«International Marketing» - Free Essay Paper
Section 1: Field Trip
The chosen location for the field trip is Florence, Italy. Italy is one of the world’s most famous destinations for tourists, owing not only to its rich history, but also its culture and siren environment. The people of Florence are unique individuals with a colorful and cultured existence, as is in the rest of Italy. Furthermore, the city is strategic area, as a metropolitan capital of the Tuscany region with a population of over a million residents. Other than the booming tourism industry in the district, Florence is also an industrial hub; thus, emphasizing its centrality to the economy of Italy. It has the highest income in the region, supporting its position an ideal destination for international marketing. It must also be appreciated that despite the deeply cultured existence of the area’s residents, they are also adequately modernized. Therefore, the region achieved the best standards of living that they can afford. Their cultural affiliation does not compromise the consumerist interests when it comes to the purchasing habits. The profile makes Florence a very attractive location for a market analysis. The city has a reputation in the country’s and the world’s fashion industry for having the great taste and an impressive market base for high end fashion among other products.
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Overview of the Region
Italy is in the European Union, and is a member of the Eurozone. Therefore, the country lies within one of the most powerful economic regions in the world. The European Union is more economic than political organization, although historically it is considered a politico-economic union of about 28 member states (Wild & Wild, 2012). Being a member implies a number of advantages including a free market system across the participant states, a unified currency system that makes international business transactions easier and more profitable in some cases, as well as a simplified legal system and framework for international business operations.
Dynamics of the Region
The European Union is a large region, comprising of over half a billion citizens and over ten of the most powerful countries in the world. The region has about 24 working and national languages including English, French, Italian, German, Italian, Latvian, Portuguese, Italian and Slovak among others (McCann, 2010). The region does not impose language policies on their member states; and thus each sovereign country is allowed to use their official and national languages provided they do business with the other member states. Thus, English, French and German are rather common in most of the member states. In fact, English is the most popular language with more than half the population being able to communicate effectively. Most of the citizens within the region are also able to communicate fluently in a second language, since they almost always need to interact with people from other countries within the region. The economy of EU is a single market with unified policies aimed at promoting fair trade amongst the member states.
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Status/Role of Italy in the Region
Italy constitutes about 60 million people of the overall population of the European Union (World Trade Organization, 2011). It is more than 10% of European Union, thus making the country rather formidable in terms of political strength, especially considering that the EU is governed by elected members of parliament (World Trade Organization, 2011). With a capitalist mixed economy, Italy is primarily in the top three of large economies in the EU. The fact puts the country in a favorable position as a trade partner, making its status prestigious within the region. Italy not only has a large population but also a large base of resources. Moreover, the country is also a popular tourist destination, and a considerable industrial hub that boasts of a diversified capitalist economy. It can be concluded that, as a member of the EU, Italy has a favorable place based on its economic position as well as its size in terms of population.
Brief Comparison with the US
The US is a successful economic region with over 50 states and a strong federal government. The country has about 320 million people, and the economy has been strong for a long period in history (Heppen & Otterstrom, 2009). The US also has a mixed capitalist economy with diversity in its industries, ranging from tourism to industrialization and commerce. The following section compares Italy to the US in terms of the economy, language, culture, population, geography, lifestyle and consumption patterns.
Both the United States and Italy are mixed capitalist states in terms of their economy. Thus, both nations rely on more than one source of national income. The countries have tourism, industry and commerce as their top earners. Therefore, the two nations are largely similar in terms of the structure of economy. However, Italy undertakes more than 50% of its business transactions within the EU, while the US trades with numerous regions in the world including Asia, the Middle East, Africa and Europe (Heppen & Otterstrom, 2009). While Italy occupies the title of the sixth largest manufacturer globally, the US is the second largest exporter in the world. The fact implies that the two countries are very strong forces in the global economy. Moreover, Italy economy is impressive considering that it is smaller in size and population. Both countries also have a successful and competitive agricultural industry that contributes over 1% of national GDP.
