Issues in Italy Pertaining To Business Culture, Business Social Situations and Business Customs

Introduction

By the definition in the dictionary, risk is "the possibility of suffering harm or loss" (American heritage dictionary, 1-2). Risk Analysis is "a procedure to identify threats and vulnerabilities, analyze them to ascertain the exposures, and highlight ways in which the impact can be eliminated or reduced" (Disaster Recovery World, 5-8). One of the benefits of risk analysis is that an organization can prevent and deal with the potential loss in order to enhance the success of the investment.

Political Risk

Italy's political situation is more stable currently than at the time when the Christian Democratic (DC) party dominated the Italian government in 1945. There had been frequent turnovers in the Italian political history. Italian voters requested "political, economic and ethical reforms" from 1992 to 1997 because they could not tolerate a government with huge debt, serious corruption and organized crimes (The Bureau of Public Affairs, 1-2). (see appendix)

Legal/Regulatory Issues

As a member of the EU and the WTO, trade regulations regarding the importing of products into Italy are fairly straight forward. The global agreements signed by these bodies are enforced and readily available for review. Tariffs are levied on importers of products coming from non EU member states such as the U.S. and Canada. Therefore the cost associated with exporting the Grapester to Italy will have to account for these tariffs which are currently 19%.

Of particular interest is Italy's adherence to the EU's standard for product liability. Under these laws both the seller and manufacturer are responsible for any defects not expected by the consumer. The Grapester is a new, technologically advanced product. Every effort should be made to ensure consumers will have the necessary directions for safe operation and handling of the product.

Italy Economic Risks

Italy is a member of the European Union and for the government to maintain this membership they have to institute policies that will maintain inflation levels and economic growth. This allows our company to have security knowing that the Italian government will not do something to adversely affect the potential earnings of the business. With a Gross Domestic Product in excess of 1.17 Trillion (Map Zones) Italy rivals France with its production. The large majority of the GDP comes from the service industry. This is a potential advantage for our company as tourists tend to go out to dinner and have wine with their meals.

Financial Risks

There are many financial risks that must be considered when expanding our company into Italy. We believe that having an established resource in Italy will help us tremendously when dealing with legalities and taxes. As stated, we will establish a well-written contract that limits how other businesses' will be able to purchase our product and the means in which they can.

By allowing only certain types of payments, we minimize undue risks on our immediate financial resources. Our operating processes will be streamlined therefore not creating a need to borrow from Italian banks or another host country. We believe that ...