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GCR report on ITALY Shayona Institute of Business Management (820) Zone 1- Ahmedabad PART-I
GCR report on ITALY Shayona Institute of Business
Management (820) Zone 1- Ahmedabad
PART-I
COUNTRY INFORMATION
Italy became a nation-state belatedly - in 1861 when the city-states of the peninsula, along with
Sardinia and Sicily, at that time united under King Victor EMMANUEL.
An era of parliamentary government came to a close in the
early 1920s when Benito MUSSOLINI established a Fascist
dictatorship. His disastrous alliance with Nazi Germany led to
Italy's defeat in World War II.
A democratic republic replaced the monarchy in 1946 and
economic revival followed. Italy was a charter member of
North Atlantic Treaty Organization (NATO) and the European
Economic Community (EEC). It has been at the forefront of
European economic and political unification, joining the European Monetary Union in 1999.
Persistent problems include illegal immigration, the ravages of organized crime, corruption, high
unemployment, and the low incomes and technical standards of southern Italy compared with the
more prosperous north.
And their border country is Austria, France, Holy See (Vatican City), San Marino, Slovenia,
Switzerland.
People:
Nationality: Italian
Population: 59 million (2011)
Ethnic groups: Primarily Italian, but there are small groups of German-, French-, Slovene-, and
Albanian-Italians.
Religion: Roman Catholic (majority).
Language: Italian.
Literacy: 98%.
Natural resources:
Mercury, potash, marble, sulfur, natural gas and crude oil reserves, fish, coal, arable land
Agriculture products:
Fruits, vegetables, grapes, potatoes, sugar beets, soybeans, grain, olives; beef, dairy products; fish
Industries:
Tourism, machinery, iron and steel, chemicals, food processing, textiles, motor vehicles, clothing,
footwear, ceramics
General Background of Italy
The flag of Italy features three equal and vertical bands, making it a tricolor flag. The hoist side
has a green band; white forms the center band; and the outer stripe is red. The red and white parts
of the flag were borrowed from the official colors of the Milanese flag, and the green was added
to represent the Civic Guards of Milan. When hung vertically, the flag is to be rotated 90 degrees.
The green is said to represent hope and joy, the white symbolizes peace and honesty, and the red
stands for strength and valor. Another interpretation of the Italian flag's colors is that the red
shows the violent struggle to become a unified and independent nation, the green symbolizes the
landscapes of Italy, while the white represents the snow-capped Alps.
POLITICAL IDEOLOGY
CURRENT IDEOLOGY: REPUBLIC DEMOCRACY
The Italian Republic was established in 1946, after the end of Benito Mussolini's Fascist
government during World War II. Throughout the Cold War, Italian politics was under enemy
control of Christian Democratic Party on the right and the Socialist and Communist Parties on the
left. There were repeated changes of government and Prime Minister, although the parties
involved changed little.
This situation was altered in the early 1990s following a major political corruption scandal which
included many leading politicians and led to the collapse of the main political parties of the
postwar period - the Christian Democrats and the Socialists. Under a new electoral system,
considered as the Second Republic, new parties emerged and the Italian political landscape was
transformed. One new political force was a coalition of mid-left parties which governed from
1996-2001 under Prime Ministers Romano Prodi, Massimo D'Alema and Giuliano Amato. A
mid-left government in 2007, led by Mr Prodi, lost a Senate vote on account of its foreign policy.
The most significant change under the new electoral system was the emergence of a new mid-
right coalition led by Silvo Berlusconi and his Forza Italia Party. This held power from 1994-96
and again from 2001-06. Silvo Berlusconi returned to authority for the third time in 2008, but
amid the elevated national debt crisis and following his incapability to secure a majority result on
the latest budget, he resigned in November 2011. Former EU Competition Commissioner and
economist Mario Monti is the present Prime Minister, heading a caretaker government of
technocrats which hopes to restore stability to the Italian economy. Elections are expected to be
held early in 2012.
Social:
Italians trace their gastronomic heritage to Romans, Greeks, Etruscans and Mediterranean
peoples who elaborated the methods of raising, refining and storing foods. But dining customs
acquired local accents in a land divided by mountains and seas into natural enclaves where
independent spirits developed during the repeated shifts of ruling powers that f spreaded Italy
from Roman times to the Risorgimento. Despite the different attitudes about eating expressed
from the Mediterranean isles to the Alps, Italian foods have points in general. Consider pizza, fast
food. Italy, with a population of near 57 million, consists of 20 regions subdivided into 103
provinces that take the names of prominent towns. Each province boasts different foods and
wines, which, needless to say, have an inherent affinity for one another. Now, in a world of ever
more uniform tastes, Italians retain their customary loyalty to distinctive local wines andfoods.
A growing number of these authentic food products has been officially protected under European
Union regulations for DOP (Denominazione di OrigineProtetta) and IGP
(IndicazioneGeograficaProtetta). The program in Italy is modeled after the successul system of
wines of controlled origin, which applies to more than three hundred appellations identified by
the initials of DOC (Denominazione di OrigineControllata) and DOCG (the G for garantita or
guaranteed) and the recently instituted system of IGT (for IndicazioneGeograficaTipica), which
applies to about 120 wines throughout the country. Italy is toothe leading European country for
organic foods with near 50,000 farms committed to growing produce by natural methods without
the use of chemica.
Throughout the centuries, Italy’s population curve has experienced many changes, often in
similar development with population movements in other European countries. Roman
Catholicism is by far the largest religion in the country, although the Catholic Church is no
longer officially the state religion.
The effects of a declining population can be opposing for an economy which has borrowed
widely for repayment by younger generations; however, a smaller human population has a
smaller influence on the environment. Economically falling populations are thought to lead to
reduction, which has a number of effects.
The Italian economy is determined in large part by the manufacturing of high-quality consumer
goods produced by small and medium-sized initiatives, many of them family owned. In education
sector, there is a common of students in technical schools that prepare students to work in a
technical or administrative capacity in agriculture, industry or commerce. Demographic growth
was increasing; the movement of the production edge was supporting not only the rise of
population, but also the rise of a wealthier population.
Trade & Commerce:
Italy Trade: Exports
The 2008 recession decreased Italy's global trade volumes significantly. Its export
volumes decreased from $546.9 billion in 2008 to $369 billion in 2010. However, the country's
economy remained relatively strong and ranked 8th in the world for export volumes.
The main exported commodities include:
Engineering products
Textiles and clothing
Production machinery
Motor vehicles
Transport equipment
Chemicals
Food
Beverages and tobacco
Minerals and nonferrous metals
Italy Trade: Imports
Italy's imports dipped as well following the 2008 recession. The figures dropped from
$546.9 billion in 2008 to $358.7 billion in 2010.
Italy imports the following commodities:
Engineering products
Chemicals
Transport equipment
Energy products
Minerals and nonferrous metals
Textiles and clothing
Food and Beverages
Tobacco
Italy Trade: Energy Export
Italy has a high volume of energy production in its industry sector. Italy exports 3.431
billion kWh of electricity and 667,100 bbl/day of oil and 210 million cu m of natural gas.
Through increased energy production, Italy’s trade balance has come down from $78.03 billion
in 2008 to $55.44 billion in 2010.
Trade Relations: India/ Italy:
Italy has a diversified industrial economy, whichis divided into a developed industrial
north,dominated by private companies, and a less developed,welfare-dependent,
agriculturalsouth, with high unemployment.
The Italianeconomy is driven in large part by themanufacture of high-quality consumer
goodsproduced by small and medium-sizedenterprises, many of them family-owned.
Italyalso has a sizable underground economy, whichby some estimates accounts for as
much as 15%of GDP.
These activities are most commonwithin the agriculture, construction, and servicesectors.
Italy has moved slowly on implementingneeded structural reforms, such as reducinggraft,
overhauling costly entitlement programs,and increasing employment opportunities
foryoung workers, particularly women.
Economic and commercial relations between India and Italy have been growing steadily.
Italy is India's 5th largest trading partner in the EU (21st globally) and the 12th largest
investor in India.
PART-II
Industry Study on Steel Industry in ITALY
MEANING OF STEEL INDUSTRY :
Steel industry, the business of processing iron ore into steel. It is simplest form is an iron-carbon
alloy, and in some cases, turning that metal into partially finished products or recycling scrap
metal into steel. The steel industry grew out of the need for stronger and more easily produced
metals.
Technological advances in steelmaking during the last half of the 19th century played a key role
in creating modern economies dependent on rails, automobiles, girders, bridges, and a variety of
other steel product.Different status of Global Steel Industry with steel production &consumption
trends in different geographical regions & global steel trade scenario are different.
CLASSIFICATION OF STEEL INDUSTRY:
Iron and steel is one of the most basic industries.
In early days demand was low and mostly of local nature. Charcoal obtained from nearby
forest was used to locate small plants. This led to disperse onofthisindustryup tomid-
eighteenthcentury.
Latter the use of coal in iron smelting began which attracted this industry. Attraction to
coalfield regions was governed by then available technology and demanding coal field areas,
forest are shrinking demand for iron increased consider ably due to starting of heavy engineering
works, required iron ore to coal ratio was 1/8, coal producing regions already had some iron
work history, pool of labor required available in many coal field region, at some places iron ore
was found associated with coal and like factors.
Up to the end of nineteenth century coal field enjoyed this unique position and during this
period it has developed sufficient industrial in retia at many places.
In twentieth century, the technology of iron smelting further improved and now less coke,
only half of iron ore, is required.
MAJOR PLAYERS AT GLOBAL LEVEL:
1. ARCELORMITTAL SA (HEADQUARTERS : LUXEMBOURG )
2. BAOSTEEL (HEADQUARTERS: SHANGHAI ,CHINA)
3. POSCO (HEADQUARTERS: POHANG,SOUTH KOREA)
4. NIPPON STEEL CORP (HEADQUARTERS: JAPAN)
5. JFE HOLDINGS (HEADQUARTERS: JAPAN)
6. JIANGSU SHAGANG GROUP (HEADQUARTERS: CHINA)
7. TATA STEEL (HEADQUARTERS: INDIA)
8. US STEEL (HEADQUARTERS: USA)
9. ANSTEEL (HEADQUARTERS: CHINA)
10. GERDAU (HEADQUARTERS: BRAZIL)
CURRENT COMPANIES WHICH PROVIDES SERVICES OF STEEL IN ITALY
1. DANIELI :
(Danieli ranks among three largest suppliers of equipment and plants to the metal industry in
the world. The company has six factories in Italy, Germany, France, Sweden, Thailand and
China. The Headquarter is in Buttrio, North-East of Italy)
2. BERCO SPA
(large manufacturer specializing in the production of undercarriage components for tracked
vehicles, equipment for overhauling the undercarriages of earthmoving machinery and the
manufacture of machine tools for the reconditioning of internal combustion engines)
3. FERRIERA VALSIDER :
(FerrieraValsiderS.p.A. is a steel works that has been operating in the province of
Verona, Italy, since 2001.Ferriera Valsider produces structural steel: heavy plate and hot
rolled coils with concast slab as raw materials. Major amount of slabs used is shipped
from Azovstal Iron and Steel Works.)
4. LUCCHINI :
(Lucchini was the third largest Italian steel group after Gruppo Riva and Techint, with a
2005 production of 3.5 million tonnes.It is specialized in high quality long and special carbon steel
products. In 2005 the Russian steel and mining company Severstal became
the majority shareholder (approx60%) of Lucchini, the remainder being owned by
Lucchini Family (30%) and other minor shareholders)
5. RIVA :
(Gruppo Riva is an Italian steel producer. After the Arcelor-Mittal merger and the takeover
of Corus by Tata Steel, the group is currently the world's eighteenth and Europe's third largest steel
producer.[2] Riva Group (consisting of two companies, Riva Acciaio and
Ilva) is private-owned and the whole shareholders' equity is held by the Riva family, through
The financial institution "Riva FIRE" (which stands for "FinanziariaIndustriale
Riva Emilio")
LAMPRE :
(The Lampre group is an Italian-based company that specializes in pre-coated steel
production. In addition to the main company the group also contains Lamital and Lamfer,
as well as a Portuguese subsidiary called Lampre Portugal.)
MARCEGAGLIA :
(Marcegaglia is an Italian corporation founded in 1959 by Steno Marcegaglia, operating
in the steel sector. It has diversified into the sectors of tourism (holiday villages) and
property as of 12 October 2007, Marcegaglia held a 17.296% stake in real estate
company Gabetti Property Solutions)
STEEL GLOBAL SCENARIO
The biggest boom in history of steel industry is that of the 1950s and 1960s, when the steel
industry was driven by the post-War boom in the developed world. Whereas the current boom is
being led by growth in the developing world, particularly China, India and Brazil. Indeed, the
China factor is huge and gives the impression that the boom has a broader basis than it actually
has. In 2005, China produced 349 million tons of crude steel, accounting for almost one-third of
the global steel output. Even this was not enough to feed the country's appetite for growth. It was
the biggest importer of steel and the sixth biggest exporter of steel in the world; in 2005, its net
imports amounted to 12 million tones and its consumption of steel also amounted to a little less
than one-third of the world consumption. China is clearly the engine that has driven steel
consumption in the Asian region. Its consumption, as a percentage of the total consumption in
Asia, increased from 41 per cent in 1999 to 57 per cent in 2005. Steel prices, primarily buoyed
by the Chinese boom, hit their peak between 2002 and 2004. This ensured high profits from
investments in steel.
Despite the moves towards consolidation, steel capacities are still fragmented. The gap between
Arcelor-Mittal and Nippon Steel, the second biggest producer, highlights this. Nippon produced
32 million tons of steel in 2005 - less than one-third that of the industry leader. More
significantly, although the Tata-Corus combine will be placed at number five in the global steel
pecking order, its capacity would still not be very far ahead of most companies in the top 15.
This implies that under the threat of further consolidation the Tata's may well come under
pressure to acquire more capacities from rivals or expose themselves to attack from aggressive
bidders.
CURRENT SCENARIO IN ITALY
The global centre of gravity for the steel business is moving to the East. China, Japan,India and
South Korea represent more than 50% of world steel output,andadding Russia and Ukraine it
represents more than 60% of world steeloutput. Italy has relatively strong position on quality and
high quality productmarkets are increasingly challenged as these competitors are improving their
technologicalcapacities and competencies as well. Italian steel producers face the riskof losing
control and global market share, even for quality products.
Italy faces a deep crisis as its biggest steel plants struggle for survival, putting it in the forefront
of a permanent decline in Western Europe's steel sector and increasing cost pressures on many of
the region's industries. Producing crude steel in the European Union, where supply is 30% more
than demand, has become too costly. Only the most technologically and environmentally
advanced plants are set to survive. Italy's largest steel producers, ILVA and Lucchini, face
potential shutdowns, which could cost the country 25,000 to 30,000 direct and indirect jobs.
The future of Italy's largest stainless steel factory, Acciai Special Terni, is also finely balanced as
it is up for sale. Many fear this might result in a break-up, production cuts and job losses. The
broader industry predicament is so acute that the particular country - Europe's second-largest
steel producer after Germany - risks becoming a steel importer.
Italy's steel sector decline signals bad condition for Europe.
GROWTH DRIVERS
Construction:
The construction industry has been witnessing a growth rate of 12%-14% in recent times. Steel
construction is now identified with speed and since Italy is in need of speedy project
implementation, steel is the best alternative for fast track construction. With economy surging
ahead and expected increase in income levels of population, it is believed that demand for steel
from this sector will continue to grow at current rates if not improve
Automobile:
The domestic automobile industry has also grown at more than double-digit rates in the past five
years. The Italian automobile sector is the second fastest growing market after China and has
emerged as a prime demand driver for alloy steel. Automobile sector which is experiencing
growth and competition is likely to be one of the major drivers for steel consumption in the
coming years and most likely, its contribution in the overall demand pie is likely to improve
from the current levels
Infrastructure:
Infrastructure sector comprises of roads, railways, airports and power. The 11th Five-year plan
has lined up huge investments in all the above related sectors of infrastructure. The sector wise
anticipated investment are $200bn in power, $80bn in railways, $48bn in roads, $13bn in ports
and $9bn in airports. Because of surge in the above activities, the demand for long products of
steel will be increasing in years ahead.
Consumer Durables:
The consumer durables sector has also been witnessing robust growth. It has grown at an average
of 10% per annum and is expected to grow at double-digit rates for coming years. The domestic
appliances market which includes spin driers of washing machine, almirahs, thermo ware, water
filters, dishwashers, microwave ovens, catering equipments, cutlery, furniture etc have opened
new opportunities for steel consumption, thus ensuring a steadily growing trend of steel off take.
Oil & Gas Industry:
Oil & gas sector is the major consumer of steel tubes and pipes. The pipe consumption in oil &
gas sector is expected to grow at a rate of 25% CAGR as this sector is set to witness massive
capital investment. Apart from laying cross-country pipelines, exploration and production
activities are also experiencing strong growth in both international as well as domestic markets.
RISK FACTOR:
Availability and the price of raw materials
In 2011-12, raw material costs accounted for approximately 56.9% of total production
costs.Italian principal raw materials include iron ore, coal, coke (a portion of which produce
from coal), limestone, dolomite, manganese, zinc, tin and aluminum. Italy depends on third
parties for some of our raw material requirements.
In 2011, there was a steep rise in the cost of a number of commodities essential for steelmaking.
Global developments, particularly the dramatic increase in Chinese and Indian demand for raw
materials used in steel manufacturing, may cause severe shortages and/or substantial price
increases in key raw materials and ocean transportation capacity.
Competition, including price competition and competition from other producers
The steel industry is highly competitive with respect to price.
The steel industry is also highly competitive with respect to product quality and customer
service, as well as technological advances that would allow a steel manufacturer to lower its
costs of production. In addition, most markets are served by several suppliers, often from
different countries. Competition from foreign steel producers is strong and may increase due to
increases in foreign steel installed capacity, appreciation of the real against the U.S. dollar and
the reduction of domestic steel demand in other markets.
In addition, many factors influence our competitive position, including efficiency and
operating rates, and the availability, quality and cost of raw materials and labor. Over the last
two years, China has become one of the main international steel exporters. If we are unable to
remain competitive with China or other producers in the future, we may be materially and
adversely affected.
Environmental and health regulations
Steel making, mining and logistics facilities are subject to a broad range of laws, regulations
and permit requirements in Italian relating to the protection of health and the environment.
Italian pollution standards are expected to continue to change, including new effluent and air
emission standards and solid waste-handling regulations. New or more stringent environmental
and health standards imposed on us can require us to make increased capital expenditures. Waste
disposal and emissions practices may result in the need for Italy to clean up or retrofit facilities at
substantial costs and could result in substantial liabilities. Environmental legislation restrictions
imposed by foreign markets to which we export our products, may also adversely affect our
export sales.
PESTEL ANALYSIS :
1) POLITICAL ENVIRONMENT:
From the political point of view Italy is an ideal country where to export the product. It has good
international relationships, especially with other European countries. There is no restrictions to
the importation or the exportation of capitals and goods. There is a stable political regime with a
multi-party sygooglrstem, which can ensure the certainty of law and the respect of contractual
rights. However lawsuits tend to be lasting and expensive, and this could represent a risk in case of
a contractual breach.
Italy is a parliamentary republic. The legislative power the Parliament receives comes from the
Constitution, which is the basic law. The Parliament is composed of the Chamber of Deputies
and the Chamber of the Senate and is directly elected by universal suffrage for 5 years. The
President of the Republic is the Chief of State and is elected every 7 years by Parliament in
ordinary session. The President of the Republic designates the President Del Consigliore, Prime
Minister, after consultation with other political parties. Justice is exercised by magistracy, which
is granted complete independence.
Despite a relatively modern constitution Italy suffers from chronic political instability.
Governments tend to be made up of loosely tied coalitions, which rarely last more than two
years. This historic instability has inflicted considerable mistrust of the Italian State, its apparatus
and infrastructure. The Italian territory is divided into 20 regions, which are made up of several
provinces. The Capital City, Rome, has a population, which is over 3.000.000 and is the largest of
the Italian cities.
EMPLOYMENT:
The structure of the steel industry's labor force has changed during the restructuring period.
Today it consists of a large proportion of multi-skilled workers, technicians, engineers, and
managers. The industry as a whole has been attempted to attract more people with higher
qualifications but the steel industry is faced with skills shortage.
Moreover, skills and knowledge requirements can be expected to continue to rise and demand for
highly skilled labor. This constitutes a serious challenge to the steel industry with a decreasing
workforce in Italy.
