Phaedra Elliott
Professor DuBois
International Business 300
6/6/2011
Country Analysis: Italy
Introduction:
Each country had it own history of economic policies and political climates that make it a good idea to invest in. Countries that have been in existence for centuries and have sustained a power within the entire world are usually the best choices to engage in business with. When determining the business it was unanimously decided that the partners wanted to start a makeup venture in a part of the world where there is a rich historical and profitable market. The partners looked at many factors in deciding which country to choose, which included personal backgrounds and knowledge of international business and countries, and decided on Italy. While none of our partners have prior knowledge of the Italy the country seemed to be the best option in order to have a profitable business. The partners set out with the goal to have the business succeed and flourish in Italy. In order to do this we had to look in depth at many factors that would contribute to the partners starting a prosperous business. While many people believe that finances are the key to success, in reality factors such as history, culture, politics, economy, and the market are vital to understand if a lucrative business is to be achieved abroad.
History:
Italian history is a rich and interesting one. It began with the Greeks settles in the southern tip of the Peninsula in the 8th and 7th centuries while the Romans inhabited the central and northern mainland. The multiple occupied areas where eventually unified by the Roman Republic. Italian history is deeply filled with art and brilliance because it is the origin of the Renaissance. During this time period, there were vast changes in culture and achievements in Europe which began at the end of the 13th century and lasted until the 1600’s. The Renaissance strengthened the Italian nationality while also ending the Medieval time period and signifying the start of the Early Modern Europe.
Culture:
To examine the culture of the Italy, first it is necessary to define what culture includes. Culture does not emerge unpredictably and is not shaped by one or two factors. The determinants of culture include religion, social structure, political philosophy, economic philosophy, education, and language. By measuring and exploring these different aspects, we can attempt to comprehend the culture of the Italy.
Social structure refers to the basic social organization of a society. A major division when classifying the social organization of a culture is to look at whether the individual or the group is more emphasized. A method of measuring the level of individualism has been found through the Geert Hofstede Analysis. From 1967 to 1973, Dr. Geert Hofstede conducted one of the most comprehensive studies of how workplace values are influenced by culture. With data collected and analyzed from over 100,000 individuals from 40 countries, the model is able to give relatively accurate, although generalized, findings on the levels of four primary dimensions of differentiation between cultures. For individualism, Italy was ranked at 71, compared at a world average of 64. (Hofstede) This means that the culture of the Italy is a noticeably more collectivist society and values close, long-term commitment to the member ‘group’, being the family, extended family or extended relationships that an individual might have. Loyalty to the ‘group’ is paramount, and often over-rides most other societal rules. Two other dimensions that Hofstede measured can give us a view of the level of social stratification that exists in Italian Culture. Power Distance, the degree of equality or inequality between people in a countries society, is 45 in Italy (Hofstede). This indicates that the culture of the country most likely follows a caste like system and does not allow for significant upward mobility of its citizens.
Italy also has a high score of 70 in Uncertainty Avoidance, which indicates a low level of tolerance for uncertainty (Hofstede). This results in strict laws, rules, policies and regulations to be implemented in an effort to eliminate or avoid the unexpected. The combination of these two dimensions paints a picture of a society where leaders control much of the power and authority, the society is highly rule-oriented and inequalities of power and wealth have been allowed to grow.
The last aspect of the Hofstede analysis is Masculinity, which describes the level that the society reinforces, or does not reinforce, the traditional masculine work role model of male achievement, control and power. Italy scored a 62, above the total country average of 52 (Hofstede). This indicates that while women in the Italy and the European world in general, are limited in their rights, it may be due to the differing faiths rather than a cultural more. This distinction can be more fully explored when viewed in the context of another deciding aspect of culture: religion.
The second determinant of culture explored is religious and ethical systems within Italian culture can be defined as a system of shared beliefs and rituals that are focused on the realm of the sacred. In Italy, the CIA Factbook reports that 90% of the population is Roman Catholic. Only 10% of the populations are classified as “other”, which includes Protestants, Jewish and an increasing Muslim community (CIA Factbook). The implications of these demographics are enormous, as religion is paramount in all areas of life for a Roman Catholic. Catholicism itself lays down some major economic implications, as the Bible establishes many explicitly pro-enterprise principles. It speaks encouragingly of free enterprise and earning a legitimate profit through trade and commerce, the protection of private property, living up to contractual obligations and abstaining from deception.

Economy: There are many aspects that determine if a company will be successful abroad. Historically Italy has had a flourishing economy but most recently has been struggling due to the recent financial crisis.
To understand why investing in Italy over other countries, an in depth analysis of the economic structure is required. Italy has had thriving open economy, where the sale of goods and services depends on determinants of the market. The economy of Italy has changed drastically since World War II. Prior to the World War, Italy was mostly an agricultural setting but has changed to an industrial market. Currently there are about 58.13 million people that occupy Italy. An estimate of the GDP per capita in Italy in 2010 was about $30,500, which is the 43rd highest in the world (CIA Factbook). While the GDP per capita has decreased about $1,300 since 2008, the reactions to the financial crisis and the strategic planning of Italy will be a wise decision. The labor force Italy is 25.05 million people, of which 65.1% are in the service industry and 30.7% are in industry (CIA Factbook). This is a promising statistic when looking to employ local Italian workers.
The amount of foreign direct investment flowing into the country is a very important statistic. As of 2010, 601.1 billion was invested into Italy (CIA Factbook). This amount has increased since 2009, which suggests that foreign investors are taking advantage of the low start up prices in the Italy because of the financial crisis. Italy has a wonderful history with trading with various countries. For example, prior to the 2000’s, Italy had a very lucrative trading relationship with Malaysia. During the 1990’s in decreased economic climates, Italian exports to Malaysia grew to 10% which was RM 1.22 billion to RM 1.338 billion (Adeline). The genius of the Italian companies manufacturing operations spreading to Malaysia; it has helped to expand and increased their ties with Asian Pacific markets. Although there has been a decrease in economic stands within Italy, their exports are 412.90 billion dollars (Global Edge). Italy still has major exporting partners which include Germany at 12.8%, France at 11.290%, Spain at 6.6%, The United States at 6.3% and the United Kingdom at 3%. While having great ties by exporting within Europe, Italy also has wonderful imports. The imports equal to approximately billion dollars an 410.2 with the same and varying countries such as Germany at 16%, France at 8.6% China at 6.2% the Netherlands at 5.3%, Libya at 4.6% and Russia at 4.3%. This wide diversity displays Italy’s ability to trade well with countries within Europe and with other parts of the world.
The Euro was traded .7715 to the US dollar as of 2009. (CIA Factbook) Currently the exchange rate is .697 (Money Converter). The Euro was introduced for circulation on January 1st 2002 to serve the seventeen of the twenty –seven countries in the euro zone. The use of the same currency throughout the seven emirates is an advantage of having ease of access. Even though Italy has suffered economically because of the financial crisis, Italian businesses are investing more. This is due to experts stating that in order to help stop loss and reverse the crisis, industries need to either close down their companies or invest more in the enterprises (Reacting to the Crisis).

Conclusion:
I set out with the hope that the makeup business would be a success abroad. There were numerous advantages in starting up our business in Italy. Some of those advantages include a local currency that is trading in our favor, a workforce with large numbers in the service industry, an educated and literate population, purchasing power that has not decreased great amounts after the financial crisis, and lastly a large population of women in their twenties who have and are enjoying many western influences these days.

--------------------------------------------
[ 1 ]. GlobalEdge. (2010). Section: History.