After scanning Sicily’s external business environment I came to the conclusion that it would be extremely challenging to have the manufacturing operations in this particular Italian region. I have conducted a PEST analysis to help you understand why it would be unwise and/or hard to achieve a successful market entry strategy in Sicily. I looked at the political, economical, social and technological factors and came across that the biggest obstacles to operate in Sicily are the current political and economical climate, whereas social factors would cause only mild difficulties and technological factors wouldn’t cause any difficulties.
PEST analysis:
POLITICAL FACTORS
==> Regional government – definitely one of the biggest challenges of doing business in Italy is the lack of clarity, efficiency and transparency of the government, which is most evident in Sicily
==> Slow court systems - difficult to enforce contracts
==> High income taxes (43%) and corporate taxes (27.5%)
==> Bureaucracy - high level of bureaucracy
==> Organized crime - Mafia infiltrates various business sectors. The extortion of money by mafia from businesses is common since it is a primary income for the mafia, aside from drugs and government contracts.
==> Corruption – the corruption has been an impediment for the economic growth for a long time. Its evident in government, investment sectors, banks, etc.
ECONOMICAL FACTORS
==> Lack of transparency – many businesses are suffering from the lack of transparency which makes it to operate efficiently
==> Economic recession – will make it difficult to operate, a lot of factories have been closed since 2010 due to challenges brought by the economic recession
==> Complex banking sector – due to the complexity of the Italian banking system access to credit may be tough to obtain
SOCIAL FACTORS
==> Employment patterns - Nepotism. Is very evident in Italy, and especially in south. The government might interfere in business operations when it comes human resources
==> Demographics – the lack of young and skilled workforce makes a bad environment for business operations
TECHNOLOGICAL FACTORS – did not come across any difficulties in order to operate in Sicily

Conclusion
Sicily is a bad environment for LVMH operations due to harsh economical and political environment. Maybe in the future things will change and there will be opportunities for the Group to conduct business in Sicily but for now I suggest to look into other Italian regions that has a better environment for production operations.

Work cited
"The Messy Mezzogiorno." The Economist. The Economist Newspaper, 13 Aug. 2009. Web. 28 Apr. 2012. .
"Southern Cross What Can Be Done to Make It More Bearable." The Economist. The Economist Newspaper. Web. 28 Apr. 2012. .