Comparative analysis of Italy and the United States

Italy and USA Analysis

COUNTRY A: Italy

Introduce country

PEST-C

Political Environment

Legal Environment

Economic Environment

Business Environment and Activities

Analysis of Exports and Imports

Balance of Payments and Exchange Rates

Social Environment and Demographics

Technological Environment

Cultural Environment

Hofstede's Country Characteristics

Power Distance Index

Individualism/Collectivism

Masculine/Feminine

Uncertainty Avoidance Index

Long-Term Orientation

Realistic Idea

Rationale and Support

COUNTRY B: United States

Introduce Country

PEST-C

Political Environment

Legal Environment

Economic environment

Business environment and activities

Analysis of exports and imports

Balance of payments and exchange rates

Social environment and demographics

Technological Environment

Cultural Environment

Hofstede's Country Characteristics

Power Distance Index

Individualism/Collectivism score91 13

Masculine/Feminine 13

Uncertainty Avoidance Index 14

Long-Term Orientation 14

Realistic idea 14

Rationale and support 15

SECTION 3 -- What type of business do you suggest to develop between COUNTRY A and COUNTRY B? Support your idea with the research you have gathered to complete this assignment. 15

References 16

Italy and USA Analysis

Executive Summary

Italy is located in Southern Europe encompassed of numerous islands like Sardinia and Sicily and boot-structured Italian peninsula. The industrial economy has become varied in Italy which is comprised of a developed industrial north where private companies are dominant and a less-developed, agricultural south i.e. dependent on welfare. The political background attained by Italy along with its regions is thought to be cracked. The country has faced consistently under mafia, corruption as well as dependent governments which have to do with its own good, since the economic growth in 1960s. The trade of Italy is dominated by the machinery and automobiles. United States is founded on the equality's fundamental belief and is a multicultural mosaic of more than 290 million people of different cultural heritage and race. Conversely, USA possesses high political stability because of well defined procedures of succession. The federal government elections are held after every four years. Total trade of United States with foreign countries was 5.02 trillion USD in 2013. This includes the imports of 2.744 trillion USD and exports of 2.272 trillion USD of both services and goods. The foundations of U.S. are equality. United States score of PDI is 40. This is an evidence of the equal rights of American government and society. Business in USA is opening of door to growth and success. The capital economy of the country helps investors in getting the best outcome.

SECTION 1 - COUNTRY A: Italy

Introduce country

Italy is mainly situated in Southern Europe encompassed of numerous islands like Sardinia and Sicily and boot-structured Italian peninsula. The neighbouring countries are San Marino, Austria, Slovenia, Holy See, Switzerland and France. Furthermore, with the dominance of central Mediterranean and southern sea and air perspectives to Western Europe, Italy has tactical location. There is republic system of the government found in Italy. The head of the government is said to be the Prime Minister while the chief of the state is called as the President. The industrial economy has become varied in Italy which is comprised of a developed industrial north where private companies are dominant and a less-developed, agricultural south i.e. dependent on welfare. Italy is included in the European Union (EU) as a member (Marzano, 2007).

PEST-C

Political Environment

The political background attained by Italy along with its regions is thought to be cracked. In the country, several small and micro parties resist for authority in the country as well as the ruling association which comprises of numerous parties who have developed a kind of strategic alliance in anticipation of the next election. The country has faced consistently under mafia, corruption as well as dependent governments which have to do with its own good, since the economic growth in 1960s. In Italy, disappointments and tensions portray the political ambience allowing the overriding of robust, power-hungry as well as populist politicians such as Silvio Berlusconi. There is a need to inspect with apprehension into which direction country as well as its political system would progress in the forthcoming (Duggan, 2013).

Legal Environment

Protection of rational property and privacy are the two main legal apprehensions in ICT. By European Union directives, Italy is directed in these regions and it has acquired some steps in order to complement its own strategies to these areas. The pertinent directive is "2002/58/EC Directive on Privacy and Electronic Communications" in the area of privacy and "2001/29/EC" is the pertinent directive in the area of rational property protection. In this area, the protections of EU are said to be surrounded by the powerful in the world. On the other hand, operative strategy does not itself certify the effective enforcement. In 2004, the BSA research indicates that fifty percent of the software used was copied illegally in Italy. Significantly, this is excessive than the EU average and it suggests that further enforcement interest is needed (Duggan, 2013).

Economic Environment

The industrial economy in Italy is said to be diversified and classified into a developed industrial north, governed by the private companies as well as a less-developed, very well promoted, agricultural south in which unemployment is higher. By the manufacture of high-standard consumer goods that are manufactured by small and medium-sized companies, most of which are owned by families indicating that Italian economy is operated in large part. Italy also has a substantial underground economy, estimating as much as seventeen percent of Gross Domestic Product. Within service sector, construction and agriculture, these activities are widespread. In the euro-zone, Italy is the third largest economy. However, its remarkably high public debt as well as structural hindrances in the way of growth has caused it to be exposed to the scrutiny by the financial markets.