The Italy steel sector's demand for skilled labor is another challenge to the performance and
competitiveness of the Italy's steel industry because skills and knowledge requirements arerising
while the labor force is decreasing. Thus, attracting and retaining highly skilled labor is
increasingly become an important topic for the Italy.
2) ECONOMIC ENVIRONMENT:
The Italian Economic Environment is also quite good for steel industry.
Italy is the 7th economic world power after USA, Japan, China, Germany, France and UK.Italy
is the 2nd producer and consumer of steel in EU after Germany. Italy is the 1st EU country for
import-export of steel products.
Italian economy is based on services and industry. The per capita GDP is $30.200, which is not
high, but which is however enough to ensure the population with the possibility to save some of
their budget for the acquisition of expensive products. In the next few years, GDP will resume its
growth.
Income is also better distributed looking at the Gini Index, Italy has a 36 (where 0 means equally
distributed and 100 means unequally distributed).
The Unemployment rate is a high in Italy, 7% .As many as 25,000 (Approx) jobs are at risk in an
area already weakened by high unemployment in Italy. Italy's largest steel producers, ILVA and
GruppoLucchini, face potential shutdowns, which could cost the country 25,000 to 30,000 direct
and indirect jobs. Job losses are a prime concern for the indebted Italian and European
governments, leading to talk of nationalization in France and Italy.
The Italian steel industry is slightly recovering in 2012as compare to 2008 production and
economic results.
In 2010 Italian production recovered 30% versus 2009, but still 16% below the levels achieved
before the recession.
Italy faces a deep crisis as its biggest steel plants struggle for survival, putting it in the forefront
of a permanent decline in western Europe's steel sector and increasing cost pressures on many of the
region's industries.
Steel imports, about 57 percent of which came from other EU countries, fell to 1.063 million
tonsin 2012-13. Italy's steel exports to its main markets in other EU countries rose 7.5 percent to
987,000 tones, while imports from the EU dropped 16 percent to 606,000 tones.
3) SOCIAL:
Actually Italy has a population of 59 million (2011). The 98.4% of it are literates, and the 66.4%
of them are aged between 15 and 64 year.
Factory work in steel is very different from other types of labor. The introduction of the factory
system had a negative effect on living conditions. Factory owners who believed in Social
Darwinism and Rugged Individualism did not care much about those who worked in their
factories. They believed that if the workers wanted to improve their; lives they had to do it on
their own. Also, because no particular strength or skill was required to operate many of the new
factory machines the workers were considered unskilled. This meant they were easily replaced.
Because of shut down of Ilva Plant in Taranto in the Puglia region Many people Lost their jobs
, particularly amongst men. Around 20,000 jobs were at risk because of the shut down of the
company. This is the reason of bitterness and anger towards the government .
People of Taranto in the Puglia region have to commute to New Industry of the other area because
there is no nearby work. Many people decide to leave the area - particularly young so changing
social structure .People are more business orientated and in touch with the outside world. The
town is a lot quieter - different shift patterns.
4) TECHNOLOGICAL ENVIRONMENT:
Technology has always played an important role in the steel industry. Italy's steel industry has
strong performance in relation to process and product innovation, supported by advanced
technology and technological development.
Very important examples include the introduction of continuous casting, which revolutionized the
industry, as well as the introduction and refinement of minimillsand the EAF(Electronic Arc
Furnace) technology. Italy's steel industry had a head start compared to the US steel industry with
early privatizations and technology investments in the 1990s. The advanced use of technology in
the Italy steel industry is a crucial factor in maintaining a competitive edge and technological lead
over the competitors,
The large Chinese companies use new technology and produce products that match global
standards. Small mills in China that are using outdated technology are also active as local
suppliers. Thus, the steel industry in Italy is very depending on its ability to compete with
Chinese products and product innovation to meet advanced customer demand and continually
reduce production costs. New steel production technologies include the Castrripprocess allow
direct casting of steel sheet. The Castrip process is different from conventional thin slab casting
of steel products. The Castrip process is best when making thin products at high casting speeds.
5) ENVIRONMENT:
The reason of the competitiveness issue that the steel sector faces due to the ETS lies in its global
nature. Environmental regulations and sustainable development are main issues in this
competitive world. In that regard, the Emission Trading Scheme (ETS) is a hotly debated topic.
The ITALY Commission's proposal for ETS review of January 2009-10 is moving more of the
responsibility for Italy's climate policies. It includes an Italy's Sector Cap i.e. that Member
States will no longer have control over the allocation of the emission rights in the ETS sector.
Italy is one of the three EU member states that have not achieved their Kyoto targets. There have
been problems especially with greenhouse gas emissions, waste management in some parts of
Italy, air pollution and climate change. In 2009 Italy had a budget of € 200 billion to meet the
Kyoto targets. (Environment policy review of Italy 2008, 1, 7.)Italy has made a promise that it will
meet its targets that was set for the climate and energy package in December 2008. This means that
Italy has to reduce greenhouse gas emissions in non-ETS sectors (e.g. buildings, road transport and
farming) by 13 % by 2020 compared to 2005 levels and energy coming from renewable sources
has to have a share of 17 % of total energy consumption. This is 5 %more than it was in 2005. The
Italian government has also set its own targets about electricity production from renewable sources
for the years 2007-2012. The goal is to increase the production by0.75 % per year. Italy has
received the largest amount of money among the 27 member states from the EU cohesion fund to
support its sustainable energy investments. (Environment policy review of Italy 2008, 3.)
In late 2007 Italy made a national plan considering agricultural biodiversity. It specifies actions to
bemade for better collection, cataloguing and conservation of animal breeds and for organic
agriculture. Italy is one of the top member states in organic farming and is still struggling with
severe air pollution, despite many implementations of sustainable mobility policies at local level.
(Environmentpolicy review of Italy 2008, 4)
6) LEGAL:
The European Union forms a customs union and a large unified market having free trade among
the member states. It levies a common tariff on imported products coming from non- European
Union countries such as the United States, Japan, and Canada.
As all members of the European Union, Italy adapts a common trade policy. Italy has a liberal
import regime where import licensing is not common. Import licenses are issued with due
consideration for the provisions of relevant European Union and Italian trade agreements and the
needs of the specific importing country.
Certain steel products are required to meet specific quality standards. The directive applies to toy
safety, machinery, electromagnetic compatibility (EMC), telecommunications terminal
equipment, active implantable medical devices, medical devices, non-automatic weighing
equipment, construction products, explosion proof electrical equipment, low voltage electrical
equipment, simple pressure vessels, personal protection equipment and gas appliances. Qualified
products must carry a CE mark to show its compatibility, fixed onto the product by a
manufacturer or importer as self-declaration of compliance.
Steel Traders must pay attention to the Italian product liability law, which covers all liability
regarding defects not ordinarily expected by a consumer. Both the seller and the manufacturer in
the Italy is liable under the law.
OT ANALYSIS:
OPPORTUNITIES THREATS
New market opportunities and improved bargaining power through acquisitions and
mergers.
Increasing consolidation in the industry will improve the bargaining power of the industries
same way supply and end-user industries that have a much higher consolidation ratio.
Acquisitions of companies outside Italy and mergers between Italian companies and other
companies can potentially give the Italy's industry access to new markets, and multinational
companies have better management capacity over the business.
Increased upstream participation and integration.
Vertical integration of mining of iron ore sources and energy production is an opportunity
for regional and/or global players in particular to get it.
Upstream process and raw material efficiency.
Upstream process can increase efficiency of raw material utilization by reducing raw material
sensitivity.
Cleaner and safer technologies.
Technologies that are more efficient are important to increase energy efficiency and reduce
emissions, which constitute an opportunity to pro-actively pursuing new business
opportunities.
More efficient technologies and processes and intelligent manufacturing
It is important to relate enhancing efficiency and flexibility in the downstream process.
Engaging in knowledge sharing in strategic networks is an important opportunity to pursue
new breakthrough technologies.
Partnerships as platform for innovation and new market opportunities.
Partnerships, e.g. with view to product development and high-performance materials, at
various levels -horizontal, vertical and multi-sectorial - provide strong platform for pursuing
new market opportunities and further strengthening existing markets through innovation and
knowledge sharing.
Cooperation with scrap suppliers to improve the organization of recycling
Cooperation with scrap suppliers are opportunity for achieving maximum scrap availability.
THREATS
Competition from China.
Increasing international engagement and exports into the Italy from China is a threat.
That is supported by increasing capacity in China together with state aid to Chinese
enterprises. Direct and indirect state aid implies uneven conditions for competition to the
disadvantage for Italy's producers.
The Competition from other countries.
The Competition from other countries such as the Brazil and India is increasing. Easy access
to raw material supplies makes these countries competitive.
Decreasing ITALY share in world production.
The Italy's steel industry as whole has not fully benefited from the worldwide growth in
the demand for steel and this has resulted in a gradually decreasing share of the world
production.
Imbalances in demand and supply for raw materials.
Iron ore reserves are extra-large. However, supply-demand imbalances have occurred and will
most likely continue in the foreseeable future due to the high demand for steel led by China.
Increasing freight rates, malfunctioning transport markets and logistics infrastructures.
Malfunctioning transport markets generate barriers for Italian steel producers. In addition,
increasing freight rates and malfunctioning logistics infrastructures increase the relative costs
for Italian steel producers and makes it more difficult for them to compete on the export
markets.
Access to energy and malfunctioning energy markets.
There is global competition for the main resources used as inputs for the steel industry, i.e.
energy and raw materials, has increased. Major issue is securing access to energy.
Environmental legislation.
Environmental legislation and specifically the new ETS might lead to loss of
competitiveness vis-à-vis competitors who are not faced by as restrictive emissions schemes.
Moreover, it might drive down the interest of investors.
Uneven global playing field.
Despite of tariff barriers are becoming less important for steel exporters, a number ofnon- tariff
barriers still remain impeding a fair and even playing field for Italy's steel producers
globally. Some non-Italy's countries benefit from domestic subsidies that protect their home
markets and improving their cost-competitiveness.
COMPARISION BETWEEN INDIAN AND ITALIAN STEEL INDUSTRY
LUCCHINI TATA STEEL
Mar '12 Mar '12
12 mths 12 mths
Operating Profit
PBDIT
Interest PBDT
Depreciation
Other Written Off Profit
Before Tax
Extra-ordinary items
PBT (Post Extra-ord Items)
Tax
Reported Net Profit
Per share data (annualised)
Shares in issue (lakhs)
Earning Per Share (Rs)
12,416.79
17,351.74
4,250.11
13,101.63
4,516.65
0.00
8,584.98
0.00
8,584.98
3,636.46
4,948.52
9,712.14
50.95
16,270.59
19,958.00
3,426.67
16,531.33
4,414.82
0.00
12,116.51
18.50
12,135.01
3,247.26
8,856.05
9,585.43
92.39
Earing per share is Rs. 50.95 Lucchini while 92.39 of Tata steel.
Net profit after tax of Tata steel is double than Lucchini . (Tata Steel 8856.05 and
Lucchini 4948.52)
so, from the above data we can say that the Tata steel is performing well in the market as
Compare to Lucchini.
CONCLUSIONS
The main findings of this study can be summarised as follows.
The Italy steel industry has been undergoing a lengthy period of restructuring, marked by
privatisation, internationalisation and concentration into a small number of major
multinationals, against a background of a need to remain competitive in a globalised market.
The steel industry currently seems to be in better shape to face the future.
In this context, the level of employment in the steel industry has fallen considerably across
Italy
over the last two decades, often linked to privatisation and mergers/acquisitions. The largest
job losses have taken place in central and eastern Italy, but falls have also been significant in
many western countries.
The steel industry is still a predominantly male and blue-collar sector, with an ageing
workforce
in many countries. Open-ended employment contracts and full-time employment remain the
norm.Over recent years, competitive pressures have changed employment conditions and
working practices in the direction of greater flexibility, while increasing skill requirements.
In Italy, 40% of the steel industry (corresponding to 80% of output) was state controlled up
until
1992. The public shareholdings were sold to various national (Ilva and Riva) and foreign
(ThyssenKrupp and Arcelor) groups. This privatisation was completed in 1996.
Steel is covered by the national sectoral collective agreement for overall metalworking. In
line with Italy's two-tier bargaining structure, this agreement is supplemented by agreements
concluded at company and territorial level, with the two levels of bargaining dealing with
specific issues. The national agreement applies to all companies in the sector regardless of
size (small, medium or large) and ownership structure (cooperatives and artisanal enterprises
are also covered).
In Italy, the government has recently set up a Steel Industry Observatory Its function is to
draw up industrial policy for the steel sector, jointly with the social partners.
In Italy, on the other hand, the tradition of cooperation between the three main metalworking
unions (which include the steel industry) has been damaged recently, following the refusal in
2003 of one union to sign a sectoral agreement for metalworking accepted by the other two,
and attempts on the part of this union to obtain company agreements that are more
advantageous than the sectoral agreement.
Industry Study on Automobile Industry
Introduction of Auto Mobile Industry of Italy
MEANING
All those companies and activities involved in the manufacture ofmotor vehicles, including m
ost components, such as engines andbodies, but excluding tires, batteries, and fuel. The
industry’s principal products are passenger automobiles and light trucks, including pickups,
vans and sport utility vehicles. Commercial vehicles (i.e.
delivery trucks and large transport trucks often called semis)
though important to the industry, are secondary. The designs of modern automotive vehicles
are discussed in the articles automobile truck, bus, and motorcycle; automotive engines are
described in gasoline engine and diesel engine. The development of the
automobile is covered in transportation, history of: The rise of the automobile.
CLASSIFICATION OF INDUSTRY
The different types of automobiles found on roads are presented in a comprehen-
sive manner. There are in general three main classifications of the various types of vehicle.
They are:
I. The single-unit vehicles or load carriers
II. The articulated vehicles
III. The heavy tractor vehicles
1.2. The Single-unit
Vehicles or Load
Carriers
These vehicles are
conventional four-wheel
types with two-axle
design in which the front axle is a steering non-driving axle and the rear axle is the driving
axle. With the advancement, many changes have been incorporated in the number of axles as
well as the driving system.
1.3 The Articulated Vehicles
A larger powered three-wheeler with single steering wheel in front and a conventional rear-
driving axle falls in this category. It can be turned about its own tail due to the three-wheel
construction and has a greater handling ability in unusual places. The coupling mechanism
between semi-trailer and tractor in most of these vehicles is designed for automatic
connection and coupling up. A lever is provided within the driver’s approach Tor coupling
operation. A pair of retractable wheels in front can be raised or lowered automatically along
with the coupling and uncoupling operation.
1.4 The Heavy-tractor Vehicles
To move heavy loads tractor or independent tractor vehicles are used. They commonly
operate in pair either in tendon or as puller or pusher. The latter arrangement provides
stability while descending appreciable gradients.
The digital figures like 4×2, 4×4, 6×4 etc. are commonly used in the classification of
vehicles, where the first figure represents the total number of wheels and the second figure
the number of driving wheels. By increasing the number of axles, the load per axle can be
reduced, which protects the tires from overloading and the road surface from damage. Wheel
axles are called “live” if drive and called “dead” if non-drive. A live axle supports the
payload and provides driving tractive effort, whereas a dead axle just supports the load
Comparison between Indian and Italian Auto Mobile Industry
Total manufacturing:-
Total manufacturing of automobile industry in
India is 11 millions where Total manufacturing of automobile industry in Italy is 0.79
millions of vehicles.
Total exporting:-
Total export of automobile industry in India is 1.5
millions where the export of Italy in automobile sector is 0.035.
Contribution in GDP:-
In India contribution of automobile industry in
gdp is more than 10% where in Italy it is around 8.5%
Growth:-
Growth of automobile industry in India is 8.22% where in Italy is 8-10%
Major Players of Italian Auto Mobile Industry
Why Companies Should Invest in Italy?
Lying at the heart of the Mediterranean, Italy is the main thoroughfare linking
southern Europe to northern and central Europe by land, sea and air. The majority of Europe's
capitals are within 3 hours flying time from Rome not to mention many in the Balkans, North
Africa, and the Middle East
Low cost of living - experience a luxury lifestyle at little expense
Property prices lower than other European resorts at similar travelling distance (aka
Spain, France)
Warm summers and fantastic beaches, lakes, mountainous regions
Enticing cultural attractions, museums, towns, architecture and other factors of
historical value including the only European wonder in the New 7 Wonders of the World, the
Coliseum in Rome
Breathtaking natural scenery, low development density compared to (for example)
Spain with many unspool beaches and coastlines
Sun, Surf and Ski – Wonderful beaches as well as Ski resorts within easy reach
Stable government and secure investment enforced by local legislation
Capital appreciation of up to 20% per annum in some locations.
Active encouragement and incentives for foreign investment - you can own 100% of
land and property.
Since 2002 – No capital gains tax
Up to maximum of 8% inheritance tax
No wealth tax
Projections suggest there will soon be a rebound in the Italian economy within the
next year or two. While the Italian economy is one of the strongest global economies, the
growth slowed down significantly towards the end of the Millennium and is set to rebound
towards the end of the first decade of the new Millennium.
Italy is the fifth largest global tourism destination, welcoming over 37 million tourists per
annum.
Tax and tariff
The 2005 budget included substantial tax cuts and a reduction in the number of tax
rates from five to four.
The top rate was reduced from 44% to 43%. The corporation tax rate, cut from 36% to
33% in 2004, remained unchanged.
The application of a lower rate of 19% on a proportion of reinvested profits and
capital raised from new stock market issues was restricted in November 2002 and eliminated
in 2004
. The basic rate of capital gains tax is 12.5%, but a rate of 27% applies for short-term
investment.
GROWTH DRIVER
1) Increase per capita income:-
The income of the consumer of the Indian people is increasing which is beneficial for the
industry. The increasing income shows the greater investment in the passenger car.
2) Changing demographic:-
The demographic situations of the Indian consumer are changing day by day.
3) Growth in auto component industry:-
The auto suppliers are increasing day by day so the manufacturing activity is increasing. Thus
sounds to be favorable for the automobile industry as well as Maruti Suzuki also.
4)Changing Lifestyle:-
The lifestyles of the consumers of the India are changing day by day they are now adapting
the new living style in which the need of cars are increasing.
5)Increasing DINKs:-
Dink’s means the double income no child. The increasing dinks have the great prosperity to
use money on the luxurious things so they are spending more on the products like passenger
cars.
OT analysis
Opportunity
Growth in the global market for high-performance super-cars due to growing
economies & developing nations.
Expansion of the brand through entering into new & important automotive markets
like India wherein competitors like Porsche have already set up base.
Enlargement of customer base (increase appeal of their products to a more variety of
buyers)
Development of technology
Packaging i.e. the concept of the car
Threats
Automotive policies being pushed by countries
competition from other iconic super car brands like Lamborghini & Porsche
A competing brand like Porsche does not follow the same low volumes, high on
exclusivity model which is followed by Ferrari.
competitors like Lamborghini & Porsche are expanding their product range to high
performance of SUV’s
Fuel Prices
MARKETING MIX:
Product:
High Performance super cars. Though the company is also heavily into 3rd party
merchandising.
Pricing
Priced at a premium, they start at prices upwardly of 175,000 $US. Vintage Ferrari cars are
also a great investment as Vintage Ferraris appreciate in value & are known to cost millions
of US Dollars.
Promotions
The strongest promotion for Ferrari is in its merchandising. It already enjoys immense
awareness throughout the world; even in places it doesn’t do any promotion. To the extent
that in India, wherein the brand is not even present as of yet, it is very well known.
Furthermore, the merchandising is done on a royalty & license basis to other brands (E.g.
Puma selling Ferrari-Puma branded shoes).
Place
It has its exclusive Ferrari dealerships spread over 52 countries as of yet with plans to expand
it’s dealerships to other countries & markets.
PESTEL Analysis
Political
The top rate was reduced from 44% to 43%. The corporation tax rate, cut from 36% to 33%
in 2004, remained unchanged.
The basic rate of capital gains tax is 12.5%, but a rate of 27% applies for short-term
investment.
Superlative word use in commercial advertisement is prohibited. Baby child in commercial
advertisement is also prohibited
Allows automatic approval for foreign equity investment up to 100% in the automotive sector
and does not lay down any minimum investment criteria.
Italian government auto policy aimed at promoting an integrated, phased and conductive
growth of the Italian automobile industry.
Economical Factors
Commercial use of automobile is increase day by day in traveling as well as heavy loading
product.
Lying emphasis on R&D activities carried out by companies in Italy by giving a weighted tax
deduction of up to 150% for in house research and R&D activities.
The Italian economy has grown at 8.5% per annum.
More than 90% of the CV purchase is on credit.
Finance availability to CV buyers has grown in scope during the last fewyears.