The United States is unified under a de-facto national language that also doubles as the country’s official language in most situations. American English is widely spoken by the nation, although there are a number of Native Americans who have been able to speak their own dialects over the years. However, the country remains an English speaking nation with over 95% of the local population being effective communicants in the language (Heppen & Otterstrom, 2009). The immigrants and the tourists present a different case, as most of them often have a problem with the English language. On the other hand, Italy is mainly multilingual with the legal capacity to recognize the foreign languages spoken by their immigrants as well. Other than the standard Italian, which is the result of years of development through media and the educational system, the country’s residents also speak Catalan, Greek, Slovene and Albanian among other languages.
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The American population is largely diverse, although there are a number of established concepts that continue to be identified under American culture. The majority of the population is immigrants from various parts of the world; the national culture continues to be redefined in terms of relevance and appeal to the current population. However, people continue to associate the Americans with individualistic tendencies, attention to the different holidays and love for entertainment. On the contrary, Italy is rather different, with specific contexts of their culture as expressed in their fashion, music, dance, art, literature and food. For example, while the Americans would opt for a quick meal at McDonald’s, the Italians are more likely to appreciate a high end meal that probably is timely to prepare (Heppen & Otterstrom, 2009). Thus, it implies a very pronounced difference in the way of lifestyles in the two nations.
With regards to the population of the two countries, there are a number of considerations that one must make. Firstly, the United States comprises of more than 50 states; thus, it is larger than any other country in size. Secondly, the American nation spans close to an entire continent, considering that the central and parts of North America are within the US. Thirdly, the population in the US stands at 321 million people, compared to Italy’s 60 million (McCann, 2010). In fact, the population of the US is much closer to that of the European Union which is half a billion people.
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Italy, especially Florence, is in a hilly geographic position with beautiful landscapes and impressive locations. The country boasts of impressive coast lines and vast fertile places with successful vineyards and other agricultural enterprises. Italy has a diverse geography that offers coastlines, rocky hills and fertile plains (McCann, 2010). The US is similarly endowed with a variety of geographic regions to support the country’s variety of economic activities. On this front, the two countries are largely similar, since the US also has vast ranches to support cattle, keeping the other farming activities. Also, it has the desert regions where the agriculture cannot take place.
The Italians have expensive taste. They like the finer things in life in fashion, art and even food. Thus, they have a lavish way of life, with their entertainment being taken very seriously. The Americans, on the other hand, are more materialistic. Thus, they feel gratified when they possess expensive things. The expensive lifestyle in Italy is a necessity as it significantly contributes to the individual’s happiness. In the US, however, expenses are more of a social status and in most cases have no impact on the individual’s quality of life and happiness. Consequently, the Americans are materialistic consumerists, whereas the Italians are high end socialites with expensive lifestyles (McCann, 2010). From a business perspective, both societies are in the high end market with regards to their lifestyles.
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Having established that both countries have a high end population in terms of the lifestyles, it is important to note that income distribution is not even in either nation. Thus, not all the people can afford a lavish lifestyle, whether by need or by choice. The US has the highest median household income within the OECD, but over 50% of the people live in some form of economic deprivation (World Trade Organization, 2011). A majority of the nation’s wealth is held by about 10% of the adult population, leaving the rest of the country to struggle financially (World Trade Organization, 2011). The factor explains why the consumer goods industry is the only stable American industry along with tourism. The people in the US generally fulfill their basic needs and purchase household goods. Thus, they are able to buy the basic products even when the economy is bad. In Italy, good food, high fashion and quality entertainment are perceived as basic; and thus remain profitable even during bad economic times.
Section 2: Final Paper
Going international is something that many businesses have to do in order to compete within a globalized world. National borders no longer have to determine the scope of business operations, as the consumers are now traversing the counties with ease. In order to go international, the companies need to study their destinations and ensure that they can meet the set expectations of the new market. Other than the legal and financial requirements of the marketing move, the cultural and competitive aspects of a new destination must be examined effectively to avoid failure in the international venture.
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Cultural and Economic Analysis
The economy of Italy has been established as stable owing to the variety of industries that the country relies upon for its income. With tourism and manufacturing being successful sources of income, it can be appreciated that the country is rather protected from a number of economic crises in the Eurozone recently. Italy is amongst the few stable economies, and thus investors can enter into the Italian market with security. The country has put in place various policies to ensure that the business environment is conducive and that the investors are well protected on many counts. Moreover, the country is open to business with the European Union members, although it does not imply that other countries are locked out. The government has contributed to making the nation a business hub and an attractive destination for investors from all over the world. However, Italian cultural aspects are not as easy. They are discussed below based on Hofstede’s cultural dimensions. Hofstede provides a relative scale, on which to compare different countries in terms of their culture. The scores are effective in painting a picture of what to expect based on the country’s principles (Trompenaars & Hampden-Turner, 2012).