Business Environment and Activities

Italy is at the seventh position in the most industrialized countries in the world. There are some large companies and many small and medium-sized companies present in Italy which are specialized in various activities. Due to high labour costs as compare to the less industrialized countries, industry is now being declined whereas the service activities are increasing. About 74% of Gross Domestic Product (GDP) is represented by the service activities including communications, transportation, commerce, banking, insurance and property rental. The manufacturing industry characterizes almost 24% of Gross Domestic Product (GDP) that comprises textiles, construction, apparel, chemicals, machinery, pharmaceuticals, non-metal minerals, vehicles and transportation. Two percent of the GDP is represented by the agricultural industry where its major products are rice, wheat and other cereals, fruits, vegetables, olive oil, wine as well as dairy products (Marzano, 2007). In some of the sectors, the Italian labour market is exemplified by the lack of skills and prominent unemployment in other sectors. For 2012, the official average unemployment rate was 10.7 representing active population. Official statistics do not manifest the condition exactly because of the high level of unofficial employment although the level of employment is different between the regions.

Analysis of Exports and Imports

The trade of Italy is dominated by the machinery and automobiles. Although, the recession in 2008 affected the volumes of trade yet economy of the country is remained strong and for export volumes in the world Italy is ranked on 8th (Duggan, 2013).

The major export commodities are:

Nonferrous metals and minerals

Beverages and tobacco

Food

Chemicals

Transport equipment

Motor vehicles

Production machinery

Clothing and textiles

Engineering product

Major export partners of Italy include:

UK

US

Spain

France

Germany

The imports of Italy fell from 546.9 billion dollars in the year 2008 to the 358.7 billion dollars in year 2010.

Following commodities are imported by Italy:

Tobacco

Food and Beverages

Textiles and clothing

Minerals and nonferrous metals

Energy products

Transport equipment

Chemicals

Engineering products

Major imports partners of Italy include:

Russia

Libya

Netherlands

China

France

Germany

Balance of Payments and Exchange Rates

In November 2013, Italy reported an unseasonal adjusted surplus worth 3.5 billion Euros. Due to the weak household spending the lower oil prices the current balance of the country is estimated to be remained in surplus.

Social Environment and Demographics

Of the social structure the family is the center in Italy. In many cases, the unmarried children live with their parents mostly till their 20's.

Population of Italy is 61,680,122. Other demographics are:

Age structure 0-14 years: 13.8% (female 4,154,547 / male 4,340,943)

15-24 years: 9.8% (female 3,028,190 / male 3,046,202)

25-54 years: 43% (female 13,405,812 / male 13,107,098)

55-64 years: 12.4% (female 3,942,261 / male 3,703,329)

65 years and over: 21% (female 7,403,693 / male 5,548,047) (Sassoon, 2014).

In Italy ethnic groups includes Slovene-Italians, French, German in the north while in the south there are Greek Italians and Albanian Italians

Technological Environment

The technology in Italy is prevailing long. Many scientific and technological innovations were made by Italy. Technological products are everyday part of Italians. Market of technology is changing at the lightening speed.

Cultural Environment

As seen the recreational activities of Italians, family time posses a major role. Italians enjoy with their families visiting museums all over the county, driving to the mountains or the seashore, and taking the Sunday passeggiata (traditional family stroll). Soccer is loved by people of Italy ranging from children to adults. It is one of the most popular sports in Italy with having professional teams by every major city (Marzano, 2007).

Hofstede's Country Characteristics

Power Distance Index

The northern Italy posses a score of 50 and tends to prefer decision making, decentralization of power and equality. Among the younger generations in Italy, formal supervision and control is normally not being liked, rather they prefer open management system and teamwork. The consequences of PDI are relatively higher in southern Italy.

Individualism/Collectivism

Italy has individualistic culture with the score of 76 especially in the rich and big cities of Northern Italy where people might have the feeling of lonely in the middle of a busy and big crowd. Friends and family is a significant antidote to this condition. For Italians possessing their own objectives in life and personal ideas is very much motivating and the route to happiness for many Italians is through personal satisfaction.

Masculine/Feminine

With the score of 70 Italy is has a masculine society and highly driven and success oriented. Children from an early age are taught that to be a winner is very important and competition is good. Success is shown by Italians through acquiring status symbols like travelling to exotic countries, a yacht, a big house, and the beautiful car (Sassoon, 2014). Completion among colleagues for career making is very strong due to considering working environment the place where success can be achieved.

Uncertainty Avoidance Index

As a nation Italians got a high score on uncertainty avoidance, 75, which depicts uncomfortable with the ambiguous situation. In the terms of work high uncertainty avoidance is resulted in the extensive amount of planning in detail.