Several Italian firms have partnered with global players.
Social Factors:
Since changed lifestyle of people, leads to increased purchase of automobiles, so automobile
sector have a large customer base to serve.
The average family size is 4, which makes it favorable to buy a four wheeler.
Growth in urbanization
Upward migration of household income levels
Italian customers are highly discerning, educated and well informed. They are price sensitive
and put a lot of emphasis on value for money.
Technological Factors:
Design of automobile and its roof is affect the demand.
The Government of Italy is promoting R&D Infrastructure Project to support the growth of
the auto industry in Italy
Technological solutions helps in integrating the supply chain, hence reduce losses and
increase profitability.
With the entry of global companies into the Italian market, advanced technologies, both in
product and production process have developed.
With the development or evolution of alternate fuels, hybrid cars have made entry into the
market.
Environmental Factors:
Physical infrastructure such as roads and bridges affect the use of automobiles. If there is
good availability of roads or the roads are smooththen it will affect the use of automobiles.
Parking area is also affect in buying decision of car.
Whether of Italy is cool so they require car with hitter.
In the hilly are they most prefer the car like gipsy.
Co. must have to recycle water for save environment.
Legal factors
Intellectual property act like pattern, copyright and trademark
Low relating safety like safety shoes and helmet, safety officer, ambulance and fist add kit
Low related employee welfare, job security, minimum wages.
Low related consumer protection like, malpractice, monopoly act, advertisement rules and
regulation.
Porter’s Five Force Analysis
1) THREAT OF NEW ENTRANT
Threat of new entrance high because government govt. policy regarding it is liberal.
2) Bargaining power of buyer’s
Bargaining power of buyers high because volume is high as well as buyers and seller both are
more.
3) Bargaining power of supplier’s
Bargaining power of supplier are low because of so many supplier and they require
rowmatirial time to time for continues production
4)Rivalry amongst existing firms:-
rivalry among existing firms is moderate because of product standardization.
5)Threat of Substitute:-
Threat of substitute is low because features of every car are deferent.
Industry Study on Tourism Industry
RESEARCH OBJECTIVE
To assess the competitiveness of the tourism subdivision in India with respect to Italy.
For this study the Tourism sector would cover
Hotels- Classified and Unclassified,
Bed & Breakfast Units and Home stays,
Restaurants and
Tour operators and travel agents.
About Italy
In Italy the tourism industry is an important economic activity which represents a main
component of the national economy. According to WTTC - World Travel and Tourism
Council, in 2011 Travel & tourism industry is expected earn to EUR 137.3 and the total
contribution to the employment will be over 2, 2 million jobs, considering also jobs indirectly
supported by the industry. Tourism in Italy approximately accounts 8.6% of the national GDP
and by 2021 forecasts predict a growth of 2% per year.
Globalization processes led to a change in the mechanisms underlying demand and in the
organizational supply chains, particularly due to the emergence and establishment of new
destinations that compete with traditional and mature ones.
Italy has always been one of the most desired and visited travel destinations and remains
firmly among the top five countries at global level, despite the increase in the offer of tourist
destinations. According to the 2011 Flash Euro barometer Survey on the attitudes of
Europeans towards tourism, Italy is the most popular planned holiday destination for 2011
among EU citizens, overcoming Spain and France with the 11.5% of the total
1st place among EU countries for accommodation capacity
2nd
place among EU countries for arrivals
4th
place in world country rankings for currency earnings
5th
place in world rankings for arrivals.
Top 10 reason to visit Italy
Style
Whether you are an office worker or a removal courier, there is no doubt that Italy is home to
some of the most fashionable and well identified cities in the world. Rome is of course the
most popular city to visit but the cities and towns in Italy are diverse, whether it’s the fashion
capital of the word, Milan or the relaxed beauty of Florence.
Fashion
Of course Italy is well recognized for its fashion, and if you like possession up with the latest
trends, or have a favorites Italian designer, then you’ll want to be able to see what the stylish
Italians are wearing. Why not visit one of the fashion shows whilst you’re here?
Foot ball
Football is the most popular sport in Italy. The Italian national football team has won
the FIFA World Cup four times (1934, 1938, 1982, 2006), trailing only Brazil (with 5), and
also appearing in two finals (1970, 1994). They have also won one European
championship (1968), one Olympic football tournament (1936) and two Central European
International Cups. Italy's club sides have won 27 major European trophies, making them the
most successful nation in European football. The Italian word for football is calcio and this is
the word used to make reference to the sport in Italy, as opposed to football in
England or soccer in the United States and Canada
To Eat Real Italian Ice Cream.
The variation of flavors will leave you spoilt for choice; we often have to ask them to serve
somebody else while we pick which flavour will be our favorite that day.
Crema, peach, lemon, strawberry, pistachio, coffee, chocolate, chocolate and nut,Nutella,
pineapple, spagnola, tuttifrutti, fruit of the forest, mango.
Not overlooking- trifle charmingly termedZuppaInglese and here I will translate it from the
Italian into English as I have been told it, it is called “soup of the English”
Cars
If you’re a motorsport fan, or just like cars, then you’ll want to learn more about the great
Ferrari, Lamborghini, and Maserati models, or perhaps just experience some of the best
driving roads in Europe. If you’ve got an Italian car, or aspire to one, why not visit Italy and
see what inspires the designers of some of the most beautiful cars in the world? It is also
possible to bring your own car into Italy and you can usually organize transport de coaches
(car transport) with relative ease.
Geography
Possibly you’re more attracted in archaeology, or volcanoes. With such a diverse
geographically you’ll want to see as much as you can whilst you’re there.
Stunning vistas
The famous Italian lakes and villages are well known throughout the world, and you’ll want
to see as much as you can? Why not hire a car in Italy and travel round the region and sample
as much authentic rural life as you can?
Italian food
Italy has given the world many exciting food dishes, so if you love pasta, ice cream or pizza,
then you’re sure to want to try the real thing for yourself. Whether you go to an authentic
restaurant or decide to cook for yourself using local produce you’ll know you are enjoying a
real taste of Italy.
The People.
Watching the Italians go about their daily life with an air of gracefulness. Women ride their
bikes elegantly no matter what they are wearing and shopping is no problem as it is put it in
the basket on the front of the bicycle. Even in the heat of the summer in the city the men and
women of Italian cities look unruffled and elegant
About Indian tourism industry
Tourism in India is a wealthy industry. Tourism contributes 6.23 percent to the national GDP
and8.78% of the total employment in India. The Foreign Tourist Arrivals (FTAs) in India
during 2010 were5.58 million with estimated foreign argument earnings at US$ 14.19 billion.
Despite the recession the tourism industry has shown impressive growth in the number of
foreign tourist arrivals. India is 42nd in the world positions as per foreign tourism arrivals in
the country. The World Travel and Tourism Council (WTTC) have named India along with
China as one of the fastest growing tourism industries for the next 10 to 15 years. Tourism
today is the most vibrant tertiary sectors and strong hold of the economy. The Travel &
Tourism Attractiveness Report 2007 ranked tourism in India sixth in terms of price
competitiveness and 39th in terms of safety and security1.
TheWTTC has said that India’s competitive advantage lies in its mystical attractions with its
ancient civilization and culture. The country has much to offer with attractions ranging from
the World’s highest Mountains, vast coastline with excellent beaches, rich tropical forests,
captivating wild life, desert safari, lagoon backwaters, ancient and majestic monuments, forts
and palaces, diverse culture, colorful fairs, folk arts, unique hospitality etc. Tourism
development has always been an integral part of the country’s five year plans. The National
Tourism Development Policy, 2002, aims to position tourism as a major engine of economic
growth and to harness its direct and multiplier effects for employment and poverty
eradication in an environmentally sustainable manner. The Tourism Ministry has also played
an important role in the development of the industry, initiating advertising campaigns such as
the “Incredible India” campaign, which promoted India’s culture and tourist attractions in a
fresh and memorable way. The tourism industry has helped growth in other sectors as diverse
as horticulture, handicrafts, agriculture, construction and even poultry. India is a developing
nation and in stiff competition from China and Southeast Asia has been able gain equal parity
in tourism. Despite of many favorable factors the country’s rankings have not increased
much. The present study aims to understand and discuss India’s position in terms of tourism
policy,
Investment and marketing initiatives in competitiveness in comparison with six similarly.
Top 10 reason to visit India
» Architecture
There are at present 22 cultural i.e. historical and five natural 'world heritage sites'. Some 19
more are expecting recognition for the last ten to two years consistently. We proudly
highlight the UNESCO world heritage sites of India for you. LikeTajmahal .agra fort
FatehpurSikri QutubMinar,RedFort,Temples of
KhajurahElephantaCave,ElloraCave,Churches and Convents of Goa ,Mahabalipuram Temple
Complex Monuments complex at Pattadaka,Mountain railways of India,Sun Temple of
Konark
» Adventure tour
Plan an exhilarating adventure, eco tour, or jungle safari with its extraordinary pastiche of
landscapes from pancake flat deserts to jagged mountain peaks- India offers a myriad of
outdoor Pursuits: a blood-pumping Himalayan trek, an inspiring wildlife safari, an
invigorating white water rafting trip, or a splash in the sun - warmed water of tropical
southern beaches. There is no death of fresh air pastimes. Thrill -seekers indulge in
everything from paragliding, kayaking, and rock climbing to scuba diving, skiing, and even
the new sport to "Zorbing”A brilliant way to explore India's great outdoors- blessed with a
stunning repertoire of flora and fauna- is by safari. Safaris - on foot, jeep, elephant, boat, or
horse- are possible in numerous protected areas, where visitors can view some of the most
exotic wildlife on earth, including rare animals like the Bengal tiger, Asiatic lion, and India
rhinoceros. Birdwatchers shouldn't miss premier sanctuaries such as Keoladeo Ghana
National park, near Bharatpur, Rajasthan, which attracts over 350 species. India has more
than 80 national parks and hundreds of wildlife sanctuaries. No matter which type of reserve
you visit, making arrangements in advance for accommodations and safari bookings as well
as checking prime wildlife -spotting time - is advisable…
» Wild life tour
If you have yen for wildlife and wish to capture it on your camera, then make your travel
plans to some of India's finest wildlife parks…
India's wealth of plant and wildlife can be best savored in its national parkls and wildlife
sanctuaries. Some of the famous national parks of India are Ranthambore national park, Jim
Corbett, Bandhavgarh, Kanha, Periyar, Kaziranga, Gir Forest. Judging from statistic, India is
concerned about its flora and fauna -we have 80 national parks, 441 sanctuaries, 23 tiger
reserves, which house the largest number of tigers, Asiatic Lions, one-horned rhino, elephants
and birds in the world.
» Shopping paradise
India is a treasure for shopping lover. India is known for its Handicraft, Jewelry, Textiles,
Carpets, stones, spices and many more items. The artisans of India have been in business
since the days of Indus valley Civilization (2500 BC). Like in pre-industrial medieval
Europe, craftsman were organized into various corporate guilds in ancient India. Every craft
was sub-case e.g. weavers, potters, carpenters, goldsmiths that gave them a hereditary genius.
From Kashmir to Kanchipuram (Tamil nadu) and Kutch (Gujarat) to India's north-east almost
every state of India has a flourishing craft culture. The art of silk weaving in India is said to
be one of the finest in the world.
» People and culture
The people and their genuine warmth is what attracts everyone to India. Treat the guest like "
AtithiDevoBhavah" hold absolutely true here. This is something you won't find anywhere in
the world. The optimism in us is what keeps us going. It's only in this land where you will
stumble upon people playing marbles and flying kites, juxtaposed with ascetics meditating on
the riverbanks and the Himalayas. India is a land of contrasts. Here, the past rubs shoulders
with the present and great architecture, a rich culture, history, diversity and magnificent
natural splendour make this country the preferred destination of many.
» Festivals
India is a rainbow of festivals. In a land of diversity, each of India's many diverse groups
exult in their own special revelry. Be it the vibrancy of Ganesh Chaturthi, the beautiful
classic poses of dancers during the Chennai dance festival, the clarion call of muezzin during
Eid, the furious rowing of the boatman during the snake boat races of Onam, the gourmet
spreads laid out during Navroz, the chanting of hymns in white-washed churches or the tribal
festivities of the Hornbill festival. The biggest fairs and festivals to be enjoyed in India from
the months of August to December. Travelers are coming from all over the world for festival
tours of India.
» Indian cuisine
Indian cuisine is famous and relished all over the world and enjoys a reputation at par with
other cuisines of the world. The culinary of Indian cuisine is a science, which has developed
over thousands of years. The classic range of regional cuisines from North to South and East
to West reflects the great size of India and its un parallel cultural heritage. The Indian Cuisine
in both vegetarian and Non Vegetarian Indian food, has an unmatched charm because of the
extravagant spices used in Indian Cuisine, thus India is better understood as "HOME OF THE
SPICES". The art of preparing authentic Indian Food does not involve an overdose of spices,
but the delicacy and mixing of right spices in right quantities. India is a land of diverse
religions, customs, festivals, culinary flavors and climatic conditions. Thus each part of India
has added and enhanced the flavor of its dishes by blending spices, herbs and condiments to
make the dish more exquisite, exotic and heavenly.
» Wellness and spa
Wellness in India, has different forms, connotations and techniques. From Yoga to Ayurveda
(the science of healing) to Indian medical systems, the most famous way of keeping fit is
perhaps Yoga. The recent surge of different forms of yoga and its popularity in almost every
generation of fitness enthusiasts has proved one thing: India is going back to its roots and
leading the world too.
In recent years peoples are visiting India for yoga and wellness tour. India has variety of
Ayurveda and Spa resorts. South India is famous for its Ayurveda Packages. Destinations like
Rishikesh and Ananada in the Himalayas are very famous for their ashrams and yoga learning
centers in India.
» Spiritual India
Spirituality, like an ageless rhythm, has travelled through the ages, enveloping sages, kings,
reformers and devotees in India. Some kept it hijacked, as a tool to power; some coined it in
difficult texts and kept it carefully guarded from ordinary men; some liberated it from the
clasp of priest; some transformed it into melodious rhyme and song; some gave it the
freedom to curl on lips the way nature intended it to be …
Pilgrimage Tours of India gives an opportunity to communicate with the creator, it opens up
the bright vistas of positivism as one begins top expect, it renews the will to live. Spiritual
India brings comfort to the soul.
» Landscapes
No destination in the world beats the landscapes of India. Where else in the world you can
find deserts and mountain ranges together. India is sacred with natural beauty and a land of
topographical contrasts. India is, certainly, the ideal and affordable destination for those
looking for a relaxed holiday in a cool and pollution-free setting. So some and explore the
nature, beautiful landscapes and snow covered peaks
Analysis of tourism industry
I
Italy key statistics
2010
Travel & Tourism Revenue (EUR billion) 137.3(8.6% OF GDP)
Inbound Tourist Arrivals (million people )
Foreign Tourist
Arrivals (FTA’s) 41.1
Inbound Tourism Receipts (EUR billion) 28.7
Hospitality Industry - hotels and other collective
accommodation (units )
145.358
Hotel Industry – number of bed places
(units )
2200000
Hotel Industry (hotels and restaurants)–
number of
employees (units )
1196000
Indian key statistics 2010
Travel & Tourism Revenue contribution 6.23% of GDP
Inbound Tourist Arrivals (million people )
Foreign Tourist
Arrivals (FTA’s) 5.58
Inbound Tourism Receipts billion, ) US$ 14.19 billion
Hospitality Industry - hotels and other collective N/A
accommodation (units )
Hotel Industry – number of bed places
(units 2009)
N/A
number of
employees (units ) in percentage contribution employment
8.78%
This is some agreement between india and
Italy that are very important to tourism sector.
Air Services Agreement (1959)
Double Taxation Avoidance Agreement (1985), revised text signed in 1993
An MOU on Defense Equipment (1994)
Bilateral Investment Promotion Agreement (1995)
During the visit of former Italian PM Prodi in January 1998, an Agreement on Cooperation
on
Combating Drug Trafficking and Terrorism was signed. It came into force on 21st Jan
2000.
An MOU to promote Small and Medium Enterprises (SMEs) was signed during PM
Prodi's visit in January 1998, an agreement was later signed during the visit of the Italian
Minister for Foreign Trade (Oct. 2000) for cooperation between the National Small Industries
Corporation (NSIC) under the Ministry of Commerce & Industry and CONFAPI (the Italian
Confederation of Small and Medium Sized Industries).
Agreement for Cooperation in the Exploration and Use of Outer Space for
Peaceful Purposes between ISRO and ASI (The AzenziaSpazialeItaliana) was signed in May
2000. The Agreement envisages cooperation in studies related to space science and its
applications including communications, remote sensing and meteorology, researches in
Satellites and satellite launch vehicles, etc.
A two-sided Agreement on cooperation in tourism sector was signed during the visit of
ourPM to Italy in June 2000.
MoU on Mutual Cooperation on Information technologies and Services between the
Italian Ministry of Commerce and Handicarft and the Indian Ministry of Information
Technology in April 2001.
An Agreement on Defence Cooperation, signed during the visit of the Italian Minister
forDefence, Mr. Antonio Martino in Feb 2003.
An Agreement for S&T Cooperation, signed during the visit of Italian MOS for Foreign
Affairs in Nov 2003.
An Agreement for Cooperation in the field of Culture, signed during the visit of Italian
MOS for Foreign Affairs in July 2004.
MOU on Political Cooperation - Feb 2005
MOU on Fishery and Aqua-culture Production - Feb 2005
MoU on Cooperation for the Conservation of Paintings of the Ajanta and Ellora
Caves - Feb 2005
MoU for research fellowships in the field of S&T
The Programme of Cooperation in the field of S&T for years 2005-07
Agreement between ISRO and Italian Space Agency on the Cooperation in Space,
Science, Technology and Applications – Feb 2005
Audio Visual Cooperation Agreement - signed in May 2005
MOU on Cooperation in the field of Railways – signed during the visit of Indian Railway
Minister to Italy on 3 July 2006
MOU on Combating International Terrorism and Transitional Crime – signed in Feb
2007 during the visit of PM Prodi to India.
MoU on Renewable Energy Cooperation – signed in Feb 2007 during the visit of PM Prodi
to India.
MoU on Cooperation in the Agro-food sector – signed through the visit of Italian Minister
forAgriculture, Food and Forestry Policies to India in Jan 2008
MoU on Cooperation in Agriculture and Physosanitary issues – signed in Jan 2008
MoU on cooperation in customs matters – signed on 29 Jan 2009.
Industry Analysis of Food Processing Sector
Italy has a diversified industrial economy country, which is divided into a developed
industrial north, dominated by private companies, and a less-developed, highly subsidized,
agricultural south, where unemployment is high. The Italian economy is driven in large part
by the manufacture of high-quality consumer goods produced by small and medium-sized
enterprises, many of them family-owned. Italy also has a sizable underground economy,
which by some estimates accounts for as much as 17% of GDP. These activities are most
common within the agriculture, construction, and service sectors. Italy is the third-largest
economy in the euro-zone, but its exceptionally high public debt and structural impediments
to growth have rendered it vulnerable to scrutiny by financial markets. Public debt has
increased steadily since 2007, topping 126% of GDP in 2012, and investor concerns about the
broader euro-zone crisis at times have caused borrowing costs on sovereign government debt
to rise to euro-era records.
The government also faces pressure from investors and European partners to sustain its recent
efforts to address Italy's long-standing structural impediments to growth, such as labor market
inefficiencies and widespread tax evasion. In 2012 economic growth and labor market
conditions deteriorated, with growth at -2.3% and unemployment rising to nearly 11%, with
youth unemployment around 35%. The government has undertaken several reform initiatives
designed to increase long-term economic growth. Italy's GDP is now 7% below its 2007 pre-
crisis level. Italy‟ s purchasing power parity is $1.834 trillion (2012 est.) Italy major Exports
is $483.3 billion f.o.b. (2012 est.) and Italy major import is $469.7 billion f.o.b. (2012
est.).Italy‟ s population will be 61,482,297 (July 2013 est.).Italy currency is EURO.
Italy has Europe's second largest network of infrastructure. It cover more than 1 million
kilometers of road, including 13, 7 % of the motorways in the whole EU. Italian railways
have a network of16, 300 kilometers of track and Italy‟ s total number of ports is 263.
(Invitalia Why Italy 2010). Italy has Europe's second largest network of infrastructure. It
cover more than 1 million kilometers of road, including 13, 7 % of the motorways in the
whole EU. Italian railways have a network of16, 300 kilometers of track and Italy‟ s total
number of ports is 263. (Invitalia Why Italy 2010). Italy is one of the six founding member
states of European Union (EU), creating the European Economic Community (EEC) in
1957 by signing the Treaty of Rome. EEC later became the EU. In 1999 Italy joined the
European Economic and Monetary Union and the Euro was introduced as the official
currency in 2002. The currency formerly was the Lira. Italy is also a charter member of the
military alliance NATO.