Power distance can be defined from the perspective of the less powerful members of a given society, as a degree to which they accept inequality within their country, organization or institution. Italy’s score on power distance is 50, meaning that the people in prefer equality over any other form of power distribution (Trompenaars & Hampden-Turner, 2012). Thus, when it comes to making decisions, they expect to be actively involved or at least be consulted by the concerned parties. For a business, it means that there is a need to have an open communication with the customers as well as the employees on a regular basis. Therefore, involving the stakeholders in decision-making would be a great way of ensuring that the business remains afloat. The people in Italy are not willing to be treated unequally, and any business must be able to uphold the value effectively.
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Individualism is defined as the perspective of the members within a given society to look at things. A high score in individualism implies an ‘I’ society whereas a low score implies a ‘we’ society. Italy scores 76, meaning that it is highly an ‘I’ society with people protecting individual needs and objectives rather than those of the collective society (Trompenaars & Hampden-Turner, 2012). The Italians are warm people with closely knit family networks and a tendency to look out for one another. However, they consider personal wellbeing before anything else, and while they may work well in teams, they are better off as lone rangers in goal setting.
Masculine societies are motivated by competition and success, while feminine ones focus on the quality of life and caring about others. Italy is masculine, and the people mainly look at achievement and success as motivation for their lives. Thus, any company in the country must look to be associated with masculine qualities rather than the feminine ones. For example, rather than forming an organization on the basis of caring about others, companies should base on achieving specific goals and being successful in given fields. The strategy would attract more attention than a company that is all about caring about people.
The dimension is about taking risks and working within ambiguous situations. Italy scores 75 for uncertainty avoidance, meaning that Italians prefer being sure of something rather than taking a leap of faith (World Trade Organization, 2011). For a country that is expected to be more religious, the score is rather surprising. Nonetheless, companies need to find a way to assure the locals of their products and their sustainability within the markets. Italians are less likely to buy a brand that they know nothing about, or that they are not sure of in terms of sustainability within the market. The dimension may explain the importance of customer loyalty within the Italian market, as customers do not easily start buying a new brand unless they are confident about it.
Regarding the cultural dimension of orientation, Italy is pragmatic with a score of 61 (World Trade Organization, 2011). The people are willing to consider their past and look into the future with only a little skeptical influences. They value ideas based on context and timing rather than holding on to the past or matching fearlessly into the future. The factor means that change is very possible, provided the context is right.
Italians also score very low on indulgence, meaning that all of their activities are based on their needs rather than their wants. Fortunately, the culture has an exquisite taste and the people have other expensive habits that are a part of their needs. They eat high end food, indulge in fashion clothing and even enjoy gatherings and arts. However, they restrain from everything that they consider avoidable, and this may include extravagant products.
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Market Audit and Competitive Analysis
The best way to understand Italy’s market and competitive environment is to conduct a PESTEL analysis with a main interest in factors that are likely to affect a new business within the environment. A PESTEL analysis includes political, economic, social, technological, environmental and legal factors that are relevant within the given country and would have an impact on the performance of the business in question. Some of the general factors that are likely to affect any new entrant in Italy are discussed below.
Italy is a rather stable political entity with limited cases of unrest. Thus, the political environment is settled, and conducive for business. The country has significant ties to the rest of Europe considering that it is a member state in the European Union. However, sovereignty is observed and the government is mainly authoritative. The country is also heavily armed in terms of the military front and is thus capable of protecting its borders in the event of an external threat. Businesses looking to enter Italy can rest easy on the political front, since there are no preliminary threats at the moment.
Italy has a stable economy with the capacity to recover fast as seen in the numerous recessions that hit the Eurozone and the world in the recent past. Italy has taken a long time to stabilize the economy through the diverse capitalistic models. Thus, the country is relatively safe from market crashes that cripple other economies. The use of the euro is an advantage for foreign corporations as it eliminates the cost of currency exchange when doing business across the continent. The people also have a great purchasing power, making the market lucrative for businesses.