Long-Term Orientation

Italians are inclined toward the short-term orientation and strive for fast rewards rather than long-term value. Like other nations with short-term orientation, there are rooted to the familiar environs and are attached to the past. Moving to another place or changing the job is considered to be a major disruption for many Italians and is required to be avoided at its best (Lissovolik, 2008).

Realistic Idea

Italy has diversified economy and business conditions are numerous. Although there is some corruption and legal issues in the southern Italy, the unemployment in the area will lead to facilitate labour intensive industries.

Rationale and Support

Italy is the third highest economy in the euro zone. The manufacture of high standard goods along with agricultural abundance gives it the status of a diversified economy. The political instability is not positive although it is not of a very serious nature that it would hamper the business activities.

SECTION 2 - COUNTRY B: United States

Introduce Country

United States is founded on the equality's fundamental belief and is a multicultural mosaic of more than 290 million people of different cultural heritage and race. It is a federal republic which shares borders with the North Pacific and North Atlantic oceans between Mexico and Canada. United States possesses a strong influential role on the political, economical and business of the world. The country is a liberal democracy and posses 50 states and the Columbia district. United States is the world's largest economy with a GDP of 16.724 trillion USD which is about 22.4% of the world's GDP. USA is the major driver in the economy of the worlds and is the leader in terms of its share of global corporations, stock market capitalization, expenditure on research and development, and international investment and trade.

PEST-C

Political Environment

USA possesses high political stability because of well defined procedures of succession. The federal government elections are held after every four years. Peace and tranquility are of high priority to the government however, the anti-west sentiment is largely directed towards U.S..

Legal Environment

It is known widely that the U.S. does not possess an omnibus federal protection data law. Multitude of privacy requirements and laws are adopted at the state and federal level. A lot of bureaucracy is needed to be dealt with. Laws governed by U.S. are enforced and legislated by the federal, state, and country governments, along with the city government, town government and village governments also.

Economic environment

The U.S. is the topped and the most advanced economy of the world. The GDP of the country is 14 trillion USD with the per capita GDP of 46000 USD and the 2.9% decline due to the recession. The debt per GDP is 52% with the budget deficit of 1.5 trillion USD. 0.7% of inflation rate was brought by decreased purchasing power and tight credit (Schweikart, 2014).

Business environment and activities

United States is an ultimate place for businesses to flourish due to lack of powerful neighbours, availability of land, innovative minds, growing population and enormous resources. The country's immense potential can be used by individuals who are prepared to understand its complexity and diversity while making the intelligent choice of business plans development.

Analysis of exports and imports

Total trade of United States with foreign countries was 5.02 trillion USD in 2013. This includes the imports of 2.744 trillion USD and exports of 2.272 trillion USD of both services and goods. The country is the 3rd largest exporter after European Union and China, and is ranked second in imports after EU. (CIA World Factbook World Rankings, 2013) Material goods contribute to the third of the total exports of United States i.e. 1.579 trillion dollars. Whereas, the imports of mainly goods that is 80% of the total imports.

Balance of payments and exchange rates

The balance of payment of U.S. showed a great annual deficit in current account over the last decade. There is also a large surplus in this account and in the official reserves account there are relatively small changes. This BOP can have two interpretations. One is that in foreign markets firms of United States are non-competitive and by buying the U.S. assets foreigners are taking over in U.S. (Stone, 2012). Second deals with the attraction of foreign investments by the surpluses of the foreign country current accounts. There are two ways of expressing Exchange rate: 0.15 dollar per yuan or 6.24 yuan per dollar. In United States, we compare normally other currency per U.S. dollar.

Social environment and demographics

The social environment of United States is of cultural mix of the European import and the domestic innovations. Country is divided across conservative and liberal and others in between. The key values includes free expression, risk taking, defined structure of politics, meritocracy, scientific and military competitiveness. There are 79.96% white, 12.85% black, and 4.43% Asian with 78% of Christians as religious affiliation, with unaffiliated 12% and others.

Technological Environment

United States is considered to be the most industrialized and technologically powerful nation of the world (Newman, 2003). Industries in U.S. include steel digital, aviation, automated, auto, computer systems, and power generation. Moreover, the patents and inventors list of U.S. is the reflection of the innovation's prevalence. 4,548,072 patents have been granted by U.S. On the utility innovations from 1964 to 2009.

Cultural Environment

People in United States normally prefer one task to be completed at a time i.e. they are monochromic. They do not pay special attention in maintain socializing and relationship. For the solution of work related issues people in United States adopt a very formal procedure.

Hofstede's Country Characteristics

Power Distance Index

The foundations of U.S. are equality. United States score of PDI is 40. This is an evidence of the equal rights of American government and society. In America the managers rely on teams and employees, superiors are accessible and hierarchy is maintained for assistance in convenience. Both the employees and managers are expected to be consulted sharing of information if frequent. In the mean while, communication is participative, direct and is informal.