Walmart in Italy

Regarding the political environment, Italy is presented with a few challenges that tend to hinder the business environment. In the fourth year of recession in Italy, the Italian Prime Minister Matteo Renzi rose to power (Gov.uk 1). The change of leadership presented new hopes of reforms that would impact the process of conducting business. The leader promised to adopt new reforms monthly that would emphasize on institutions, the workplace, the justice system, administration, and taxation. Political stability affects how businesses are run. With the promise of the prime minister, the situation is bound to change for the better. Before the reforms, the labor market was highly inefficient because of stringent hiring and firing policies amongst other issues. Labor reforms have been recently passed and will include incentives to hire youths to curb the 40% youth unemployment rate (Electra.lmu.edu 1). The changes will help the country in that investors can feel comfortable investing in the country and employing the youths. Walmart can seize the opportunity by investing in the Italian market. The policies adopted by the Italian government concerning investments makes it suitable for consideration investment. They have a skilled labor force with a vast pool of qualified applicants. The availability of skilled labor from the locals makes it easier for Walmart to invest in the country. For Walmart, there is a tremendous need for intro level workers that would stay on staff for a long time. This need could be served by the enormous population of youths looking for work. The employment of such youths would have the implication that the company reduces extra costs of outsourcing skilled labor and also be beneficial to the Italian population (Sme.shb.com.sa 1).

In general, Italy’s legal system is sound and will protect foreign investment. The strategies implemented favor foreign investors. Foreign investment in Italy is unrestricted, meaning that any willing investor can invest in the country. Regardless of the fact that Italy is not a federal state, the local governments have the jurisdiction to implement the laws. An investor can start a business where the policies suit the business. Several instances of the legal system falling short are evident in the corporate systems of Italy. First, Italy’s intellectual property laws are not strictly enforced (Pelloni and Savioli 1). Second, the tax evasion in Italy has driven corporate taxes upward of nearly 65% to compensate. The government has controlled the market in Italy for years. State-owned corporations dominated the market. However, the gradual withdrawal of the government from the market has opened up the Italian market. Now, the market is opening up to competition. Consequently, Walmart can invest in the Italian market since the competition will be free and fair. Despite the interferences, doing business in Italy presents Walmart with a chance to enjoy the privileges accorded to foreign investors in the country. The legal system in Italy protects the foreign investors from unfavorable and unfair treatment in the market (En.santandertrade.com 2).

However, in the market, there are opportunities to receive tax breaks in the poorer southern region of the country and the mafia’s influence is relatively very limited. With these few manageable legal issues aside, Italy has a strong legal system capable of protecting potential investors. When looking at Italy as a whole, it is clear that the economic environment is the strongest of the three. Projections for the country’s economy are adamant and indicate confidence in the business marketplace as a whole. Much of that trust is based on increasing consumption amongst consumers which is a strong indicator of economic performance as a whole. Taken in context with the various political and legal issues, much of the decision on whether or not to enter the Italian market will be based on how much of an impact those issues might have on the market Walmart looks to penetrate.