The structure of the Italian economy is similar to developed OECD countries, with a
decreasing, but important primary sector, a still significant industry and a growing tertiary
sector. With a considerable strong tourism, the service industry represents more than two
thirds of the national GDP. (Ministry of foreign affairs 2009) Italy is ranked 7th regarding
the industrialized countries of the world. The northern parts of Italy are amongst the
richest in Europe (per capita).The development of the Italian economy however depends
geographically. In the north good infrastructure and a trained labor force can be found,
whereas the South (also called Mezzogiorno) lacks these characteristics and therefore
incentives are given towards the development and especially for
the industrialization. (Member states of the EU Italy 2010) 99.9 % of the enterprises in Italy
are small and medium sized. Representing especially more microenterprises than the EU-27
average (94.6 % in comparison to 91.8 %). The most important economic sectors of Italy are
tourism, fashion, agriculture, chemicals, engineering and motor vehicles. 68 % of the
population of Italy lives in the cities. 90 % of Italians are Roman Catholics.
There are some industry and sector in Italy country
First of all, in the chapter1 to maintain a introduction of the food processing industry
Meaning of Food Processing Industry: Food processing is the set of methods and techniques
used to transform raw ingredients into food or to transform food into other forms for
consumption by humans or animals either in the home or by the food processing industry.
Food processing typically takes clean, harvested crops or butchered animal products and uses
these to produce attractive, marketable and often long shelf-life food products. Similar
processes are used to produce animal feed.
The sector has been characterized by the growing consolidation of smaller companies and by
an increasing number of joint ventures. The 10 leading food-processing companies account
for around 40% of sector sales. Growth in recent years has been strongest in the production of
frozen foods, pasta and roasted coffee. A large proportion of raw materials have to be
imported. The food industry plays an important role in the manufacturing industry because it
is the third most important sector (9.5%), behind the mechanical and the textile sectors. It has
specific characteristics and is deeply settled in the Italian productivity sector. Consequently,
the trend of the food industry is affected by the recent bad results of the Italian economic
sector. In the last Years, the Italian food industry has been characterized by greater
connections to the agri-food system and to the food chain.
So that there is some Classification of food processing Industry, are as under: - Dairy product,
beverage, processed meat, fruit and vegetables, confectionary, oil and fats. So that in this
product some good high growth enterprise in the Italian.
First of all, explain about Dairy product enterprise. Emilia-Romagna is famous for the
cheese "Parmigiano- Reggiano" and Campania for a particular cheese product known as
"Mozzarella". It is interesting to notice, that the "Parmigiano Reggiano" is a union of small
enterprises that are located in the same area between the provinces of Parma and Reggio-
Emilia. This fact confirms the localization and the specialization of the Italian food-industry
in some particular areas.
At the end of 2003, a great crisis happened in this sector because of the failure of "Parmalat", the
biggest Italian enterprise in milk products. This collapse has created problems not only to this
sector but to the whole economy as well.
Nowadays, the most important enterprises are: "Galbani", "Danone" and finally "Granarolo" which
is trying to incorporate Parmalat after its failure. The expenditure for dairy products
represents 14% of the total food expenditure.
Italy’s imports of dairy products are 2.7 billion euro, 96%, of which are from the EU-15
countries.
Second product is beverages product, the most significant production is wine, which is one of
the most typical Italian productions and the most exported kind of beverage. The most
relevant enterprises are "Campari", "Coca Cola Italia", "San Benedetto" and "Heiniken Italia".
None of those enterprises produce wine because it is mainly produced and sold by many
small enterprises, which are collected in cooperatives. The main producer of beverages is
Veneto (North-East of Italy).
Third product is processed meat. Meat consumption plays an important role into the Italian
agri-food system. The most relevant enterprises are "Arena", "Inalca", "Fiorucci" and
"Unibon". "Parma Ham" is produced by a group of small enterprises in the same areas, which are
included in a consortium. To forecast the role and the importance of this sub-sector, we will
evaluate the role of the Italian meat sector in respect to other countries, particularly the EU.
Looking at the imports and the exports of the meat sub-sector, we can observe that processed
meat is important in terms of both imports and exports.
Forth product is fruit and vegetables. Processed fruits and vegetables is an important sub-
sector of the Italian food industry. In the last few years the sector has been restructured
because the general decrease of prices and because the globalization of the markets. The sub-
sector is relevant also because the 18% of the total food expenditure are on fruits and
vegetables.
Fifth product is confectionary. Confectionery is included in the sub-sector "other food
industry" and is the second in terms of turnover. The most relevant enterprises are "Sagit",
"Forneria Bindi" and "Forneria Lucana". This kind of production covers the whole Italian area
and is not allocated in special places.
Sixth product is oil and fats. The "Oils and Fats" sub-sector is characterized by the presence of
two main kinds of production: olive oil and other oils and fats. Most of the olive oil
enterprises are small, but there are also large enterprises involved in this sub-sector, such as
"Carapelli" and "Monini". The olive oil production enterprises are mainly localized in Puglia,
Sicilia, Italian Sardegna, and Calabria. Differently, retail enterprises are diffused in all the
Italian regions.
Next second chapter is govt. rules and regulations and guidelines are as under:-
The following agreements have been signed between India and Italy:
Agriculture, Food and Forestry Policies to India in Jan 2008 MoU on Cooperation in
Agriculture and Physosanitary issues - signed in Jan 2008 MoU on cooperation in
customs matters - signed on 29 Jan 2009.
A bilateral Agreement on cooperation in tourism sector was signed during the visit of our
PM to Italy in June 2000. MoU on Mutual Cooperation on Information technologies and
Services between the Italian Ministry of Commerce and Handicraft and the Indian Ministry
of Information Technology in April 2001.
An MOU to promote Small and Medium Enterprises (SMEs) was signed during PM Prodi's
visit in January 1998. An agreement was later signed during the visit of the Italian Minister
for Foreign Trade (Oct. 2000) for cooperation between the National Small Industries
Corporation (NSIC) under the Ministry of Commerce & Industry and CONFAPI (the Italian
Confederation of Small and Medium Sized Industries).
The Italian Federal Government provides various benefits to the foreign investors in terms of
tax benefits, investment loans at discounted rate of interest, state guarantee for exporters and
other financial aid. The Italian government grants financial assistance to the foreign investors
depending on the geographical location of the investment, the size of the investing company
and the sector in which the company is investing.
A foreign investor investing in certain areas in southern Italy, where rate of unemployment is
high, the government of Italy grants tax exemptions (corporation tax and local tax) for a
period of 10 years. Owing to such favorable FDI policy of Italy, it is one of the most
preferred destinations in EU amongst big conglomerates for Investment.
Foreign companies that investment a sum that is in excess of the average investment for the
past 5 years are eligible to get a tax deduction from taxable income to the limit of the excess
investment. The Federal Government of Italy has strictly laid down that in no case the
financial benefits for foreign investors would exceed 50% of the taxable income. Depending
on the geographical location, foreign investors can avail investment grant up to 65% on the
investment invested in acquiring fixed assets in the country.
Italy is one of the key players in the EU (European Union). Italy is known for it rich cultural
and historical heritage. Italy, officially known as the Italian Republic is located in the south of
the Central European Continent.
With over 60.4 million inhabitants (approx. figures) residing in the country, Italy is the fifth
most populated country in European continent and it is the 23rd most populous country in the
world.
Italy is one of the founding members of the European Union and it also part of the Eurozone.
Italy is also one of the key members of G8, G20 and NATO and other important International
organizations. Today the Economy of Italy is experiencing a boom rapidly. Italy is the sixth
largest economy in the world Italy has become one of the key destinations in the EU for
foreign investment.
Italian importers are usually small to medium-sized companies, rather than the large, market-
dominating types found in northern Europe. Most imported food products enter the Italian
market through brokers or specialized traders. Price is always important, although quality and
novelty alone do move some imported products. Italian households still prefer fresh rather
than frozen and frozen to canned food, as shopping frequency is greater in Italy than in many
other European markets
Italian food retailing is still very fragmented and dominated by a high number of small to
medium- sized outlets. Most of the supermarkets, hypermarkets, and large shopping malls are
mainly located in the North of Italy, while the south continues to lag behind with fewer retail
outlets and a still underdeveloped distribution network.
Each retailer has begun to offer a variety of private label food products, targeting different
types of consumers, especially in the organic or typical regional categories.
As a member of the EU, Italy employs the same tariffs as other EU member states. Tariff
rates can vary considerably and processed foods generally attract higher tariff rates than raw
materials. The tariff rate for specific items can be checked on the European Commission‟ s
tariff database:
The standard rate of value-added tax (Imposta sul Valore Aggiunto; IVA) is between 4 and
20%, which is added to imported luxury F&B products, such as caviar and imported wines.
There is a reduced rate of 10% for the majority of imported foods and 4% for certain basic
foodstuffs such as bread.
The agricultural sector contributes to about 2% of the Italian GDP. Italy is the biggest
European producer of rice, fruits and vegetables, and also the world's biggest producer and
exporter of wine.
The country has to import most of the raw materials required for production and more than
80% of its energy resources. Italy‟ s fabrics industry is made up mostly of small and medium
family businesses. More than 90% of the industrial companies have less than 100 employees.
The country is the prime exporter of luxury goods. Its main industries deal with precision
machinery, motor vehicles, chemical products, pharmaceutical products, electrical items,
fashion and clothing. The services sector contributes to 70% of the GDP. Tourism plays a
major role; Italy is the third most-visited European country, after France and Spain.
taly is known for its great food. It is the home for the two of the most popular delicacies -
Pasta and Pizza. Italians in general love good food and there are plenty of world class
restaurants in the country.
The Food industry is another key sector that offers great foreign investment opportunities.
The Italian culinary tradition is greatly appreciated by both locals and the foreign visitors.
Since the numbers of licensed restaurants in Italy are limited there is opportunity galore for
investing in restaurant. The best approach for investing in the industry is to buy a functioning
restaurant with a good reputation so that investors have better chance of earning good returns.
Next fourth Chapter is Key perspectives of food processing industry in Italy.so that first
analysis is driving forces of industry.
The concept of driving forces that Industry conditions change because important forces are
driving industry participants (competitor, customer, or suppliers) to alter their actions; the
driving forces in an industry are the main underlying cause of changing industry and
competitive conditions- they have the biggest influence on how the industry landscape will be
altered. Some originate in the outer ring of macro-environment and some originate from the
inner ring. Identifying an industry’s drivers of change that are as under:-Changes in an
industry’s long term growth rate, increasing globalization, Productivity initiatives to boost
productivity in the food sector, Political and regulatory developments, A change of direction,
Food safety, Other regulatory requirements, Technological change, biotechnology,
information and communication technology (ICT), radio frequency identification (RFID), and
robotics and sensor technologies. The next step in the development of novel foods is
nanotechnologies, which offer new potential in relation to storage life as well as to changing
and designing the flavor, appearance, uniformity and nutritional properties of food products.
While research on technologies such as biotechnology can tile the way for improvement and
growth in the food industry, there are a number of moral, health related and environmental
concerns connected with the use of biotechnology and in particular the use of genetically
modified organisms (GMOs). As mention, biotechnology has possible benefits and some still
consider it the solution to world hunger. On the other hand, biotechnology also poses a risk -
or at least is apparent to pose a risk - to the environment and to human health. Organizations
such as Greenpeace warn that GMOs can „increase through nature and interbreed with natural
organisms, thereby contaminating none "GE" environments and future generations in an
unforeseeable and out of control way.
Even though labeling of genetic modified foods put consumers in a good position to make
their have choices concerning biotechnology, the not have of knowledge of its environmental
and health related effects makes it complex for citizens and politicians to set a clear course
for its future use. Surveys reveal that public acceptance of biotechnology to various extents
depends on the industry in question. Europeans generally accept medical applications of
biotechnology but there is extensive public skepticism about its use in food production and
manufacturing. Skepticism affects the market perspective for biotechnology applications and
thus the interest and research in this area. In fact, according to the European Commission, the
doubtful public attitude toward GMOs has led to declining public and private investments in
agricultural biotechnology research and the replacement of private R&D to countries outside
Europe. There is some Growth driver are as under. 1. World-class researchers and institutions 2
Commercialization opportunities 3 Bountiful supply and support 4.Skilled and specialized labour
5.High Quality standards 6.Innovative Packaging and cold chain.
Employee turnover in food processing industry are as under:
In 2011, the production of food and drinks contributed 1,7% to the gross national product; it
was the first time the share had fallen below 2%. In the same year, the Slovenian food-
processing industry employed 2.2% of the total labour force in the Republic of Slovenia. We
have been witnessing a trend of a fast decline in the number of people employed in the food-
processing industry which, since 2005, has started to slow down. However, the growth in the
number of food-processing companies we have been witnessing in the last few years has also
started to slow down. In spite of all these problems, positive trends in the Slovenian food-
processing industry are indicated by the export growth of mostly milk and meat products, as
well as feedstuff, oil and milling products.
Next fifth chapter is Industry Analysis of Food Processing Industry are as under:
The Food Processing Industry is a mature sector that loosely tracks underlying demographic
trends, such as population and income growth. Companies generate revenue from the sale of
food and ingredients to a whole host of customers, ranging from supermarket chains and local
bodegas to restaurants and other players further down the processing chain.
This sector is praised for its ability to deliver consistently positive investment returns. Indeed,
over the past 20 years, Food Processing stocks have, on average, delivered high single-digit
annual total returns (share-price appreciation and dividends), with much less volatility than the
broader market indexes.
It is, therefore, of little surprise that food stocks are well suited to fairly conservative investors
with low tolerances for share-price volatility. Defensive characteristics, including stable growth,
ample interest coverage, and solid balance sheets, also establish these companies as "safe
harbor" selections during major economic and stock market downturns.
PESTEL is a short form for Political, Economic, Social, Technological, Environmental and
Legal - the categories into which a compound business environment is broken up for analytical
ease.
Here, we have analyzed food processing industry from the view point of political, economic,
social, Technological, Environmental and Legal aspect in the PESTEL analysis.
1. Political Factors: - It refers to all those things relating to and committed by the government that
affect the economy and business scenario in general.
So far as political factors affecting to food processing industry in Italy is concerned, political
factors like Government regulation regarding hygiene, health and food regulations, food
standards, etc. affect to the food processing industry in Italy.
Economic policies of government regarding the restaurant industry and running eating joints;
these may include licenses, inspections by Health and Food Ministry departments, etc.
From the political point of view Italy is an ideal country where to export a product. It has good
international relationships, especially with other EU countries. There are no restrictions to the
importation or the exportation of capitals and goods. The accounting system follows the
International Accounting Standards (IAS), the same adopted by all EU countries, and quite
similar to the American‟ s General Accepted Accounting Principles (GAAP). There is a stable
political system with a multi-party system, which can ensure the certainty of law and the respect
of contractual rights. However lawsuits tend to be lasting and expensive, and this could represent a
risk in case of a contractual breach.
2. Economic factors:- It refers mostly to the macroeconomic factors as these factors may have a
high impact upon the business environment but a firm does not have any control over them. The
most a firm can do is modifying its business strategies and various commercial and financial
policies accordingly to make the most of the economic situation at hand. These economic factors
may include the currency exchange rate, interest rate, economic growth rate, rate of inflation, etc.
So far as Economic Factors affecting to food processing industry is concerned, economic factors
rate of inflation determines the rate of remuneration of employees and directly affects the price of
the food products. Again, the proportion between the inflation rate and wages/prices is direct.
3. Social factors:- It refers to the social, religious and cultural aspects of the business
environment that may be affected by, and may react to, the firm's transitional strategies either
positively or negatively. These may include demographic aspects like age distribution,
population growth rate, employment and income statistics, education and career trends, religious
beliefs and social stigmas, overall general attitude (conservative or liberal), etc.
So far as Social Factors affecting to the food processing industry is concerned, social factors like
certain cultures dislike certain foods. For instance, Hindus will not eat beef and Muslims would
not even touch pork, eating habits of the people, ratio of people preferring to eat out regularly.
4. Technological factors:- It refers to the technical aspects of the business environment and may
include the level of automation available in the current times, technical facilities and
infrastructure, rate of technological progress and research and development activities. These
factors may assume important proportions and may impact the cost, quality and scope of
innovation for a product, service or commercial utility.
As far as technological factors affecting to food processing industry in Italy is concerned,
technological factors like a good technical infrastructure is available and it leads to better
production, procurement and distribution logistics, resulting in reduced wastage and lower costs.
The food industry has increasingly developed by adopting more advanced technologies that can
deliver a healthier, fresher and more varied food. Currently, the marketplace offers a vast variety
of foods that can choose from, at a better quality and lower prices than in the past.
As of recently, the food industry has been focusing of new ways to produce healthy,
ecological food, based mainly on natural ingredients. Because of the population's interest for
additive-free products, the industry is constantly implementing new ways of producing them.
5. Environmental Factors:- It includes climate, weather, ecological balance, level of pollution,
wildlife conservation, tourism, farming, etc. The food industry is now facing increasing pressure
to ensure that their company's activities are environmentally sensitive, but there is also increased
internal pressure to maintain or increase profitability in the face of fierce competition. The food-
processing industry has special concerns about the health and safety of the consumer. Key
resources used by the food-processing industry include the water, raw materials and energy.
Traditionally, the food-processing industry has been a large water user. Water is used as an
ingredient, an initial and intermediate cleaning source, an efficient transportation conveyor of
raw materials, and the principal agent used in sanitizing plant machinery and areas. Although
water use will always be a part of the food-processing industry, it has become the principal
target for pollution prevention, source reduction practices.
6. Legal Factors:- It includes various laws and legislation pertaining to consumers,
discrimination, employment, competition, public health and safety. Italy has some of the best food
in the world, and the country's government is passionate about maintaining Italy's food heritage--
through legislation if necessary. Because it is part of the European Union, the Italian
government is not free to discriminate against products imported from other European Union
countries, so the government has attempted to maintain the authentic Italian nature of its food
through other types of national and local legislation.
Since 2009, some localities in Italy have banned the opening of certain types of restaurants.
The Tuscan city of Lucca, in one of Italy's most traditional food regions, has banned the opening
of any new restaurant serving foreign food within the city walls. Milan has also banned new
restaurants that serve ethnic food, such as kebabs, although it will allow new European restaurants
to open.
There is some opportunity and threat of food processing industry is as under:-
There is tremendous improvement and up gradation in technologies in the food and beverage
sector in Italy. Italian companies are offering innovative technologies, machines and equipment
all over the world in areas like pasta-making, confectionery, dairy, wine- making and
packaging solutions. There are huge opportunities for the Italian companies in the food
processing sector in India, which is lacking modern technologies and safety and quality of food
products matching international standards.
If we talk about India in the food processing industry, India had to go a long way in food
processing and packaging.
With a growing middle class which is becoming health and quality conscious, there is
tremendous scope for processed value-added food. Dairy, bakery, confectionery, breakfast
cereals, fruits, hot beverages like coffee and tea are some of the areas where change is taking
place.
If we talk about threat of food processing industry in Italy, it has increased competition from other
parts of the world, increased power of food retailers, competition from primary producers
(farmers) selling produce directly to customers, Competition from caterers and restaurants,
Inconsistent consumer trends making strategic decisions difficult. Another is
Food industry life cycle for food processing industry in Italy is as under
The main steps of food industry life cycle are as follows. From agriculture i.e. from various
farms basic raw material is taken. Then it is processed in food processing machineries. Then it
move through transport for selling in the retail market. After that the food is purchased by the
consumers for that consumption. Once they consumed the food, whatever remains it goes in
wastage.
In the forthcoming years, the Italian packaged food market is good postured to show positive but
slow growth given the global economic instability and frail consumer confidence.
India and Italy have identified some 10 areas including infrastructure, automotive and food
processing for joint cooperation and expansion of bilateral trade and investments.
Italian cooperation in the areas of design and skill development, as the Government proposes to
set up four more National Design Institutes. Making a strong pitch on the cooperation in the
leather industry, where Italy has a well-built presence, India is eagerly interested in up gradation
of the technology and skills of this labor-intensive industry.
An Industry analysis of Fashion and Clothing
Italian fashion and clothing
Fashion today is a global industry, and most major countries have a fashion industry.
