This report is written to offer insights into the business environment of Italy; it is a detailed description of Italian ways of life that affect business prospects. It also looks in to the current economic situation in the country. Evaluation of the trade system and trade partners of Italy is also examined. The report offers basis that can be used by the business people to come up with a business plan or description that is fully informed. The paper can therefore be used by the business people in deciding on whether to invest in Italy or not.

The recommendations from this report are that Italy has a very open market that any company can come into and carry out its business practices effectively. It, however, has some cultural control measures in the business activities. A company may opt to abide by those controls or simply take a very new approach that will end up changing the way Italians think about business.

Abstract

Italy is one of the world greatest economies that suffered a lot from the global financial recession. It is, however, on the recovery path. This paper examines the current business environment in Italy highlighting on its location, type of government, and political system. It also looks at the economic strengths and weaknesses of Italy. The paper then looks in detail on how one is supposed to conduct himself/herself professionally as a businessperson in this country.

It is noticeable that the Italian culture influences a lot the business activities in Italy. This goes as far as communication, dressing, role of women in the society and other minor eases that still affect how daily business transactions are carried out in Italy.

From the report, Italy has many areas that still require investments, especially in the south. Their cultural practices are also not very complex to learn and practice. Therefore, Italy is a good investment destination.

Introduction

Italy is a very beautiful country. It has variant regional characteristics. Italy possesses one of the richest cultural heritages in Europe, dating back to the Roman Empire, which builds up its historical pride. The Italian culture is very diverse and can accommodate almost every aspects of life. It means that those thinking of starting a business in Italy need to understand the cultural, political and economic status of Italy. This paper will attempt to examine these aspects in  relation to how it affects the business environment. The situation on the ground in Italy will be expounded in order to enable the user to come up with an informed judgment on whether a certain business can be carried out in Italy. The success of a business in a new environment will depend on how the company or the individual evaluates the new market. This paper can be used as a basis of establishing the prerequisites of starting a business in Italy. (Italy, par 1-5)   

General overview

The Italian republic is found in the south Europe. It is a parliamentary state with a unitary government. It is a democratic republic (Investment Guide 6). France, Austria, Switzerland, and Slovenia border Italy on the northern side. Italy’s neighbors to the south are Sicily, Peninsula, and Sardinia. Within Italy, there are independent states of the Vatican City and San Marion. Italy also extends to Campione d’Italia in Switzerland. The total area of Italy’s territory is 301,338 Km2. The climatic conditions of most parts of Italy are temperate and seasonal. Italy has a population of 60.8 million people; it is on of the most populated countries in Europe. The capital city of Italy is Rome, a centre of western civilization in Europe (PKF 9). The figure below indicates Italy’s population by the year 2009.

Italy is a developed country; it is ranked amongst 24 most developed nations in the world (PKF 9). The quality life index in Italy was amongst the best ten in the world by the year 2005. Citizens of Italy have very high standards of living. The per capita income in Italy is also very high. Italy is a founder member of the European Union; it is also a member of the G20, G8, and NATO. Italy is also linked to the organization for economic co-operation and development, WTO, the council of Europe, the UN, and the Western Europe union. Italy’s annual budget is ranked as the sixth largest in the world. Italy is important in European affairs and global military. It has a lot of influence both socially, politically and economically in Europe. This makes it a regional power in Europe. The level of public education is very high in Italy. It is one of the most highly globalized nations. The currency used in Italy is Euro. The official language in Italy is Italian, but in some regions of Italy, German and French are used as a mean of communication.  

Economic overview

The economy in Italy is compelled by the manufacturing industry (The World Bank 5). It is well known for the manufacture of high quality consumer products. Families own most of these companies in Italy. The underground economy in Italy is also well established accounting for 17% of the GDP. The economic activities carried out in Italy are agricultural, service sectors and construction industry. Italy has the third largest economy in Europe. It, however, has many public debts, which have affected the stability of its economy. The public debt results from structural obstacles. This made Italy to suffer some financial crisis in the recent past. In the year 2011 Italy’s debt rose to a record highest of  over 120% of the GDP, due to increased borrowing by the public sector. This has made the borrowing costs to increase. The government of Italy has put in measures to curb this and it is estimated that by the year 2013, the public debt will have reduced significantly (The World Bank 6). The figure demonstrates the gross domestic product of European major economies indicating the position of Italy as an economic power in Europe.

The government is under pressure from trade partners and investors to remove the structural obstacles to growth and development. These obstacles include tax evasion and the inflexible labor market. The international financial crisis increased unemployment levels in Italy from 6.2% by the year 2007 to 8.4% by the year 2011. There is a very low fertility rate in Italy, which also stains its economy. The figure below shows Italy’s fertility rate and how it has declined from 1960 to date.

However, Italy is still a very stable economy with well-established trade links with the EU, where Germany and France are the Italy’s top trading partners. Italy also enjoys favorable trade links with other countries like the US, Canada, Australia, and some nations in Africa. The figure below shows the investment pattern from the year 2002 to 2012 in Italy.

Purpose statement

The purpose of this paper is to examine how best to conduct oneself, while doing business in Italy. It will examine the general business environment of Italy.

The Italian culture

Culture is a vital tool that needs to be well understood in order to successfully conduct oneself well in a certain business environment. This culture will be looked at in terms of individualism, Bella figura, and how to effectively communicate (Lothar, 2).

There are very high levels of individualism in Italy. This society observes and respects the family as a basic unit of the society. Individual responsibility is highly emphasized (Lothar, 1). Therefore, an Italian takes care of his/her needs first, closely followed by family needs, and then the others come in now. This explains why an individual or families own most businesses in Italy. Italians also carry out business activities with people they are familiar with, such as family members (Italy, par 3).

