SPORTSDIRECT ENTERING ITALY

SportsDirect Entering Italy

Management of International Business

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Executive Summary1

Introduction3

Information on Italy6

Trade7

Trade Unions8

Incentives for locals and foreigners9

Warm towards Joint Ventures and Franchises9

Exporting10

Licensing10

Joint Ventures10

Foreign Direct Investment (Wholly-Owned Subsidiaries)11

Internal factors14

References18

SportsDirect Entering Italy

Executive Summary

This report was written in order to examine what is the best mode in which SportsDirect, a MultiNational company, can enter into Italy. This research is mainly divided into four parts. Firstly, this research draws attention to the strengths and weakness of SportsDirect; the company is the largest retailer store of sports clothing and sports equipment in the UK and has stores in other countries. Secondly, the main features of the tertiary sector and factors surrounding clothing industry are discussed.

Thirdly, this paper provides information on Italy, the country, and European Union (EU), the regional organization. Information about the different features such as the country's GDP, business structure, the infrastructure, treatment of foreign businesses, Trade Unions, EU's Antitrust law and EU's trading policies is provided. Investigation reveals that Italy is the 7th most industrialized nation, and it earns 60% of its GDP from its tertiary sector. Italy's market is dominated by small family companies, which earn up to 75% of the entire GDP. In Italy, all types of businesses are present, from sole-traders to partnerships to cooperation. Italy is a member of the EU, and under it, it follows the EU's trading policies, as well as the Antitrust laws. The EU puts minimum trade barriers such as tariffs and quotas, and it believed in free competition. Therefore, Italy is engaged in all sorts of trading activities, and is friendly and welcoming to franchises and is comfortable undergoing joint ventures.

Fourthly and finally, the heart of the paper lies analyzing and recommendation the best possible mode of entry into Italy that SportsDirect can use. The four main entry modes are presented, which include, Trading, Licensing (Franchising), Joint Ventures, and Foreign Direct Investment (entering the international market independently). Furthermore, the paper looks into the various external and internal factors that SportsDirect has to be aware of while choosing one of the four entry modes. The external factors are mainly Italy's environment that SportsDirect has to be cautious of, which includes Italy's low trade barriers, low demand for clothes and the plan of expanding Italy's airport. The internal aspects are the internal aims and capabilities of SportsDirect as a company; how much control, risks and returns it aims for and is capable of when it enters Italy. According to research both on Italy and SportsDirect, this report evaluates the advantages and disadvantages of all the four entry modes and concludes that the best possible mode of entry into Italy is if SportsDirect undergoes a joint venture with a local firm.

Note: Theoretical and conceptual frameworks, from different authors, have been used to write this report.

Introduction

SportsDirect is a UK retailer, and it sells sports clothing and sports equipment. It is a globally recognized brand but does not have stores in some ...