Fashion in Italy means a lot of things, but as the title suggests, quality, elegance, comfort, and
fantasy are its four cornerstones. Probably in that exact order with quality and elegance always
coming first.
Italian men and women like things to last, and their choices in fashion reflect this. They would
only buy clothes that are good quality, remain stylish longer, and are comfortable enough to wear
on various occasions.
These characteristics of Italian fashion have made it the world leader in various streams of la
moda, be it men's fashion, women's fashion, beauty and make-up, or fashion accessories. Italian
style has begun to rule the world, having first conquered it in the middle of the last century. Some
of the most powerful fashion houses now call Italy their home.
The Italian "fashion system" is particularly representative at international level, both in the
European and non-European context. Made in Italy products are appreciated worldwide and
make fashion a symbol of the Italian economy. Italian fashion has customers all over the world,
both trade and end consumers, and Italian products are sold in company shops, in franchise shops
or shops belonging to local entrepreneurs. In clothing, footwear and leather goods, Italy is the
second world exporter after China; in textile production, Italy is the third world exporter, after
China and Germany.
Changing trends in fashion have always reflected large-scale social and cultural changes.
Changing Fashion presents for the first time a multi-disciplinary approach to examining fashion
change, bringing together theory from fashion studies, cultural studies, sociology, psychology
and art history, amongst others.
Italian products of the textile and apparel industry are known worldwide. This sector has
attracted a great deal of attention because it is rare for a wealthy and developed country to
specialize heavily in fashion-oriented as well as semi-customised industrial products and base its
production system on small and very small companies. The aim of this paper is to present the
current situation and future challenges of the Italian textile and apparel sector. The paper is
divided into three parts: The first one describes the international and domestic position of the
T&A sector, the second - the key characteristics of the T&A sector in Italy, and the third
outlines consumer-supplier relations in this sector.
During the Renaissance, Italian city-states such as Florence were centers of fashion innovation.
For centuries thereafter, however, Paris dominated the world of fashion. Of course, fashions
were produced in Italy during that time, but they were usually derivative of French styles. Only
since the 1950s has Italy achieved its own independent identity as a source of fashionable
clothing for the rest of the world.
The emergence of the "Italian look" drew on important historical advantages, such as the
existence of
-quality tailoring, and
Modern Italian fashion first came to international prominence with the rapid post-World War II
war reconstruction of the textile industry and the rise of ready-to-wear clothing production, as
Nicola White documents in her important book Reconstructing Italian Fashion. The postwar rise
of Italian fashion was not accidental. A number of Italian manufacturers, with the support of the
Italian government, made a systematic effort to create an export-oriented fashion industry that
would play a significant role in Italy‟ s postwar economic reconstruction. Beginning in 1949
fashion shows designed to emphasize Italy‟ s heritage of art and culture were staged to capture
the attention of foreign journalists. In July 1951 a pivotal fashion show in Florence attracted
almost two hundred American buyers and journalists, along with another hundred from Italy and
elsewhere in Europe. Soon journalists and department store buyers attending the Paris fashion
shows began to take the train down to Florence. There, fashion presentations were conceived, in
part, to cater to the demand for creatively constructed, well-made ready-to-wear combining
distinction and informality, adapted to the American fondness for sunny weather and colorful,
affordably priced garments. Originally, the Italian alta mode (couture) houses also showed in
Florence, but soon the couturiers for a variety of reasons began to show instead in Rome, where
many of them were members of Roman society. There they organized and presented their own
singular creations for la dolce vita.
American journalists enthusiastically promoted "the Italian Look," identifying it with casual yet
aristocratic elegance. Italian designers were said to have a special knack for resort wear; capri
pants, sandals, gold jewelry, and chic sunglasses were essential elements of Italian style. Italian
fashion offered an appealing (and less expensive) alternative to the more formal Paris couture.
The commercial and cultural relationship between Italy and America played an important role in
the postwar development of Italian fashion. One appearance of this was the close connection
between the worlds of film and fashion.
Emilio Pucci entered the fashion business in 1948 and quickly became known for his
kaleidoscopic textile designs, which were made up into "featherweight" jersey scarves, shirts,
and other separates. Pucci helped establish the reputation of Italian designers for easy,
comfortable, body-conscious clothing. His brightly colored fashions were part of a broader range
of Italian products, such as Vespa motor scooters and Olivetti typewriters, that became icons of
modern style. By the early 1960s, it was clear that Italy had changed the way the world looked;
the word "Italian" had become synonymous with "good design."
The Italian Look that had such a profound impact on women‟ s fashions extended to men‟ s wear
as well. Even before World War II, Italy had an international reputation for the highest quality
bespoke shirts and men‟ s accessories. By the 1950s, tailoring firms such as Brioni created the
"Continental look" in menswear. Italian tailors created luxurious, body-conscious suits that
offered a clear alternative to the dominant Ivy League look of American men‟ s wear and the
traditional styles of London’s Savile Row.
The persistent, unresolved competition between Florence and Rome, each with its own schedule
of fashion shows, contributed to the rise of Milan, which emerged in the 1970s as the center of
Italian fashion for both men and women. Some of the most innovative Italian houses, including
Krizia and Missoni, shifted their collections to Milan, as did the influential stylist Walter Albini,
who designed for several different firms that showed in Milan, as well as producing clothing for
his own label.
A northern Italian industrial city, Milan lacked the historic allure of Rome and Florence, but was
able to draw on the established Italian tradition of fine textiles. Textile producers in northern
Italy provided financial backing to Italian clothing manufacturers who showed in Milan.
Moreover, Milan was known for modern product design, and Vogue Italia had been published
there beginning in 1961. The rise of a ready-to-wear clothing industry was a natural consequence
of these circumstances. Two designers in particular rose to prominence and worldwide fame in
this milieu: Giorgio Armani and Gianni Versace.
Armani revolutionized men‟ s wear in the 1970s, creating unstructured jackets that were as
comfortable as sweaters and that radiated an air of seductive elegance. Armani‟ s clothes were
prominently featured in the 1980 film American Gigolo; by 1982 his picture was on the cover of
Time magazine. His women‟ s wear was also characterized by an easy elegance and luxurious
minimalism. Meanwhile other Italian firms long known for fine fabrics and superb workmanship,
such as ErmenegildoZegna, also benefited from the rise of Italian tailoring to a position of world
leadership from the 1970s onward.
Very different from Armani was Gianni Versace, who founded his own label in 1978. Where
Armani emphasized understated luxury, his rival Versace grounded his designs in an aesthetic of
flamboyance and display; he produced, for both men and women, some of the most sexually
expressive clothing ever made within the mainstream of fashion. After Gianni Versace was
murdered in 1997 in Miami, his sister Donatella became the company‟ s head designer. Having
collaborated closely with her brother for many years, she was able to build on his aesthetic, while
also making her own contributions to the Versace style. Popular music, for example, had always
been a passion of Gianni‟ s, but became even more central to Donatella‟ s style. Her body-
revealing and consciously outrageous dresses, worn by top singers and actresses, became by the
early 2000s an eagerly awaited feature of the annual Oscar and other entertainment business
award ceremonies.
Franco Moschino was overshadowed commercially by Armani and Versace, but his witty send-
ups of the fashion system were popular with women who wanted to be seen as stylish but not as
"fashion victims." Other important Italian designers of the late twentieth and early twenty-first
centuries include Romeo Gigli; Gianfranco Ferré; knitwear designer Laura Biagiotti; and Renzo
Rosso, founder of the irreverent sportswear firm Diesel.
Among the most remarkable success stories of Italian fashion in the late twentieth century are the
revival of Gucci under the direction of the American Tom Ford, the rise of the firm of Prada, and
the impact of Dolce &Gabbana. After Miuccia Prada took charge of her grandfather‟ s small,
respected leatherwear firm in the 1980s, it burgeoned into an international phenomenon in
accessories, shoes, and clothing. Her first big success was a black nylon backpack with a
triangular silver label that became a must-have cult item among fashion-conscious women.
By the mid-1990s, Prada bags and shoes were setting the international standard for cool.
Meanwhile, Gucci, founded in the 1920s as a leather-goods firm, and famous among jet-setters in
the 1960s, had lost prestige until its reinvention in the 1990s as a source of ultrasexy fashions
and accessories. Domenico Dolce and Stefano Gabbana founded Dolce &Gabbana in 1982, and
skyrocketed to fame with fashions that recall the sex-bomb stars of 1950s Italian cinema.
Italy’s success as a center of modern fashion derives in large part from a uniquely Italian model
of the fashion industry, quite different from that in other countries. It is immediately apparent,
for example, that the family unit remains an important feature of the Italian fashion system. Craft
traditions also remain strong. At the same time, the most up-to-date technology is readily
available. While a handful of star designers from Milan and Rome attract public attention,
hundreds of anonymous but highly trained creative talents work at family firms and large
companies throughout the country.
A skilled workforce is available both for factory employment and in small-scale production by
independent contractors. Florence, Rome, and later Milan have all been important fashion
centers, but the geography of Italian fashion is widely dispersed, and different regions of Italy
specialize in different materials and goods. In addition to the regional segmentation of
production in specific geographic areas known as "the Districts," the Italian fashion system is
also characterized by the vertical integration of production from fiber to finished product.
The Italian fashion system in the early 2000s integrates state-of-the-art production of modern
apparel, relaxed tailoring, luxury leather goods and knitwear, and research into new modes of
design and production together with thread, yarn, and fabric innovations. Italian style is
characterized by understated luxury and modernism, as well as glamour and sensuality.
Fashion designers in Italy are not considered "artists" so much as skilled workers within an
industrial system. One of the dominant characteristics of the Italian fashion industry is its
interdisciplinary nature: the seamless blend of product development, new materials and
technology, new communications methods, celebrity, tradition, and art.
Italian fashion has evolved to supply the market with styles based on both the latest technology
and traditional craftsmanship. Designers concur that imagination, research and experimentation
are the basis for the Italian Look.
The women's clothing Italian market and its competitors: key sector data by segment, major
recent trends, supply and demand evolution and their main drivers, market leaders, operators‟
policies and business strategies.
Regarding specific price ranges, the quality/design content of garments and other leverages of
the marketing mix, the sector has been divided into four segments:
- luxury: includes the main lines of designer labels and most prestigious industrial brands; -
high-end: including the diffusion lines of designer labels and quality industrial brands, the so-
called accessible luxury segment;
- medium -high end: including less differentiated brands than the previous segment;
- mid -low cost: includes fast-fashion companies/chains as well as the lowest cost brands.
The Italian fashion industry really took off after WW2 with the help of technologies provided as
part of the Recovery Plan, the entrepreneurship of business and manufacturing leaders who saw
an opportunity, a newly-urbanized population of skilled textile workers, and a burgeoning
demand for quality apparel and ready-to-wear.
The first phase of industrial fashion in Italy was made by a few concentrated, large-scale
production facilities. As the economy turned south and many new market segments emerged, big
business lacked the flexibility to diversify their business model, and small to medium-sized
manufacturing companies took the lead.
Designers and their business partners (typically family) recognized the changing market as an
opportunity, and developed partnerships with manufacturers who had once contracted work to
them. Under this model, the designer became responsible only for the initial designs of his
collection, while his business partners managed the brand and image, and licensees took care of
the rest - from manufacturing through distribution and retail.
By the end of the 1980s, many brands had gained the capital and the knowledge base to buy back
their licenses in specific product categories, as well as their distribution and retail systems. Some
were able to purchase their own manufacturing facilities. The typical model now had the design
company controlling the initial designs of the highest line and whatever licenses they had
brought in-house, as well as their distribution and retail. Manufacturing was
still typically licensed out.
During the final years of the 20th Century, the costs of running a fashion business had exploded
with a need for mass marketing. Many companies went on the stock exchange to build capital
investment. While some brands took control back from their licensees, others were acquired by
luxury conglomerates. Some manufacturing leaders developed their own lines or acquired brands
they had once licensed production rights from.
SistemaModa Italia, Italian fashion and textile federation, has just released its projections about
Italian fashion industry in 2012, announcing a 4.4% decrease which is going to lower the overall
turnover to €50.5 billion.
The fall is mainly due to the internal market's bad performance and regards not only the
revenues, but all the main branches of the sector, exeptexport with a 0.7% growth, which is
going to maintain a positive trend even without dazzling in 2013. It is estimated to be around
€27.1 billion in 2012, while import came to a standstill, decreasing 7.3% to €18.8 billion.
As for companies are organization, 2012 is going to be still a tough year for many industrial
realities, whose presence is going to be reduced by 2.5% as well as the overall staff, that is going
to be reduced by 3.6% instead.
According to the Italian Government's forecasts, a slight pick up might stand out in 2013, but
only if production costs are goint to be held down.
The structure of the Italian fashion market can be organized into segments. These products have
limited style content and are sold at low prices, becoming accessible to the majority of
customers. They can be used for different occasions, such as work, daily life and leisure is called
mass segment. This consists of products aimed at consumer targets who want to keep up with the
latest fashion trends (such as young people) is called Bridge segment The products with a high
innovative or quality content, designed for day wear or for work. These products are geared to a
limited target consisting of people with a certain spending power is called Medium-high or
diffusion market. The "high fashion" products, characterized by refined creativity, high price and
quality, designed for a very limited target, characterized by inaccessibility is called High end of the
market.
Competitive Strategy in Fashion & Luxury
Different business models within the fashion industry compete using various ranges of
business logic.
Luxury conglomerates often compete and protect their dominance based on the strength
of their branding. (LVMH, Richemont, Gucci Group, Polo Ralph Lauren)
Designer brands rely on creativity and the power of their communications campaigns to
protect their brands. (Dolce &Gabbana, Prada, Chanel, Valentino)
Industrial brands retain their brand strength by focusing their business models on trade
services. (Diesel, Coach, Zegna)
Retailers base their business models around the strength of their stores. (Zara, H&M,
GAP).
Economic crisis continues to hit sales of apparel
Even though the worst performances in Europe were witnessed in 2009, 2010 was even
worse
than the previous year for apparel sales in Italy. The negative trend of apparel consumption in
Italy marginally decreased in 2011 but a complete recovery of pre-crisis performance is quite
far away. All side effects of the economic crisis, such as lowered wages, affected the
performance of local Italian apparel. Many companies are rearranging their politics in order to
face difficulties and maintain sales from pre-crisis levels. They managed this because of the
success of Italian fashion brands across the world.
Footwear only category to switch from negative to positive in 2011
Footwear holds almost a fifth of Italian apparel value sales. Despite the difficulties,
manufacturers continued to invest in new products adding value to them and the negative
trend of 2010 switched to a marginally more positive one during 2011. Even if the
performance of footwear was quite far from pre-crisis levels, this was a more positive result
given the poor performance of apparel overall. New product launches and innovations also
contributed to the improved performance. For example, Geox managed to lead footwear
because it invested money in research and development, about 2% of its total turnover every
year, and continued to obtain new patents. It actually owns about 50 patents for apparel-related
technologies.
Discounts create the key chances to sell products
Apparel specialist retailers capitalise during the discount seasons. The customer is attracted
by appealing offers such as three-for-two or big discounts in percentages during the classical
winter and summer discount months. Thus, apparel store managers tried to use this rationale
extending this opportunity to other weeks of the year. Even though prices are lowered during
these particular offers, a store can recover the poor performances of other days during
discounts.
Largest share held by independent retailers
The largest share was held by independent apparel specialist retailers, even though this
channel experienced a consistent decline in value share over the review period. On the other
hand, chained outlets, which witnessed a rise in share in 2011, continued to hold a smaller
share out of the whole distribution channel. Apparel specialist retailers tends to be chosen by
consumers over other channels because of the large variety of products sold and for cheaper
prices. However, the trend is going to change due to the fairly large sums of money spent by
big brands in order to build dedicated chains of shops.
Poor economic conditions continue to impact sales
Due to the economic crisis spanning across Europe, matters are unlikely to be resolved in the
short-term. Despite retailers appearing quite optimistic, the negative effects of the economic
crisis will affect apparel. The government did not help textiles re-growth, due to the VAT
increase and the closing of ICE institute, a useful tool to support the promotion of exports,
which could worsen the difficult economic situation. In particular with regard to the 1%
increase in VAT, it has calculated that the impact in the first year of the forecast period will
be a further decline in household consumption of apparel.
The fashion apparel industry has significantly evolved, particularly over the last 20years,
when the boundaries of the industry started to expand (Djelic and Ainamo1999). The
changing dynamics of the fashion industry since then, such as the fadingof mass production,
increase in number of fashion seasons, and modified structural characteristics in the supply chain
have forced retailers to desire low cost and flexibility in design, quality, delivery and speed to
market (Doyle, Moore, andMorgan 2006). In addition to speed to market and design,
marketing and capitalinvestment have also been identified as the driving forces of
competitiveness in thefashion apparel industry (Sinha 2006). Franks (2000) suggested „sense
and respond‟ as the key strategy to maintain a profitable position in the increasingly
dynamic and demanding market. A key defining characteristic of rapid responsiveness and
greater flexibility, in this context, is to maintain closer relationships between suppliers and
buyers (Wheel right and Clark 1992).
Looking at the basic structure of the fashion industry until the late 1980s,traditionally fashion
Apparel retailers used their capability of forecasting consumer demand and fashion trends
(known as ready-to-wear) long before the actual time of consumption in order to compete in
the market (Guercini 2001). However, recent years have seen fashion retailers compete with
others by ensuring speed to market with their ability to provide rapidly the fashion trends
revealed by fashion shows and runways.
According to Taplin (1999), such retailers could be credited with the adoption of quick fashion
that is an outcome of an unplanned process on the reduced time gap between designing and
consumption on a seasonal basis.
Most of the Italian maisons have by now become household names in terms of international
luxury, but also (as well as their own - or subsidiary to - multinational companies). The
legends of Made in Italy predominate, and they‟ re global: Prada, Armani, Versace,
Cavalli, Dolce&Gabbana, Bottega Veneta, Ferragamo, Gucci, Tod's, Marni, Valentino,
Missoni, Gianfranco Ferrè, Krizia, Coveri, Trussardi, Laura Biagiotti, Alberta Ferretti,
Moschino, Rocco Barocco, Emanuel Ungaro, Luciano Soprani, Romeo Gigli, Sergio Rossi,
and many others. The success of Italian moda is the fruit of a long history that has built up a
complexity and character that have evolved to be on par with society and culture
themselves: from the beginnings of the 1950s to the modern lines and trends of today, Italian
fashion immediately fused with the glamour of cinema and the lives of the most sensual
actresses, who were fascinated by, and fascinating in, the signature style of Made in Italy
looks. This charmed existence amplified through the decades, and echoes ever louder in our
days.
We all know that Italy is one of the best countries for fashion and design. Fashion has always
been an important part of the Italian culture and society, and Italians are well-known for their
concern with always looking fully dressed and elegant.
In Italy there is no lack of fashion! You won't be surprised to know that Milan was ranked the
top fashion capital of the world and Rome the 4th, according to the Global Language Monitor
in 2009. Milan and Rome are generally considered two of the "big five" global fashion capitals.
Many of the most important fashion designers came from this elegant country. In Italy there
are also many important fashion-houses. In fact among the Italian fashion labels there are
names such as: Roberto Cavalli, Gucci, Emilio Pucci, Prada, Bottega Veneta, Benetton,
Missoni, Valentino, Armani, Dolce & Gabbana, Versace, Krizia, Miu Miu, Laura Biagiotti,
Max Mara, Fendi, and Moschino, just to name a few.
Fashion is not only about apparel. An important role is played by accessories and jewelry and
sometimes by a mix of both. This is the case of the partnership between Bulgari and
Luxottica
which has created wonderful and very exclusive
eyewear!
If you are visiting Italy it would be a good idea to take advantage of your stay to make some
great purchases! Good places to have a great shopping experience and get great bargains all
year round are the Italian factory outlets.
Italian Fashion Trends for Women 2013
The trends for women in 2013 have evolved keeping the mind the basic premise of Italian
fashion for women- elegance, grace and focus on femininity.
In its spring/summer 2013 collection, Prada for instance brought out the floral motif
predominantly in their designs Moschino on the other hand, focused on making the ladies look
sexy with their short and sizzling mini dresses and scorching black and white themes on the
ramp.
Each Italian Fashion House, from the largest to the latest, has a fascinating story-- a story of
passion, of growth, and an unstoppable determination to establish its own concept of fashion
in Italy and the world. Celebrating this story, the history of each of these Italian Fashion
Houses, is the aim of this section of Life in Italy.
An Industry Analysis of Manufacturing industry
GTU has given a wonderful opportunity to MBA student for getting exposure to learn about
international business in the form of Global Country Report.