Bella figura is a term used when expounding on how an individual is supposed to conduct oneself well, have correct presentation, and the perfect and correct level of formality. It is very important in Italian business culture. In southern Italy, Bella figura is believed to foster peace and beauty. The appearance of an individual and other people’s opinions about that individual are very important in determining the survival of a business in Italy (Italy, par 4). Therefore, for any business entity in Italy the business materials and how they are presented should be pleasing to the Italians.

Communication is also an important aspect of any business. In the Italian culture, people’s thoughts and feelings are expressed openly (Lothar 2). Italian conversations are sometimes emotional accompanied with hand gestures. There is also close individual contact during conversations. The Italians are, therefore, emotional people who are steered by business situations and their feelings. The establishment of firm relationship based on dependence and trust are critical for any business negotiations to be successful (Italy, par 7).

Conducting a business in Italy

Being a founding member of the EU, Italy contributes largely in Europe’s political and economical affairs. Italy is also divided into south and north regions, providing diversified business investment opportunities. These investment opportunities range from agricultural and manufacturing industries. Since family ties and national pride is highly emphasized in Italy, knowledge on this is important for the success of a business venture in Italy.

Work environment in Italy

The Italian work force is highly disciplined in time management. There is a strict rule of punctuality that is taken very seriously (PKF, 12). This rule is even more stun to non-Italians who must adhere to it. Social events, however, do not observe time strictly. The legal system of Italy is rather slow due to increased bureaucracy. It means that business related decisions might take a longer time to get the relevant certifications. The normal office hours are the best time to make appointments. Italians like keeping time and do not prefer working outside the normal office hours.

Structure of Italian companies

The business organizations in Italy have standard structures within which any business company operates (PKF 11). These companies have a set hierarchical structure. The distinctions and divisions between different ranks are evident. Associations between the employees from different status are minimal. The larger traditional businesses in Italy have well established chains of command within the hierarchy system. The senior management makes decisions in the companies.

Relations at work

Personal relationships take a long time to develop. But once in place they play a crucial role in making the business successful. Italians exhibit high respect for power, age, and authority. Therefore, in a business environment elderly people and powerful persons are accorded preference. Informal address among the business fraternity in Italy is becoming common in recent days (The World Bank 6).

The practice of business

Italians express themselves openly as earlier said. This explains open constructive conflicts and disagreements during business meetings in Italy (The World Bank 5). Most business meetings in Italy are avenues of informal evaluations on some individuals and relationships. No business decisions are made during meetings. The top management crew makes most of the decisions. The last names with the correct titles are used when associating at work places. This is also observed during greetings. Business cards are in most cases exchanged during first meeting of colleagues at work place. The card must be translated into Italian, have full names and the designation of the holder, and have the academic qualification of the owner of the card (Italy, par 14).

Business etiquette

The maintenance of eye contact during communication is very important. It is used to signify honesty. Introductions during a business or social encounter are accompanied with a handshake (Italy, par 10). Men are supposed to wait for women to offer their hand first during these greetings. Before entering an office, the door must be knocked first and then closed after entering the office. During a business negotiation, Italians believe that patience is very important, therefore, observance patience is vital for a successful business negotiation. If one tries to rush through a business negotiation it is perceived as an indication of weakness (Italy, par 10).

If you are new in Italy, do not involve yourself in giving gifts until when you start getting gifts from the Italian colleagues. Rushed gifts are alleged to be bribes. (Italy, par 7) The Italian communication involves several people speaking at the same time and even some cutting short others. This is a practice that is also evident during meetings, so do not be surprised about it or misinterpret what is happening. There is an element of bargaining amongst Italians, especially those from the south. Sometimes this bargaining’s are accompanied with haggling’s. While in Italy, expect a lot of bargaining to achieve a certain business transaction. Some even end up becoming emotional complaining a lot.

Agreements and contracts

Italians honor verbal agreements. This agreement may be reached during a meeting or a casual conversation. Recently such kinds of agreements are not dependable due to increased cases of defaulters. There are two types of agreements that are used by business people in Italy, final agreement and interim agreement. Before it is fully signed by both parties, it is still in interim state and is still subject to changes. In an Italian business environment the terms of an agreement are assumed to be flexible, where as they can still be altered during implementation. This is a common practice in the business community of the Italian republic (Italy, par 12).

Women and business

Gender disparity is minimal in Italy. Some women hold very important positions in the business community (Italy, par 4). The current government policies are emphasizing on equal opportunities for both men and women. This should be reflected in any business entity being initialized or operated in Italy. Women are publicly complemented whether at work place or not. This should not influence women workers performance in Italy. If someone extends the complements beyond the recommended limits, ignoring such an individual normally prevents a major catastrophe. 

Conclusion and recommendations

The Italian society has a very strict code of contact that determines whether a certain business may or may not succeed in their country. Any individual or company planning to start a business in such a country the first and most important investment will involve learning about their culture. From the discussions it is seen that they expect a lot from business community especially foreigners. Therefore, a foreign company planning to plant its roots in this Italian market will require personnel that is well acquainted with the knowledge of managing a business environment from Italian point of view (Alexander 18).

The Italian market has been suffering financial crisis in the recent past, but it has laid down foundations to recovery. This recovery is working out very well and, therefore, any company planning to invest in a foreign country Italy may be one of the best choices. Those barriers to trade that were put in place by the government especially on external companies have been lifted. Italy as a country has a very great potential, although it is fully developed the influx of external companies has been very low. This market lacks competition, since the companies that operate there have been in Italy for a very long time monopolizing business. If foreign companies come in, they will create the much needed competition, eliminate monopoly and hence further stabilize the Italian economy.

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