Walmart In Italy

Why Italy?

Economic and Political/Legal Factors

Hello my name is Ahmad and today I will be talking about why we chose Italy as a market to enter. There are several factors that will potentially affect the establishment Walmart in Italy. I am going to start of with economic factors, and from there I will touch upon political and legal factors together. Starting with economic factors...

Economic Factors

· GDP growth-1%

· Foreign Investment Index- 8/10

· Economic Reforms-Renzi

· GDP growth in 2015 was nearly 1%, and it is projected to increase in 2016 at the same rate.

· This growth is attributed to the low oil prices, a competitive euro, and easy monetary policy, forecasters project that this will increase consumption and drive GDP.

· The next factor is Italy’s Foreign Investment Index. Italy has an Index of 8/10. For comparison, the United states has 9/10. The foreign investment index is based on economic stability, growth, economic risk, and business and investment climate.

· The relatively high foreign investment index of Italy is attributable to increased consumer demand. Therefore, Walmart will have a market for their products.

· Finally, Italy’s new Prime Minister, Matteo Renzi, has undertaken economic reforms that ensure lower taxation thus increasing consumption. The corporate tax rate is at an attractive 27.5%. This economic incentive makes it feasible for Walmart to enter the Italian economy.

· The economic reforms will encourage the consumers to increase their spending. Walmart can bring those services and products closer to the customers with the one-stop retailer.

More economic factors (facts)

· Italy is expected to have a positive GDP with an annual growth of 1% due to the low oil prices, competitive euro, and easy monetary policy.

· Comparatively, Italy has a Foreign Investment index of 8/10 while the United States has 9/10.

· The economic reforms implemented in 2014 focus on institutions and lowering taxes to increase consumption.

· Renzi flagged a 2016 budget proposal that includes incentives for firms and employees and notable tax cuts to revive the Italian economy.

· Walmart can enter into a market that has high expectations.

Political/Legal Factors

· Other Reforms

· Issues

· In addition to some economic reforms, there have also been a wave of other reforms as well. A legal reform, for example, has been ongoing in protection of intellectual property. A few recent innovations include new measures to combat counterfeiting, protection for internet related intellectual property, merging and simplifying patent and trademark rules.

· A political reform led by Prime Minister Renzi has recently passed. This reform is concerned with the inefficient labor market in Italy and the 12% overall unemployment and 40% unemployment of people under 25. The bill makes it easier for employers to fire unproductive workers. Walmart needs a motivated and productive workforce in order for our operations to be efficient, so this new bill would potentially be beneficial to us because it will ensure that we have the right people for the jobs. There is a large pool of entry level workers that are looking for work in Italy, so our entry into that market will give us the opportunity to pick the best workers that will stay on staff for a long period of time.

· To conclude, I would like to address a major concern of doing business in Italy. Many fear the power of organized crime there and the costs that they represent for a business. In Italy, organized crime only has influence in what is called the ‘mezzogiorno’, or the southern half of Italy. As you will see later in the presentation, Walmart’s entry strategy will be based in the north where private action is almost nonexistent.

· Italy is in a very transitional period. There are a lot of reforms going on today, most of which are aimed at improving the business environment there. We are confident, especially in the north, that the changes in the political, legal, and economic sphere will strengthen the Italian market.

· Now we are going into the value Walmart could add .

More political factors (facts)

· Italy is presented with a few challenges that tend to hinder the business environment.

· Italian Prime Minister Matteo Renzi rose to power and changed the country’s leadership In the fourth year of recession in Italy.

· The Political stability affects how businesses are run.

· The changes will help the country in that investors can feel comfortable investing in the country and employing the youths.

· Walmart can seize the favorable political opportunity by investing in the Italian market.

· 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.