We have studied ITALY country - Manufacturing Sector -as a part of Global Country
Report. The study gave opportunities to the students as well to the faculty members to glance
into the stranger world i.e. foreign country. We have learnt various aspect of Italy's
Economic, political, demographic, cultural environment. As a part of study, we have studied
various aspects in depth about manufacturing sectors like how it operates, major issues and
challenges of these sectors, scope of expansion of business in Italy as well as in India.
Although people nowadays connect Asian countries like China to be the major manufacturing
industry hub & many industries have set up factory there, Italy's manufacturing industry
has held its own and receives a great deal of investment. People tend to fail to notice
locations like Italy, but Italy' economy is highly trusted for fashion, leather and other
products. Light manufacturing and some heavy manufacturing industries like cars; give a
great deal to the Italian economy.
The Italian textile and clothing industries are some of the biggest suppliers of high-quality,
textile products. Italy's automotive industry too is really famous for its brands to include Fiat,
Ferrari, Maserati, Lamborghini etc. Its food processing industry has famous brands names
like Parmalat and Nestle and they contribute significantly to Italy's GDP.
Over the past several decades, manufacturing has experienced Significant change as rapid
globalization shifted a significant Proportion of manufacturing capacity from developed to
emerging Economies and substantial new markets and new competitors Emerged. The
globalization of manufacturing was enabled by a Combination of forces coming together
simultaneously, including a significant change in geopolitical relations between east and
west, the widespread growth of digital information, physical and financial Infrastructure,
computerized manufacturing technologies, and the Proliferation of bilateral and multilateral
trade agreements.
Certain large enterprises have relocated some of their operations to southern Italy to benefit
from tax breaks and a more flexible workforce, but the region still has a very poor
concentration of factories. Furthermore, large state-owned factories shut down in Taranto,
Crotone, Terni, and Naples in the late 1980s, causing the loss of thousands of jobs. This
action was part of a rationalization plan that required either the closure or the privatization of
state-owned companies, and the public sector workforce was encouraged to seek employment
in the growing service sector.
The Italian industry has sought to actively engage emerging markets like India to regain
"Lost decades" since Piaggio came to India in the 1960s. The sectors to watch for promoting
Indo-Italian trade and investment relations are - Higher education, tourism, skills
development, SME cooperation, fashion and design, automobiles, renewable energy,
healthcare services and defense. Today the Italian economy is witnessing an economic
slowdown with a negative population growth rate and public debt up to 120% of the GDP.
Economic and commercial relations between India and Italy have been growing steadily.
Italy is India's 5th largest trading partner in the EU (21st globally) and the 12th largest
investor in India.
Italian Grid Infrastructure (IGI) is the Italian Grid infrastructure, run for the benefit of the
research and education communities in Italy and worldwide. With more than 15000
computing cores and storage resources distributed across more than 50 computing centers all
over Italy, IGI brings the members of the Italian academic and research communities in
contact with the latest developments in scientific computing.
The attractiveness of the Italian economy for inward Foreign Direct Investment (IFDI) has
been traditionally limited, despite the country's locational advantages such as a large
domestic market and a skilled labor force. The recent global crisis worsened the country's
IFDI position, with flows falling from US$ 40 billion in 2007 to -US$ 11 billion in 2008
before recovering to US$ 20 billion in 2009 but down again to US$ 9 billion in 2010.
The Italian Government welcomes foreign investment in the manufacturing sector. In
keeping with the objective of increasing Italian participation in manufacturing activities, it is
the policy of the Government to encourage projects to be undertaken on a joint-venture basis
Between Italian and foreign entrepreneurs.
Import duty and taxes are due when importing goods into Italy from outside of the EU
whether by a private individual or a commercial entity. The import duty and taxes payable are
calculated on the value of the imported goods plus the cost of importing them (shipping and
insurance). The duty rates applied to imports into Italy typically range between 0% (for
example books) and 17% (for example Wellington Boots). The standard VAT rate for
importing items into Italy is 20%, with certain products, for example books, newspapers and
magazines, attracting VAT at the super-reduced rate of 4%.
Italian manufacturing sector has a quiet good amount of contribution to the overall wealth of
the company. And there are major leading companies been established in Italy. In also the
influence of the manufacturing sector is also quiet good other than service sector. A strong
base is made out by the manufacturing sector. The main reason for this is due to high end
products. So Italy is very fortunate for its manufacturing sector.
The manufacturing sector of Italy is divided into various sectors. So its sectors are:
1) Aerospace & Defence Sector
2) Automobile Manufacturers
3) Textiles
4) Electronics
5) Energy & Petroleum
6) Marine Companies
7) Motor Cycle Companies
8) Food
So the above are various sectors. There are many more sectors but these sectors are having a
major influence. So a brief idea of each and every sector is being given as well.
The aerospace and defence industry consists of several component segments i.e. aircraft
and aircraft parts manufacturers, weapons and intelligence systems manufacturers, satellite
manufacturers and launch vehicle manufacturers. All segments of this industry are capital
intensive. Designing complicated new products or systems requires long lead times.
Production requires a high degree of coordination of capital, manufacturing equipment,
skilled personnel, materials and parts.
Italy is very famous for the automobile industry and it has leading companies for cars and
motorcycles. Racing cars are also manufactured by these companies. Automobile industry's
influence over the manufacturing sector is major compared to other sector. Ferrari the leading
company of car manufacturing is Italian.
Textiles industry is one of the very well-known sector of Italy which is famous all over the
world. High end designers are present today and they give the best fashion essence. So a very
big product range is being available all over the Italy.
Electronics sector is also wide spreaded all over Italy. But it is not very competitive in the
global market as USA and china are the leaders of all of them. So Italy's influence is not very
much but existence is there and though the contribution to the manufacturing sector is good.
The petroleum industry includes the global processes of exploration, extraction, refining,
transporting (often by oil tankers and pipelines), and marketing petroleum products. The
largest volume products of the industry are fuel oil andgasoline (petrol). And accordingly
Italy is also having quiet influence over the sector over the world.
Food Industry has emerged in Italy at a large extent. Italian is foodie people and their pasta
and pizza are famous all over the world. So they serve a huge amount of readymade food
packets all over the world.
The Key Success factors in the Manufacturing industry are:
Efficiency factor - Improve labour productivity, labour flexibility, and capital efficiency
Resource Availability - Quality manpower availability, infrastructure improvements, and
raw material availability
Effective cost controls - Close relationship with supplies and goods distribution channels.
Establishment of export markets - Growth of export markets
Having an extensive distribution/collection network - Goods distribution channels
Successful industrial relations policy - Ethical and tactical industrial relations
Access to the latest available and most efficient technology and techniques - The degree
of investment in technological improvements and product development
Optimum capacity utilisation - The level of plant utilisation
Management of high quality assets portfolio - Understanding implications from
Government policies.
Running a business can be a dangerous occupation with many different types of risk. Some of
these potential hazards can destroy a business, while others can cause serious damage that
can be costly and time consuming to repair. In manufacturing industry, there are many types
of risk to face:
1. Material handling
2. Personal protective equipment
3. Housekeeping
4. Safeguarding and lockout/tagout
5. Effective supervision
There is a high degree of consistency in the factors that manufacturing firms identified as
important to their growth. The overarching consideration is competitiveness, both in the short
term and in the long term. The following five factors emerged as the key drivers of
competitiveness and thus of growth in manufacturing:
exchange rates (reflecting price competitiveness)
innovation (encompassing the availability of new ideas, and the capacity to innovate)
the quality and availability of skills, and labour productivity
regulation and taxation
the performance of supply chains (including the cost, quality and timeliness of inputs).
A well-developed manufacturing infrastructure is essential for any business producers, as
they require access to R&D facilities; advanced manufacturing facilities and equipment; a
sophisticated supply base; and basic materials. A manufacturing location must have access to
adequate transportation infrastructure offering rail, port, and/or truck shipping of
components, and a dependable utilities infrastructure to provide reliable power and
communication to manufacturing and administrative facilities.
GDP in Italy is reported by the The World Bank Group. The gross domestic product (GDP)
measures of national income and output for a given country's economy. The gross domestic
product (GDP) is equal to the total expenditures for all final goods and services produced
within the country in a stipulated period of time. The gross domestic product (GDP) or gross
domestic income (GDI) is one of the measures of national income and output. GDP can be
defined in three ways, which should give identical results. The Gross Domestic Product
(GDP) in Italy was worth 2193.97 billion US dollars in 2011. The GDP value of Italy
represents 3.54 percent of the world economy.
Wages in Manufacturing in Italy remained unchanged at 122.20 Index Points in December
of 2012 from 122.20 Index Points in November of 2012. Wages in Manufacturing in Italy is
reported by the National Institute of Statistics, Italy. Historically, from 1967 until 2012, Italy
Wages in Manufacturing averaged 56.40 Index Points reaching an all time high of 122.20
Index Points in November of 2012 and a record low of 2.60 Index Points in February of
1967.
Industrial Production in Italy decreased 3.80 percent in February of 2013 over the same
month in the previous year. Industrial Production in Italy is reported by the ISTAT.
Historically, from 1991 until 2013, Italy Industrial Production averaged -0.21 Percent
reaching an all time high of 17.40 Percent in August of 1994 and a record low of -25.90
Percent in March of 2009. In Italy, industrial production measures the output of businesses
integrated in industrial sector of the economy such as manufacturing, mining, and utilities.
We had done analysis of manufacturing sector with the help of PEST analysis and external
analysis (i.e. Opportunity and Threat).
PEST analysis:
Political Factors:
Italian government formulated a manufacturing policy that aimed
at promote integrated, phased, enduring and self-sustained growth of the Italian
manufacturing motive industry.
and conductive growth of the Italian manufacturing industry.
minimum investment criteria.
mainly based in well-heeled northern Italy.
and local industry.
manufacturing industry approval for foreign equity investment up to 100% in the
manufacturing sector and does not lay down any least amount investment criteria.
Economical Factor:
(GDP) measures of national income and output for a given country's economy. The gross
domestic product (GDP) is equal to the total expenditures for all final goods and services
produced within the country in a stipulated period of time.
Italy's foreign trade balance improved in March from February and compared with a
year earlier.
elevated jobless rate will undermine domestic demand. A new government's pledge to
dismantle parts of austerity measures could, however, support Italy's economy a bit.
Social Factors:
Italian governments often favour growth of Italy, so they have not kept too much control
over the policies to start over a business.
1992). Women and youth have significantly higher rates of unemployment than
men
Italian national economic system and its attentiveness to social relationships as a whole. In
this context, several initiatives on CSR have been promoted to face the rising attention paid
by public opinion to environmental protection, product safety and the respect of human and
workers' rights.
has had a vast social welfare network that has been cut in recent years to fit the requirements
of the European Union. These budget cuts have fallen on the poorer strata of society.
Technological Factors:
costs, thus making the company more competitive and shorter product development times,
improved quality and faster production.
nical aspects of the manufacturing
process can be made more effective with programmable automation equipment
Italy companies are improved. Moreover, programmable automation reduces inaccuracies in
data transmission.
Environmental Factors:
per capita than those living in developing countries.
consumptions, can only resort to natural resources
standards that address manufacturing and manufacturing waste.
international manufacturing standards that are based on existing European standards.
Although these measures do not address manufacturing directly, they exert a powerful influence
on the market.
micro environmental factors include cultures, norms, lifestyle,
demographics and population changes. These factors affect the any industry in different
ways. For example, a small clothing manufacturer needs to create styles that appeal to those of
different cultures.
Legal Factors:
them some degree of certain as to what the business has to gain and loss in extreme cases such as
business bankruptcy.
minimum wage is not stipulated in national law, but through collective
bargaining by the social partners. In the case of internships and project-based contracts, there is
no stipulated minimum wage. In fact, these contracts do not refer to any national work contract.
maternity and paternity rights and guarantees the right for
adequate assistance with childcare.
Maternity and paternity - Italian National Social Security Institute
Regulations supporting maternity and paternity
disability in Italy. Disabled self-employed workers are subject to the same provisions as other self-
employed workers.
kers under the same conditions as
any other trade union members. However, unions have developed specific measures to target
employment and work-related issues for disabled persons.
External Analysis
Opportunities:
Increase market for luxury product (carsand fashion)
Improve financial structure
Attract more investments
Labour force available
Leading-edge research capabilities are available that gives place to innovation
Science, technology and innovation are becoming increasingly global
A significant investment in research would help to sustain not only competitiveness
but also employment
Industrial actors need to make further efforts to increase their investments in
Research to guarantee sustainable competitiveness
High-technology products are the fastest-growing sector
Medium- high- manufacturing sector will be the drive of growth worldwide
Threats:
Strong competition in manufacturing and
automotive sectors
Economic inequality between the regions
Not matching the Maastricht criteria
loosing global manufacturing market and exports
not investing enough in research to guarantee sustainable competitiveness
faces continuing competition from the other developed economies
Asia is becoming an increasingly potent force in the marketplace
China industrial sector has increased its dominance over time
Developing countries built considerable domestic high-technology
Low-wage economies are increasingly threatening the Italy
New production paradigms might involve significant disruption, failure to break
the current pattern gives rise to equally serious threats for Italy manufacturing
industry
Medium-technology products world exports decrease
Trend Analysis
trend in sales that started at the beginning of the year. However, the rate of growth varies from
sector to sector and is, on average, slower than that reported by their European competitors. This
is due to slow population growth, low, unequal income levels, high fixed costs (e.g. rent and
utilities). In view of such modest recovery, enterprises are also reluctant to make new investments.
As underlined in the report, there is a need to foster dialogue between parties, improve
the integration of information held by each party and for banks to base their
assessments on direct knowledge of the company as well as on its accounts.
-
finished products and commodities. This phenomenon continued throughout 2010 and the first half
of 2011 and has affected profit earning capacity, which is at its lowest in ten years.
ive
use of capital. This will necessarily involve the renewal of corporate structures. Italy is at a
disadvantage in relation to its European competitors, mainly due to the limits
imposed by operating within smaller scale structures
-15 five-year period Italian exports of goods will increase at an average
rate of 4.5% per year (at constant prices) and account for 43% of Italian companies' sales. The
emerging countries will drive demand and account for more than 50% of Italian exports (less than
40% in 2005).
Conclusion:
The overall position of Italian Manufacturing sector is strong and its influence would
be increased over the world day by day. So the future is quiet bright for the respective
companies in Italian manufacturing sector.
Industry Analysis of Textile Industry
The report is about analysis of textile industry in Italy. It also include its comparison & analysis
about information of India’s Textile industry. Both the country, India & Italy, are involve in
textile industry. The Italian textile and clothing industry is exclusive, innovative, lively and
leader in the world.
The textile industry include the chain for manufacturing which is from the first processes on
fibres to fabrics, finishing operations & final products for the market. This operations involve use
of lots of advanced technologies & machinery for the purpose of innovative manufacturing of
textile products in Italy. This dynamic combination of productive, managing & creative activities
involves about 67,500 industrial companies with medium, large, and even very small scale
operations. The profitability & trade of Italian textile sector is continuously increasing from year
to year.
The investment of Italian textile industry is around 39% in 2004. It is seen that this investment
make lots of contribution to European Union. The textile and clothing industry is a key sector of
the Italian manufacturing industry and of the made in Italy in general. At European level as well,
the textile-clothing industry plays a significant role: it accounts for approximately 36.3% out of
the total number of companies, employs 23.6% of workers and produces roughly 25.5% of
turnover.
The Italian companies in the textile-clothing industry are indeed undergoing a deep change: they
are now working within an industry where the demand has slowly increased during the last years
and, with regard to the supply, the competition of countries offering better economic conditions is
higher and higher. The same problems arise in the textile-clothing industry at European level, in
all the countries representing the division.
If from 2001-2005 textile and clothing industry recorded a constant decrease in its turnover (5%
for clothing & 23% for textile) due to the negative trend of both domestic market & expert
according to the data of 2006 the industry recorded increase in its turnover accounting for 6.9%
for clothing 3.5% for textile. The export data also improve drastically for textile industry of Italy.
Indian textile industry is fast growing competitor. Evidences that India has been trading silk in
return for spices from the 2nd century have been found. This shows that textiles are an industry
which has existed for centuries in our country. Recently there has been a sizeable increase in the
demand for Indian textiles in the market. India is fast emerging as a competitor to China in textile
exports. The Government of India has also realized this fact and lowered the customs duty and
reduced the restrictions on the imported textile machinery.
The results of the government’s move can be visible as Indian companies like Mafatlal, Arvind
Mills, Grasim; Reliance Industries have become prominent players in the world. The Indian
textile industry is the second largest inthe world-second only to China. The other competing
countries are Korea and Taiwan. Indian Textile constitutes 35% of the total exports of our
country.
Thetradition of specialization and the network of relationship in italy find a special form of
organization in the so-called “industrial districts”, the Italian contribution to industrial
organization models. Actually, the Italian fashion industry is located into an archipelago of
specialized districts: Como for silk, Prato, fabrics, and Vicenza for wool yarns and fabrics,
Castelgoffredo for women’s Carpi, stockings and Treviso for Empoli for leatherwear, knitwear
Pesaro for denim apparel, Grumello for buttons, Brescia for socks producing machinery, and so
on.
Italian textiles have been well-known since the Middle Ages & they carry on to set a world
standard for quality of design and production. Italian weavers have habitually focused on
producing silk& woolen fabrics, but they also produce fabrics of synthetics, cotton & blends
including cutting-edge “techno-textile” formulations. The existence of a high quality textile
industry was an essential ingredient in the conquest of world markets by Italian fashion designers
in the 1960s and 70s, and continues to be a mainstay of the Italian fashion industry today.
Textile manufacturing on a mass-production basis worldwide has long since migrated to low-
wage developing countries, but Italy’s textile industry has continued to prosper by emphasizing
high-end & high-quality products. Many of Italy’s textile firms are comparatively small and
family-owned, often with a habit of several generations. They can call upon a highly skilled labor
force in all fields of textile production, from the spinning of yarns to fabric design to engineering
to manufacturing. Flexibility is also a key; many Italian textile mills are able to set up looms to
produce complex fabric weaves and willing to produce them in relatively short runs for the high-
fashion industry. The utilize of literally unique textiles in Italian garments continues to be a key
factor in producing a unique Italian Look.. Italian textile manufacturers also do aextensive
amount of export business, selling finished fabric abroad (especially to other European countries)
for tailoring in those markets.
The textile industry of India contributes around 14% to industrial production, 17% to the
country’s export earnings,4% to the country's gross domestic product (GDP) according to the
Annual Report 2009-10 of the Ministry of Textiles. It provides straight employment to more than
35 million workers directly & it accounts for 21 percent of the entire employment generated in
the economy and is the 2nd largest provider of employment subsequent to agriculture.
India is the highest handloom producing country in the World, With 3.9 million handlooms. 30
percent of the total export income is generated by textile alone, it is 2nd largest Employer
industry after agriculture. The textile industry constitutes just about 14% of country's total
industrial production.
The Agreements of the World Trade Organization will have their deepest impact on the Indian
textile industry. The cause for this is two-fold: It is one of the most protected, among the
developed countries &It is one of the biggest sectors of the economy.
The textile industry makes an important contribution to employment generation & foreign
exchange earnings. It adds about 4% to GDP &14% to the industrial production. It provides
direct employment to about 35 million people and, after the agriculture industry, is the 2nd
largest job-provider. Its contribution to the gross export earnings is about 37% but adds only
about one to 1.5% to the gross import bill.
The textile sector will be under pressure with the removal of quantitative restrictions on imports,
starting April 1. India is also committed to move to lower Customs tariff (around 20 per cent) for
most products. Textile companies are already complaining of the Chinese onslaught in several
sectors. Industrial and political circles fear that cheap imports could flood the market and might
take away the means of livelihood.
The universal business of textiles & clothing has enhanced up the GDP of India to a huge scope
as this sector has brought in a enormous amount of profits in the country. There has been a huge
increase in the textile industry of India in the past one year,. The industry size has extensive from
USD 37 billion in 2004-05 to USD 49 billion in 2006-07.
Indian textile & apparel industry is one of the largest in the world with US$ 30 billion of
domestic textile & US$ 19 billion of export, apparel during 2006-07. Over the years the
industry has contributed significantly to national output, exports& employment. At present,
industry accounts for about 14 percent of our total industrial production & contributes to almost
15 percent of entire exports.
The most common causes of problems in the textile industry of India is Manual handling.
Grave &unmatched injuries include permanent disability& back injury. Usually, injuries are not
results of a single event but of pains& stresses acquired over time in intense involvement to tough
work. The source of many manual handling problems originates from workplace management or
very poor job design.
