Global Business When Businesses Go Essay

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SAMPLE EXCERPT:

[. . .] The largest impact which Italy has taken from Globalization is from economic environment of the world markets (Dconti, 2012). Due to Globalization, Italy has seen a large number of businesses going international during the last eight to ten years. Finding attractive investment opportunities in the developed and developing countries of the World, Italian companies expanded their operations into those countries, strengthened their foot prints, and became successful international corporations (CIA, 2012).

Recognition in the World Markets:

With the help of Globalization, Italian businesses received world-wide recognition and appreciation. Italian products were introduced to the new potential target countries which warmly welcomed these international brands into their markets. To compete with the low cost manufacturers in these international markets, Italian companies focused more on the quality of their products rather than compromising it for saving business costs. They benefitted from this strategy by creating demand in the new potential markets and recognizing their brands as of superior quality than those offered by many other competitors (Dconti, 2012).

Competition in the Low Labor Cost Countries:

Italy faces a stiff competition in those countries where the labor is cheaper than the local markets. The costs of doing business are greater for international corporations in these countries. To compete in these countries, Italian companies have to achieve economy of scale by increasing the level of production and creating brand loyal customers. Italian businesses have new started setting up operations in these countries in a view to compete with the local low cost competitors with equal competencies and strategies (Dconti, 2012).

Open Trade Policies:

When the world economy was under severe recession in 2008, the governments of all countries decided to make the trade laws and policies more relaxed for international businesses in order to improve the economic infrastructures and boost up the industries through foreign direct investments. Italy largely benefitted from these relaxed laws and policies and encouraged its local businesses to import advanced machineries and technological products in order to improve their business processes (Dconti, 2012). There was an open trade mechanism in Italy which significantly increased the GDP growth rate of the economy. Italian companies entered into potential target markets to offer their wide range of products through exports. In collaboration with the other countries in the European Union, Italy did not allow the recessional economy and crisis to hit its industrial sector; it successfully revived its industrial growth and became the sixth largest market economy in the world (CIA, 2012).

Examples of Italian International Businesses

During the last five to ten years, a large number of Italian-based organizations have gone international. They greatly benefitted their businesses from Globalization and expanded business markets. Some organizations chose to merge with larger organizations in new markets while others set up their production units on their own. This section discusses the examples of a few renowned Italian businesses which have expanded their operations, increased their market shares, became more competitive, and improved their stakeholders' value -- all as the result of Globalization.

Ferrero is one of the biggest examples in Italy when it comes to international expansion. It is an international Group mainly engaged in the production, marketing, and sales of a variety of food and confectionary items and drinks. For the last few years, Ferrero has been pursuing an international business growth strategy. It has recently set up new production units in Poland, Germany, and Belgium to serve the customers in these countries and the adjacent regions. According to Financial results of 2011, the Earnings before Tax of the Group were declined by 4.1% due to bad economic conditions in different target countries. However, the Ferrero International supported the growth of the whole Group with its new projects in different potential markets in the Asian and European region (Ferrero, 2012).

Ferrero:

Ferrero offers a variety of food items that best match the requirements of its customers all over the World. It understands the social, cultural, and demographical differences that each of its target market possesses. Moreover, it sets up new projects after carefully analyzing the economic situation, political and governmental forces, and the overall business environment in every new region. With the help of Globalization, Ferrero has made tremendous growth in its international projects that were set up with a huge initial investment of about 382 million Euros in 2011 (Ferrero, 2012).

San Pellegrino:

San Pellegrino is another example of internationally competitive Italian brands. It has recently won the Confindustria Awards for Excellence for being the best beverage brand of its type around the world. As a part of its international growth strategies, San Pellegrino has started an international recognition campaign (Water Coolers Europe, 2012). This campaign mainly aims to create brand awareness among the new potential customers of the company. The brand awareness campaigns have brought positive results on the sales and profitability of the company. Moreover, San Pellegrino has targeted some new markets where it intends to expand in the coming years (PRWeb, 2010).

Benetton & Prada:

In addition to the consumer good markets, Globalization has also impacted some other sectors of the Italian economy. Benetton and Prada can be taken as the most eminent examples from the fashion industry of Italy. Benetton -- a renowned brand in the fashion apparel industry has been showing a rapid business growth for the last few years. This growth can be attributed to the sales of its fashion apparels in more than 120 countries of the world (Funding Universe, 2012). Benetton has been serving the worldwide customers with its 6500 stores; all of which are fully equipped with the modern apparels and outfits for all age groups. The positive impact of Globalization can be seen on the product line of Benetton; it has customized its clothing line according to the social patterns and life styles of its target consumers in the international markets (Benetton, 2012).

Similarly, Prada has also taken positive impacts from Globalization in the form of high level of sales growth and acceptability in the Asian, American, and European regions (Prada, 2012). The most significant growth has been seen in the Chinese markets where the sales volume is being expected to increase up to three times in the next 12-18 months period. The business setup in the rest of the Asian region is also on its growing pace; a sales growth of about 50% is expected in the coming year (Global Times China, 2011). After entering into international markets, Prada has realized that its products do not match the income levels and life preferences of a big percentage of the total consumer market. Reason being, the products offered by Prada are considered premium-priced in the world markets which restrict a large number of consumers from buying Prada brand.

Conclusion

Global business environment affects the economies and businesses in both positive and negative ways. On one side, it enables them to thing strategically, become internationally competitive, and grow with full strengths and competencies. At the same time, it brings a number of challenges and threats in different aspect of their operations (Hill & Jones, 2007). The major forces present in the Global environment are political, economic, social, technological, and environmental forces; all of which have a direct impact on the growth of business and competitiveness of nations (Kotler & Armstrong, 2008).

Italy -- one of the most developed nations in the world has taken great advantages from Globalization and internationalization of its local businesses. It has revived from severe recession and economic downturn and stood up in the row of top industrial economies of the world. Italian businesses have also benefitted from Globalization by expanding their operations into potential countries, setting up production and operational units in foreign markets, serving greater number of potential customers, and increasing their brand loyalty, sales volume, and profitability at Global level (Dconti, 2012).

References

Benetton, (2012). The Group. Retrieved on May 3rd, 2012, from

CIA, (2012). Italy: Economy Overview. Retrieved on May 3rd, 2012, from

Cherunilam, F. (2007). International business: text and cases. India: PHI Learning Pvt. Ltd.

Dconti, (2012). Effects of Globalization on Italy. Retrieved on May 3rd, 2012, from

Funding Universe, (2012). Benetton Group S.p.A. Retrieved on May 3rd, 2012, from

Ferrero, (2012). Ferrero -- Worldwide. Retrieved on May 3rd, 2012, from

Giacomello, G., & Verbeek, B. (2011). Italy's foreign policy in the twenty-first century: the new assertiveness of an aspiring middle power. Lanham: Lexington Books

Global Times China, (2011). Prada sees China sales tripling in coming years. Retrieved on May 3rd, 2012, from

Hill, C., & Jones, G. (2007). Strategic management: an integrated approach. U.S. Cengage Learning

Kotler, P., & Armstrong, G. (2008). Principles of Marketing. 11th Edition. U.S.: Prentice Hall

Lambin, J.J. (2007). Entry Strategies in the Foreign market, Palgrave Macmillan, Retrieved on May 4th, 2012, from

Prada, (2012). Company Info. Retrieved on May 3rd, 2012, from

PRWeb, (2010). San Pellegrino Launches New International Advertising… [END OF PREVIEW]

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