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Which Are the Key Success Elements of Made in Italy and Italian Excellence and Which Are the Major Threats?

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An important item for companies producing footwear, accessories, clothing, jewelery and watches is the fact of being handmade, that is a distinctive element for luxury goods and a source of prestige, exclusivity, uniqueness and value for consumers. Many leading brands in Made in Italy footwear such as Ballin, Fratelli Rossetti, Tod's and Testoni pay close attention to the need to use handmade methods and highly skilled human resources in craftsmanship in their mission, for the production of high quality products that can also become objects of collection.

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The unification of Italy happened during the years 1861-70 and this unification broke down the feudal system that was in existence since the Middle Ages. Industrialisation started picking up in the early 1880’s in the northern and central part of the country resulting in the massive migration of labour to these areas between the years 1880-1914 which in turn resulted in a booming economy. World War I had a devastating impact on the country resulting in huge destruction and loss of life. The Fascist party came to power after the World War in 1922 under the leadership of Mussolini. Mussolini followed the lassiez faire policy in which he aggressively reduced the taxes, trade barriers and regulations resulting in high growth. In 1929 Italy faced a huge depression because of which he changed these policies in favour of government intervention and protectionism. Mussolini nationalized the major banks in the country and tweaked the economic policies so as to result in an economic model which was based on public private partnership and is widely known as corporatism. People who start a business in this country are generally from business oriented families and usually start a business with family members. The culture of the people is to hold the business in their grip to such a high extent that they are willing to compromise on growth rather than having an investor investing in their business. This is the main reason why many businesses in this country are small and usually rely on the debt taken from the banks for their growth. People do not usually sell their company. They perceive selling business as a failure

So people run their businesses as their life long profession. People usually believe in organic growth and are not comfortable dealing with Venture Capitalists. They strongly believe that the growth of the firm should come from the revenues generated by the company. Companies are more focussed on operations and technology and lack in HR and legal aspects which are equally important in the success of the company.

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The economy achieves this by harnessing solar and wind energy (refer to appendix 3). The availability of these resources leads to an inexpensive price point. It allows for the maximization of the resources. In addition, it leads to competition as companies seek to obtain more resources than others. The development increases supply in the market, which enhances GDP growth (Holm, 2006). High investor confidence has also increased the growth of Italy’s economy. In 2013, the country’s GDP stood at 136%. As a result, Italy had the second-largest public debt ratio in the Eurozone. However, in spite of the fact that this level of debt was sustainable, it made the economy highly vulnerable to swings in market confidence (Holm, 2006). As a result, the Italian authorities made efforts to provide a structural surplus. The objective of such a move is to reduce public debt. The government also restores investor confidence in the country. High investor’s confidence indicates that people are willing to spend money on the economy (Holm, 2006). Similarly, increased business confidence raises output in order to meet the high demand for consumer products. Freedom and the ability of the government to protect private property is another factor behind Italy’s economic growth. The two elements encourage individuals to enhance their livelihoods (McDonald, 2005). In light of this, Italy experiences GDP growth as an individual’s self-interests takes over (Holm, 2006). By protecting the rights of citizens and providing a free operating environment, Italy is able to guarantee the economic success of its populace.

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In summary, the intricate bureaucratic trap, political instability, endemic tax evasion and inefficient infrastructures, to name a few, have always burden on businesses, forcing some out of the country. Cheaper workforce, less bureaucracy and more dynamic markets are just some of the reasons why so many historic Italian brands are saying goodbye to the Mediterranean country. The Italian nationalist party, the League, which is part of the coalition government that took power last year, presented a bill to stop companies relocating production abroad. If a brand wants to move its manufacture to another country, they are free to do so, but will not able to label their merchandise as “Made in Italy”.

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Federici, D., & Marconi, D. (2002). On exports and economic growth: The case of Italy. The Journal of International Trade & Economic Development, 11(3), 323-340.

Holm, K. (2006). Europeanizing export controls: The impact of the European Union code of conduct on exports in Belgium, Germany, and Italy. European Security, 15(2), 213-234.

McDonald, J. (2005). Domestic regulation, international standards, and technical barriers to trade. World Trade Review, 4(2), 249.

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