In Indian GDP the Role of Textile Industry had been undergoing a reasonable raise till the year
2004 to 2005. But ever since, 2005-06, the textile industry of India has been witnessing a healthy
improvement & reached almost USD 17 billion throughout the same period from USD 14 billion
in 2004-05. At present, the textile industry of India holds 3.5 to 4% share in the entire textile
production transversely the globe and 3% share in the export production of clothing.
India holds just about 25% share in the cotton yarn industry across the world & India contributes
to about 12% of the world's production of textiles & cotton yarn in the world. India is known to
be the 3rd major manufacturer of cotton across the world.
India is one of the fastest growing economies of the world, which has both positively and
negatively, affected the textile industry of India. The emergence of brand slavery, mall & fashion
awareness, rise in the income level has further reinforced the competition among domestic
players & the multinationals and it leads to opening of numeral of retail outlets in India.
The top most companies in India in the textile industry are Gokaldas Exports, Arvind Brands,
Koutons, Zodiac, House of pearl, Pearl Global &Haria Exporters. Gokaldas Exports incorporated
in 1979, based in Bangalore. It is one of India's largest designer & manufacturers of garments for
women, men & children. It caters to the needs of several international fashion brands and
retailers.
Arvind Mills Ltd. was incorporated in 1931 in Ahmedabad by the Lalbhai group. Products
manufactured by Arvind mills are mulls, dhoties, sarees, dorias, crepes, coatings, printed lawns,
shirtings& twills gabardine, voiles cambrics etc.
Koutons is also one of the leading company in Indian textile & clothing industry. The winner of “
best retailer leadership award 2008” organized by retail congress, Mumbai, Koutons Retail India
Limited engages in the manufacture, design & retail of men’s wear & integrated apparel in India.
Zodiac is one of the today’s the largest selling shirts & tie brand at Shopper's Stop according to
Brand Equity (The Economic Times) in the Indian Textile industry. The business of ties is a high
fashion business and Zodiac has taken this to new highs in India and across the globe.
House of Pearl Fashions Limited is a multinational ready to wear apparel manufacturing
company. The company also provides supply chain solutions for the fashion industry globally
along with distribution and warehousing networks in the US& UK. The company adopts
integrated marketing techniques and has merchandising teams in Canada, Europe, HK, UK, and
US, closely interacting with existing and potential customers at their doorstep.
Haria Exports Ltd. is a top garment exporter in the Indian textile industry for the last twenty four
years. This company is a Star Trading Company. It occupies a unique place in the industry of
the by its contribution to Industrial output& Foreign exchange earnings& employment
generation. It has won the golden status certificate in the year 1999.
Evinix was incorporated on 1st May 1996 as Evinix Fashion Accessories Private Limited under
the Companies Act, 1956. The apparel category constitutes men and women’s shirts, kids wear
and nightwear, trousers, skirts & tops.
Pearl Global Limited was incorporated on 23rd October, 1979 under the name Pearl Agencies
Private Limited. It is also important part &provide substantial contribution to Indian textile
industry. The company primarily produces garments in woven and knitted fabrics. Its products
include casual ladies’ blouses, wear dresses, & bottoms.
Bang Overseas Ltd group operates only in India. It was incorporated in the year 1992. It is
presently providing fashion fabrics & meeting ready to wear requirements of the customers in
textile, apparel and Retail segment. They have ventured into ready-to-wear mens' segment in
2000 by outsourcing manufacturing process & in turn selling to various international brands.
As I have discussed the list of Indian companies which has tremendous contribution in the textile
industry of India. There are also top most companies in the Italy which has contributed to the
Italian textile industry. It includes Fila, Marzootto, PeroniS.p.a, Frette,ErmenegildoZegna.
Fila is one of the world's largest sportswear manufacturing companies. It was founded in 1911 in
Italy. Fila has been operated& owned from South Korea since a takeover in 2007. It is Headed by
CEO& chairman Yoon-Soo Yoon. Now Fila has offices in 11 countries worldwide.It is involve in
the manufacturing of men. Women & kids wears. In January 2007, the global Fila brand & all its
international subsidiaries were acquired by Fila Korea from SBI, which made it the largest South
Korean sportswear company. Fila Korea currently holds all of the rights to the worldwide use of
footwear and clothing brands of the parent firm.
The Marzotto Group is an Italiantextile manufacturer, based in Valdagno. It was Created in
1836. In 2005 Marzotto Group's textile business separated from Valentino Fashion Group.The
Group manufactures cotton&woollen yarns for clothing & through equity investments,linen yarns
and silk, woolen yarns for knitwear. . In the 1950s, MarzottoS.p.A. diversified in the
manufacturing of private-label menswear, Principe by Marzotto. After going public in 1961 with
a listing on the BorsaItaliana, the Milanexchange market, the company started exporting its
products to the United States. To reduce labour costs, 40% of the clothing production would
eventually be transferred there.
Peroni established a weaving mill near the end of 18th Century in Gallarate, a city in the main
cotton weaving industrial district of Lombardy, in Northwest Italy. It is also one of the most
important company in the Italian textile industry. The firm had been producing cotton and linen
blankets for more than a hundred years. It began the manufacturing of big size cotton fabrics for
scenic painting like later cotton tulle &canvas that became its main products, at the beginning of
20th Century.
Frette is an Italiantextile company known for its luxury linens. It was established in 1860 in
Grenoble, France but relocated to Concorezzo, Italy in 1865. Currently it isheadquartered in
Monza, Italy. The company sells products to both hospitality& individuals customers. It has nine
retail locations in the United States, twenty-five in Asia& many more around the world. In 1881,
Frette won the Gold Medal Award at the National Exhibition in Milan for the quality of its
products, and in that year Frette also became an official “Provider to the Royal House”.
ErmenegildoZegna is an Italian luxury fashion house. It is specialized in men's clothing. It was
founded in 1910. It is now managed by the 4th generation of the Zegna family& it remains in
family ownership.Zegna's range includes accessories,neckties, fabrics, suits, knitwear, shirts&
sportswear. They have also branched out in other areas, for instance upholstering the interior of
automobiles such as the LanciaTreviVolumex in 1982.
In the chapter 3 we have done Segment Analysis of Textile Industry in India and Italy.
In the analysis we have included Value Chain, Porters Diamond Model, BCG Matrix, Pestle
Analysis and SWOT Analysis of both the Indian and Italian Textile Industry.
A value chain is a chain of activities that a firm operating in a specific industry performs in order
to deliver a valuable product or service to the customers. It also helps to analyze the dynamics
and underlying drivers of growth at each step of the value chain of the industry.
Textile, a versatile basic necessity turns into luxury brand having a long value chain, where some
are the direct actors and others are the indirect actors. Direct actors are spinning mills,
Knit/Weaving/Knitting Units, Processing Units Garment Manufacturing Units. The strongest
parts are long period experience, optimum geographical location, some special product
innovations, firms are smaller and developing quick response systems;
Then we have included Factors of Porter Diamond model. Competitiveness is measured with
porters model which measure labor and management, raw material inputs, innovations, logistics
management in distributed value chain, infrastructure and proximity to markets, geographical
location.
Italian industry seems to offer good opportunities and factor condition for the textile industry as
Italian textile and clothing producers have been keen to promote its development because an
acceleration of fashion-cycles allows them to have a competitive advantage that is the reason for
a good demand condition also in the country.The high rate of fashion change and a highly
segmented demand is certainly more easily satisfied by local producers only. In Italy there is
favorable condition on the side of supporting industry because they are able to provide new
technologies, new materials and fibers to local producers
In India, there is different demand condition because India has a large number of cheap labour in
comparison of Italy. But low technology and modernization level causes is not favorable
condition. Because of the poor quality of the fabric and untimely delivery are the major
disadvantages due to the use of outdated technology in weaving, processing and finishing sectors.
So, Supporting industry also not has much better condition. The domestic clothing market is
growing at a faster pace due to large young population and increasing disposable household
incomes, and apparel exporters need to gain economies of scale by catering to the large domestic
market.
PESTEL Analysis of Italian Textile Industry shows that with the abolition of quotas, survival of
the remaining, but still sizeable, apparel sector in the Italian market depend on using the benefits
of proximity from design, marketing and production point of view to respond to the increasingly
volatile market demand.
ACIMIT represents an industrial sector comprising around 300 companies (employing close to
12,400 people) and producing machinery for an overall value of about 2.7 billion euros, with
exports amounting to 80% of total sales. The quality of Italian textile technology is shown by the
high number of countries in which Italian machinery is sold: around 130 countries worldwide.
Creativity, technology, reliability and quality are the characteristics which have made Italy a
global leader in the manufacturing of textile machinery.Italian machinery can now state the
environmental performance specifications of each machine they produce.
Environmental factors also now in control in comparison with past situation in Italian textile
industry because they control the water pollution as well as they are applying the Green business
practices particularly for textile industry and its providing many benefits.
Italy has aamount of trade unions which, although formally independent, are connected to the
larger political parties.
In India, textile sector accounts for nearly 14% of the total industrial output. Indian fabric is in
with its ethnic, earthly colored & many textures. The textile sector accounts about 30% in the
total export. This expresses that it holds potential if one is ready to innovate. So, textile sector is
important part for Indian Economy for the growth of GDP also.
Indian Ministry of Textiles has established FDI Cell to invite FDI in the textile sector in the
country.
At present, the textile industry is suffering a substantial re-orientation towards other than clothing
segments of textile sector, which is commonly named as technical textiles. It is affecting
vertically with an average aggregate rate of nearly two times of textiles for clothing applications
& now account for more than half of the total textile output. The processes in making technical
textiles require exclusive machinery & skilled workers.
For the purpose of controlling Environmental hazardous The Government of India is committed
to the preservation of ecological balance. Some Legislative measures have been taken for this
purpose.
SWOT Analysis indicates that Italian Market has Indian textile industry still has lots of
opportunity to go further like elimination of Quota Restriction leads to greater Market
Development and , product development & Diversification to cater global needs which Italian
textile sector already implied it.
Italy known as a fashion hub so its a main strength for the Italian Textile industry. Apart from
this Government support shows effective growth in the industry, Tourism is very stable in Italy
that also positively affects the Textile Industry and most important is that Italy is leader in leather
and textile production.
The Indian textile industry is facing a problem to compete in the world textile market. This is
because of faintness like fragmented infrastructure, rigid labor laws, technology obsolescence
and many others.
Italian Textile has a main weakness of having high labor costs. Indian Textile also has great
advantage in Spinning Sector and has a presence in all process of operation and value chain.
India is one of the largest exporters of Yarn in international market and contributes around 25%
share of the global trade in Cotton Yarn. Emerging Retail Industry and Malls provide huge
opportunities for the Apparel, Handicraft and other sections of the industry.
The threat of Indian textile industry is that competition from other developing countries,
especially China Threat for conventional Market for Power loom forcing them for product
diversification, Geographical Disadvantages as well.
Italian Textile has threat Increasing rivalry from countries outside the EU and other countrie as
well Competitors are moving up the worth chain. Trade barriers in main export markets.
The marketing mix is a business tool used in marketing and by marketing professionals. The
Marketing mix is often crucial when determining a product or brand's offering, and is often
Synonymous with the four Ps: price, product, promotion, and place; in service marketing,
However, the four Ps have been expanded to the sevenPs or eight Ps to address the different
nature of services. We have done 4Ps Comparison of both the countries Textile Industry.
Point of
Comparison
Indian Textile Industry Italian Textile Industry
Products Cotton Textiles
Silk Textiles
Woolen Textiles
Readymade Garments
Hand-crafted Textiles
Jute and Co
Fabric
Suits
Necktie
Leather Products
Sportswear products
Canvases and cotton
tulle
Promotions Using word of mouth
Advertising
Combo offer
Online Marketing
Publicity
Discount offers
Online Marketing
Exhibition
Technical Seminars
Advertising
Price
In Indian market textiles
Companies are not depending
on material from outside
countries tats why prices are
comparatively law
In Italian Market price
of Textile products are
very high because they
are using advance
technology for
producing more
qualitative products.
Italy is known as
fashion hub that is also
are reason for having
much higher prices as
compare with India
Places
Indian textile industries
distributes
their products in side India
and in
following countries also
Australia
Middle Europe
China
New Zealand
USA
Italian textile industries
distributes their products in
side Italy and in following
countries
also
Germany
France
Spain
Hong Kong
Russia
USA
Industry Analysis of Pharmaceutical Industry
Executive Summary
The forerunner of the contemporary pharmaceutical industry was born many centuries ago in the
ancient Greece and Egypt world with the Pharmacopeia, which was the systematic listing of
drugs available for the treatment of various diseases (Piachaud, 2004).
Today the pharmaceutical industry is highly characterized by dynamism and it mainly consists of
large multinational companies.
The first known drugstore was opened by Arabian pharmacists in Baghdad in 754. After this first
business, many other pharmaceutical activities started to operate throughout the Islamic world
and in Europe.
Most of the today famous multinational companies were founded in the late 19th and in the early
20th centuries. The former represents an era of important scientific discoveries. An example is
provided by Bayer that in 1899 launched Aspirin, which was extensively used during the
influenza pandemic in 1918. Antibiotic era of 1960s and early 1970s was crucial for the
economic success of many small US-based firms, which then became global industry leaders.
According to Med Ad News (Pharmalive: www.pharmalive.com), currently the market leaders in
terms of revenues (USD millions) are the US-based multinationals Johnson & Johnson (USD
53,324), followed by Pfizer (USD 48,371). The German Bayer ranks third (USD 44,200).
GlaxoSmithKline ranks fourth (USD 42,813), but it is considered the market leader in terms of
sales, only after Pfizer that is one of its fiercest competitor.
Advancement in the legislation regarding the product patent also contributes to the evolution of
the pharmaceutical industry. Companies were allowed to perform activities that not have been
possible some years before. Huge reduction of mortality is the first result. Today, citizens in
developed countries can expect to live not only longer, but longer and healthier. However,
pharmaceutical companies still have to face many challenges in some therapeutic areas such as
those about cancers and orphan diseases (Effie, 2008).
The main trend recorded since the 1990s is the deterioration of Europe's competitive position
within the global pharmaceutical industry (Efpia, 2008). This weakness advantaged the US
industry leading to the concentration of R&D into the North America. Figures highlight that
from the early 1990s to 2007, R&D in United States grew 5.2 times while the European growth
rate was about 3.3. In the meanwhile, the rapid growth of the research sector became a
prerogative of emerging economies such as China and India.
Pharmaceutical companies' value chain starts with and it is for the most part constituted by the
R&D process that comprehends two distinct phases: drug discovery and drug development.
The pharmaceutical industry in Italy
The main areas of interest for the purpose of this analysis are concentrated on the impact of the
Italian pharmaceutical firms on the State's economy, the rate of investments for R&D and the
national health expenditure.
According to Farmindustria (2008, p. 3), Italy was the third country in the EU (behind Germany
and France) and the fifth in the world in terms of pharmaceutical market size and of number of
employees in 2007. Italy's potential for growth started to decline since the beginning of 2007.
Today the situation is turning into a long-term crisis because of the reduced competitive position
of Italian firms as compared to the foreign ones, together with a negative economic trend that has
affected almost any industrial sector around the world.
The economic impact of the Italian pharmaceutical firms
Italian pharmaceutical firms (i.e. both the firms involved in the production of raw material and of
finished drugs) are 324. Hence, Italy is the second European country in terms of quantity only
behind Germany with 398 companies. As a whole, the Italian pharmaceutical industry is
characterized by large and medium-sized companies (i.e. companies with more than 250
employees exceed 70 per cent). Smaller firms are equally important if we consider the incidence
of the workforce employed in them and their qualification levels. The presence of
pharmaceutical companies is concentrated in five main regions such as Lombardia, Lazio,
Toscana, Emilia Romagnae Veneto, which represent about 90 per cent of the total employment in
the sector.
R&D represents the biggest component of the pharmaceutical industry's value chain, which is
fundamental to deliver solutions for illness and diseases. Even if the pharmaceutical sector is one
of the major target of investments for R&D (i.e. it represents 6.6 per cent of the R&D), Italy has
always suffered for a lack of financial resources devoted to research. The pharmaceutical sector
is also highly self sponsored, with only 3 per cent of funds coming from the government
(Farmindustria, 2007).
Data highlight Italy's disadvantaged position in R&D, even if it has recorded a bigger increase
between 2005-2006 as compared to the other European countries (i.e. +6.5 per cent against the
European average of +3.0 per cent in 2005, and +4.2 per cent against +3.5 per cent in 2006). The
gap still continued to be reduced during 2007 (see figure 2.2). Italy is making progress in Red
biotech, meaning biotechnology for human health, which is developing fast. In 2007 Italian
companies involved in this branch of medicine were 168, among which 58 per cent were founded
after 1991. Here two typologies of companies can be recognized: born biotech (126 firms),
which are small and medium-sized companies oriented toward R&D in biotechnology and
pharma biotech (42 firms), which are traditional pharmaceutical firms that are currently investing
huge capitals in biotechnology. In this sector R&D is fundamental and its centrality is
demonstrated by the huge investments (about € 1.149 million that is 25.1 per cent of the
turnover) (Farmindustria, 2008).
Future directions
To achieve a better competitive position it is necessary to consider the pharmaceutical sector as
an industrial field of strategic importance for Italy (Farmindustria 2006). As a consequence, what
comes next is the improvement of R&D as well as the modernization of techniques and
equipment. Research needs huge resources in terms of financial, human and intellectual capital.
Thus, it is fundamental the development of a system to promote incentives for the innovation.
Money might come from both institutions and private companies, even operating in different
economic sectors. Government must be responsible for the issue of a stable regulatory reference
frame and for the organization of proper academic programs, which will educate prospective
professionals. All these efforts, employed in an integrated and consistent fashion, could improve
the Italian pharmaceutical industry performance and increase its economic relevance.
In the light of the globalization, countries must abandon the myth of ownership by national
investors. Instead, they must recognize this new dynamic and facilitate its exploitation. Finally,
Italian companies must be more financially attractive in the eyes of foreign actors in the attempt to
expand themselves abroad.
Outsourcing has been considered the most appropriate business method for conducting scientific
research since the World War I. In that period it was common for most pharmaceutical
companies to conduct research by contracting them out to universities and external laboratories.
Traditionally the R&D activities were kept within the boundaries of the organization. However,
with the increasing assessment of efficiency within the pharmaceutical R&D pipeline, the
prominence of services, on which the virtual organization is based, has occurred (Piachaud,
2004). For clarity, they can be traced in four main areas:
I. Politics: harmonization of regulatory requirements, control over prices and profits, reduction
of the effective patent life.
II. Economics: globalization, mergers and buyouts, rising costs of R&D, increased generic
competition.
III. Technology: emergence of biotechnology, growth of information technology, impact of
genomics.
IV. Society: population ageing, deeper scrutiny of the drugs' prices, use of alternative theories.
Risks in the pharmaceutical industry
Many new potential drugs do not come to market because of R&D risk considerations.
Reepmeyer (2006, p. 29-48) suggested that risks can be grouped into several categories such as
the following:
I. Risk of growth attainment: in the today's confusing context, which the pharmaceutical
industry is embedded in, investors and top management force companies to at least maintain the
growth rate reached in the past thirty years.
The fact that the pharmaceutical industry is the fastest growing market is demonstrated by the
annual growth rate of 11.1 per cent between 1970 and 2002 (PhRMA, 2003 cited in Reepmeyer,
2006, p. 29). In order to sustain the same degree of expansion a large pharmaceutical firm should
develop at least two to four new drugs per year (Gassmann, et al., 2004 cited in Reepmeyer, 2006,
p. 29). The leaders should even exceed these numbers.
what it can be defined as the growth imperative. To this regard firms believe that taking the right
road means to rely on mergers and acquisitions. Some of the most recent example of large
mergers include Pfizer & Pharmacia, Astra & Zeneca and Aventis & Sanofi (Reepmeyer, 2006,
p. 30). However, studies in this field disclose that mega-merged companies are not always more
efficient than their counterparts.
According to a research by Wood Mackenzie (2003 cited in Reepmeyer, 2006, p. 30) between
1995 and 2002 non-mega merged companies (e.g. Merck, Johnson & Johnson, Eli Lilly and
Roche) gained 10 per cent in the ethical8 drug market against an average loss of 2.8 per cent of
the mega-merged ones (e.g. GlaxoSmithKline, AstraZeneca, Novartis and Aventis). To conclude,
pharmaceutical organizations are likely to cope with the risk of not achieving the required
growth rates in a candidate target market because sometimes that market is not large enough to
satisfy those growth expectations. Other times because even multinational companies lack the
needed amount of resources to face an exponential growth.
