance is the greatest cultural difference, where Italy avoids uncertainty more than the US. Administrative differences in Italy are the most important to look at. The “constitution provides the basic freedoms of thought, speech, press and the right to work (Welcome to Italy)”. Furthermore, workers have the right to form and join unions as well as the right to strike. As a result labor unionization is very high; in 2002, 40 percent of Italy’s labor force was unionized (Italy - Labor). Geographic differences also increase the costs and risk of doing business. Italy is divided into geographic and administrative regions, some of which are autonomous and have different regulations (fig. 3). Generally however Italy is divided into two regions the Northern Region and the Southern Region. The north is characterized by high industrialization and urbanization while

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