II. Risk of increasing complexity: pharmaceutical companies do not only spend the greater part
of their share of wallet in R&D, but they are also characterized by high R&D intensity because
of the complexities of the R&D process itself.
To maintain the profitability most of them have dissipated their resources in the attempt to focus
only on the fastest growing markets. However, they have to confront themselves with strategic
reasons or portfolio considerations.
Average cost structure of a newly developed drug
Relative Contribution Cost Factors
20%-40% Research, Development, Licenses
15%-30% Production
5%-15% Technical and Administrative Costs
20%-30% Marketing and Distribution
20%-35% Margin
Source: Pharma Information (2002 cited in Reepmeyer, 2006, p. 32)
III. Risk of technology investment: all novel technological processes employed in the today's
pharmaceutical industry are mainly triggered by improved computing power, new computer
applications and the discovery of human genome. Genomics are expected to facilitate the
development of scientific knowledge even further and its application into new drug design.
However, since they are still novel there is a lack of evidence that investments in these
advancements will lead to real improvements in R&D productivity. Hence, the implied financial
risks are tremendous.
IV. Risk of high attrition: it is quite high since many R&D projects are terminated because of
efficacy or safety considerations, particularly at late stages. Pointedly, the later a project is
stopped, the higher the financial loss will be. According to Buchanan (2002 cited in Reepmeyer,
2006, p. 40), the highest attrition rate is that of Pre-Clinical Phase (60.2 per cent), followed by
the Phase II with a percentage of attrition rate equal to 52.1. Phase I has an attrition rate of 24.8
per cent, Phase III of 28.8 per cent and Submission phase of 10.2 per cent.
V. Risk of blockbuster reliance: pharmaceutical firms traditionally choose to market only few
blockbuster drugs9 to respond to the growth imperative (Reepmeyer, 2006, p. 41). The
emergence of new R&D technologies has opened the opportunity to take the path of
individualization and mass customization. As a consequence, what is questioned is whether the
application of a single drug to a vast market will remain a viable strategy in the long-run. In
other words, genomics will not have out the blockbuster paradigm; instead they will help the
development of multi-busters, which are personalized therapies designed for several particular
diseases (Ibid., p. 43). Hence, they protect pharmaceutical firms against the risk of facing intense
Competition and prevent the entrance of competitors into these niches.
VI. Risk of market timing: it has to do with the likelihood that a competitor might introduce a
drug for the same target, just few months before the firm 9 This expression indicates drugs that
can reach at least $ 1 billion in annual sales. 69 pioneering in that segment. First-mover
advantage is quite crucial since patients tend to be loyal toward the first drug used. At the end it
is clear that market timing is a critical issue.
VII. Risk of product differentiation: the increased number of patients' profiles has lead
pharmaceutical companies to sustain more investments with the aim to pursue a successful
product differentiation, which is only possible by proving the drug's superior profile with the
help of clinical studies. Hence, much more resources are spent in clinical trials. Unlike medicine
protection is getting shorter and shorter.
VIII. Risk of regulative force: companies have to comply with several policies and regulations.
The research-based pharmaceutical industry can play a critical role in restoring Europe to
growth. In 2011 it invested an estimated 27,500 million in R&D in Europe. It directly employs
660,000 people and generates three to four times more employment indirectly - upstream and
downstream - than it does directly. However, the sector faces real challenges. Besides the
additional regulatory hurdles and escalating R&D costs, the sector has been severely hit by the
impact of fiscal austerity measures introduced by governments across much of Europe in 2010 and
in 2011.
There is rapid growth in the market and research environment in emerging economies such as
Brazil, China and India, leading to a migration of economic and research activities outside of
Europe to these fast-growing markets. In 2011 the Brazilian and Chinese markets grew by more
than 20% (20.0% and 21.9% respectively) compared with an average market growth of 2.6% for
the fi ve major European markets and 3.6% for the US market (source: IMS).
In 2011, North America accounted for 41.8% of world pharmaceutical sales compared with
26.8% for Europe. According to IMS data, 56% of sales of new medicines launched during the
period 2006-2010 were on the US market, compared with 24% on the European market.
The fragmentation of the EU pharmaceutical market has resulted in a lucrative parallel trade.
This benefits neither social security nor patients and deprives the industry of additional resources
to fund R&D. Parallel trade was estimated to amount to 5,100 million (value at ex-factory prices)
in 2010.
The research-based pharmaceutical industry can play a critical role in restoring Europe to
growth. In 2011 it invested an estimated 27,500 million in R&D in Europe. It directly employs
660,000 people and generates three to four times more employment indirectly - upstream and
downstream - than it does directly. However, the sector faces real challenges. Besides the
additional regulatory hurdles and escalating R&D costs, the sector has been severely hit by the
impact of fiscal austerity measures introduced by governments across much of Europe in 2010
and in 2011.
There is rapid growth in the market and research environment in emerging economies such as
Brazil, China and India, leading to a migration of economic and research activities outside of
Europe to these fast-growing markets. In 2011 the Brazilian and Chinese markets grew by more
than 20% (20.0% and 21.9% respectively) compared with an average market growth of 2.6% for
the fi ve major European markets and 3.6% for the US market (source: IMS).
In 2011, North America accounted for 41.8% of world pharmaceutical sales compared with
26.8% for Europe. According to IMS data, 56% of sales of new medicines launched during the
period 2006-2010 were on the US market, compared with 24% on the European market. The
fragmentation of the EU pharmaceutical market has resulted in a lucrative parallel trade.
This benefits neither social security nor patients and deprives the industry of additional resources
to fund R&D. Parallel trade was estimated to amount to 5,100 million (value at ex-factory prices)
in 2010.
MAIN TRENDS
The research-based pharmaceutical industry can play a critical role in restoring Europe to
growth. In 2011 it invested an estimated € 27,500 million in R&D in Europe. It directly employs
660,000 people and generates three to four times more employment indirectly - upstream and
downstream - than it does directly. However, the sector faces real challenges. Besides the
additional regulatory hurdles and escalating R&D costs, the sector has been severely hit by the
impact of fi scalausterity measures introduced by governments across much ofEurope in 2010
and in 2011..
■ There is rapid growth in the market and research environment in emerging economies such as
Brazil, China and India, leading to a migration of economic and research activities outside of
Europe to these fast-growing markets. In 2011 the Brazilian and Chinese markets grew by more
than 20% (20.0% and 21.9% respectively) compared with an average market growth of 2.6% for
the fi vemajor European markets and 3.6% for the US market (source: IMS). In 2011, North
America accounted for 41.8% of world pharmaceutical sales compared with 26.8% for Europe.
According to IMS data, 56% of sales of new medicines launched during the period 2006-2010
were on the US market, compared with 24% on the European market.
■ The fragmentation of the EU pharmaceutical market has resulted in a lucrative parallel trade.
This benefits neither social security nor patients and deprives the industry of additional resources
to fund R&D. Parallel trade was estimated to amount to € 5,100 million (value at ex-factory prices)
in 2010.
IMPORTANCE OF PHARMACEUTICAL R&D
I n 2010 the pharmaceutical industry invested about € 27,800 million in R&D in Europe. After a
decade of strong US market dominance, which led to a signifi cant shift of economic and
pharmaceutical research activity towards the US during the period 1995-2005, Europe is now
also facing increasing competition from emerging economies. Today there is rapid growth in the
market and research environment in emerging economies such as Brazil, China and India,
resulting in further migration of economic and research activities outside of Europe to these fast-
growing markets. The geographical balance of the pharmaceutical market - and ultimately the
R&D base - is likely to shift gradually towards emerging economies.
Patent of INDIA and ITALY:
In Italy, pharmaceutical patents were prohibited until 1978, when the Supreme Court ruled in
favor of eighteen pharmaceutical companies, all foreign, requesting the enforcement of foreign
patents on medical products in Italy. Despite this complete lack of any patent protection, Italy
had developed a strong pharmaceutical industry: by the end of the 1970s it was the fifth world
producer of pharmaceuticals and the seventh exporter.
Before 1978 the Italian pharmaceutical industry was characterized by the presence of a large
number of small and medium sized independent firms. After 1978, industry concentration
proceeded rapidly: the total number of independent firms went from 464 in 1976 to 390 in 1980
and 335 in 1985. During the same period, no concentration of the productive activity took place
in the pharmaceutical industry of the other large western countries. The Italian pharmaceutical
industry, in the meanwhile, has lost market share at a constant pace both nationally and
worldwide; as one of us, from time to time, tries to keep up with what is happening back there,
we learn from alarmed politicians and newspaper reporting that the Italian pharmaceutical
industry is, in fact, practically disappearing, together with the most valuable and patentable drugs it
did not invent since 1978. Since 1978, India has taken over as the primary center of
pharmaceutical production without patent protection. The growthand vitality of the Indian
industry is similar to the pre-1978 industry in Italy. Sadly, India has now been forced to
introduce product patents on pharmaceutical products - from the Italian experience, we can
expect this to put an end not only to imitation in India, but innovations as well.
Industry Analysis of Communication Industry
Executive Summary
Introduction of communication Industry In the world
In the past decades world communication has developed into a rapidly expanding field with a
large number of players. Communications across borders consist of flows of words, images, texts
and data that move between and among individuals, governments, social movements, and
business organizations. Flows of world news are carried across the globe by the major printed
news agencies (Associated Press, Reuters, and Agence France Press) and the leading agencies
for visual news (Reuters Television and World Television Network, and to a lesser extent CNN
and the BBC). Flows of entertainment and educational materials, which include recorded music,
feature films, textbooks, and TV entertainment, are provided by the world's largest entertainment
media companies.
Flows of promotional messages, which consist mainly of commercial advertising in international
newspapers, magazines, and broadcast media across the globe, are produced by the world's
largest advertising agencies. Flows of data, like in electronic data exchange, electronic funds
transfers, remote resource satellite sensing, electronic mail and database searches, are carried by
worldwide computer networks such as the Internet, or such inter-firm networks as the largest
interbank network SWIFT*. Flows of voice messages -for both private and commercial
applications- are facilitated by such major players as the world's largest telecommunication
service providers.
Flows of text messages are transported through such media as telefax, telex and the mail
services. The major players are the telecommunication service providers, the postal services
around the world, and the leading courier companies.
Together the message producers, network operators, and equipment manufacturers that facilitate
these flows represent a multi-billion dollar world communication market.
This market is largely shaped by four major trends that originate in the 1980s and mature in the
1990s. These are: digitization, liberalization, consolidation, and globalization.
Classification of Industry
So these are the classification of communication Industry in every country. Here there are many
other forms of communication apart from these like mobile telecommunication, broadband,
recorded music, and video games, information technology, books and magazine and directories.
Communication
Industry
Television Radio Home video Cinema News Paper
Telecommunication Advertising
1.3Introduction of Italian Communication:-
A substantial downturn in 2011 and a generally weak recovery in 2012, although with exceptions
in some areas. The performance of the Italian communications industry during the economic
recession was not very different to that of the country’s economy in general.
The dip experienced by this macro sector (with a catchment boundary open to methodological
clarification) was 4.4% overall, a figure close to the 4.9% forecast in the previous IEM Report,
which reflects a better-than-expected recovery in the last months of 2011. The total value of this
sector amounted to 96.147 billion euros (down from 100.520 billion in 2010), slightly less than
it’s worth in 2007. The final figure at end of 2011 was not expected to reach the 100 billion
mark; indeed, given the difficulties experienced in the ICT sector it was forecast to remain well
below that figure.
Figure 1 - Communications industry revenue, 2007-2011
105.000
100.321 100.520
100.000
98.712
96.263 96.147
95.000
90.000
85.000
80.000
2007
2008 2009 2010
2011
Source: IEM elaboration of various figures.
The performance of various markets in 2011 leaves little room for considerations beyond the
channels already used to read and interpret events of recent years. The very few segments that
ended the year on a positive note include Internet advertising, which confirms its role in the
repositioning of communications investments, though its considerable growth did suffer a
slowdown. Cinema box office results were also in the black, confirming the market’s
extraordinary anti-cyclical nature.
But the movie theatre represents only the first step in the chain of product exploitation in this
sector and does not guarantee similar performance for the windows that follow, such as home
video, which is in sharp decline, or television, which has seen advertising revenues drop and
subscription revenues slow. The third sector to register a positive result was below-the-line
advertising, a form of commercial communication where investment is usually less affected by
the general economic situation than traditional advertising.
1.6General information
Telephones - main lines in use: 20.031 million (2008)
Telephones - mobile cellular: 88.58 million (2008)
Telephone system:
Modern, well-developed, fast; fully automated telephone, telex, and data services
domestic: high-capacity cable and microwave radio relay trunks
international: satellite earth stations - 3 Intelsat (with a total of 5 antennas - 3 for Atlantic Ocean
and 2 for Indian Ocean), 1 Inmarsat (Atlantic Ocean region), and
Radio broadcast stations: AM about 100, FM about 4,600, shortwave 9 (1998)
Radios: 50.5 million (1997)
Television broadcast stations: 358 (plus 4,728 repeaters) (1995)
Televisions: 30.5 million (1997)
Internet Hosts: 22.152 million (2009) Internet users: 24.992 million (2008)
Population 61,016,804 (July 2011 est.)
GDP $1.782 trillion (2010 est.)
Per Capita GDP $30,700 (2010 est.)
Main Lines 21,699,000 (2009)
Teledensity 36.24 % (2009)
Mobile subscribers
88,013,000 (2009)
Mobile Penetration 147.01 % (2009)
Internet Users 29.235 million (2009)
Internet Penetration 34.39% (2008)
Broadband Subscribers 12,300,000 (2009)
Spending on telecom equipment and
Services
$45,846.5 million (2010)
U.S. equipment exports to market
$164,893,503 (2010)
1.7Italian Telephone Companies
Acantho
Aexis
Alcotek
Amtel
ASCO
Atlanet
Bergamocom (only in Bergamo)
Brennercom (coverage only in South
Tyrol)
Budget Telecom
Cdc 1085
ClickTel
Colt Telecom
Digitel
EasyTel
EcsNet
Elemedia
Elitel
Energit
Eurotime Communication
Eutelia
FreeLine
Leadercom
LTS (coverage in Sicily)
Millecom
Mobaila
Momax
Noicom
Orobiacom
Tiscali
Telecom Italia
Infostrada
Wind (Italy)
1.8ITALIAN MAJOR RADIO STATIONS:-
Name Owner Notes Transmission
m2o Elemedia
Commercial; Electronic dance
music
FM, DAB, DAB+, DVB-
T, DVB-S
R101 Monradio Commercial; Classic hits FM, DAB, DAB+, DVB-S
Radio 105 Network
Gruppo
Finelco
Commercial; Rock, Pop, Hip Hop FM, DVB-S
Radio 24
Il Sole 24
Ore
Commercial; News/Talk FM, DAB, DVB-S
Radio Capital Elemedia Commercial; Classic hits FM, DAB, DVB-T, DVB-S
Political
The political factors of the telecom industry are the ways that the government intervenes on the
industry. Government laws put restrictions on the tariffs and phones that the telecommunications
industry can produce and all new technology must adhere to a strict set of government rules.
Goods and services provided by the telecom industry also need to fit the safety and privacy
government regulations.
Regulations –
Mobile phone licenses are tightly controlled and access to the spectrum is limited. In addition
political pressure may be brought about regarding the use of mobile phones by children and the
possible health issues associated with mobile phone use.
Infrastructure –
Building the infrastructure needed to support the network usually requires permission from the
government and statutory bodies to use their lands.
Health issues –
There is still no definitive public opinion on the effect of mobile phone usage by people and also
the possible health effects of the closeness of phone masts to schools.
Economic
Economic growth, inflation and interest rates can all have an impact on the telecommunications
industry. Rival telecom businesses need to stay competitive but most have had to raise prices
during the global recession. Different companies will try to beat others by offering limited time
offers on some of the latest mobile phone handsets.
Cost of licenses –
The cost of acquiring mobile phone licenses is very high.
3G –
The bidding war for 3G licenses happened at the height of an economic boom and consequently
the price paid for them was extreme. This with the cost of building the network will require a lot
of revenue to break even, but if the price is too high, the standard will not take off.
Cost of calls being driven down –
There are constant price wars between the providers and there are very few markets where there
is monopoly controlling the mobile market.
Social
Some of the biggest social factors that have affected the telecom industry are those considered
with career attitude and safety. The increase in on-the-go business careers has led to an increase
in desire for mobile phones that will alert for messages, phone calls and emails. They also need
to have the facility to carry out conference calls, instant messaging and a host of other career
focused features.
Safety regarding mobile phones also needs to be taken into consideration by the industry. Phones
with hands-free features for cars are a must in the current environment.
Health issues:-
If mobile phones are shown to be harmful both with the masts and handsets, there may be a
move away from their use and a campaign to ban the masts.
Demographics –
Mobile phones tend to be used by the younger members of society. In a country where the
population is ageing, which is the trend across the EU, the demographics may shift to a more
aged population who may have less use for mobile phones.
Social trends –
A lot of take up of mobile phones has beendown to fashion and peer pressure. If a trend of not
having a phone was to occur this could seriously impact on their usage,although unlikely to
happen.
Technological
The rate of technological change is important within the telecommunication industry. New
models of phones and communication devices can be produced at an alarmingly fast rate and it is
essential that manufacturers compete to have the most up-to-date handset available.
This brief PEST analysis for the telecom industry gives an insight into the factors that can affect
how the businesses are required to run.
The mobile phone industry has seen a great deal of technological change and will
continue to do so. Mobile phones were originally used for telephone conversations but since text
messaging became available the usage has increased dramatically.
As technology developed, it has become possible to swap information between mobiles
and other devices via Bluetooth technology. However, this can be used inappropriately to send
anonymous and unwanted texts; this is known as ‘blue jacking’ and can be distressing
particularly if the recipient is a child or young person.
The introduction of 3rd generation (3G) mobile phone technology is bringing with it a
better mix of content and providing more services. These further raise the issue of ethics as
Vodafone can now offer a wide variety of content to mobile phones with this new technology 3G
will help to increase their sales revenues. However, Vodafone recognizes that it brings additional
responsibility, including the need to protect young people from inappropriate content, including
violent games and gambling.
Legal Factors:-
Laws regulating businesses e.g. The Sales of Goods Act 1974stating all products must be fit for
the purpose they are intended. A mobile phone must therefore work. Certain laws are created to
regulate particular industries, examples include the ban on using a phone while driving
introduced in 2003
5.3SWOT Analysis of Telecommunication Industry in Italy:-
Strengths
A telecommunications SWOT analysis should identify the internal structures within the industry
or company that are performing well or better than expected. The internal structures could
highlight human resources, physical capital or elements within the company’s control. The
telecommunications strengths may be
highlight
Economies of scale,
An engaged and active management
team,
high staff morale,
A strong brand name,
first-rate field equipment
Sustainable business modeling.
Weaknesses
The weaknesses of a telecommunications
SWOT analysis would involve the internal structures within the industry or company that are
performing poorly or worse than expected. The internal structures could highlight human
resources, physical capital or elements within the company’s control. For example, the
telecommunications weaknesses may highlight
Ineffective Board of Directors,
Low broadcast frequencies,
Poor customer service,
Low signal strengths
A high overhead cost structure.
Opportunities
The opportunities of a telecommunications’ SWOT analysis would involve the external
structures outside the industry's or company’s control that could potentially benefit the company
or be an area for growth. For example, the telecommunications opportunities may highlight
A decline in competitors,
A decrease in the cost of broadcast signals,
Technological advances,
An increase in communication networks and channels,
New tax incentives
Threats
The threats of a telecommunications SWOT analysis would involve the external structures
outside the industries or the company’s control that could potentially hurt the company or cause
harm in the short or long run. For example, the telecommunications threats may highlight
A shrinking economy,
Less demand for telecommunications services,
An increase in health care costs,
An increased regulation,
A decrease in the number of radio frequencies
Changes in the population.
SWOT Analysis of Telecommunication Industry in India:-
Strengths
Huge Customer potential
Teledensity still being 48% and rural tele-density 21%.
The broadband subscribers grew from 0.18 million in 2005 to6.2 million as on 30 April
2009 and about 7.98 million, at the end of the December 2009.
High Growth Rate
Wireless subscribers growing at a CAGR of 75 per cent per annum since 2011.
Allowed FDI limit ranging from 74% to 100%
The total FDI equity inflows in telecom sector have been US$ 2223 million
during April-November 2011-12
High return on Investment
Easier to create economies of scale thereby increasing return on investment
Liberalization efforts by Govt.
The share of private sector in total telephone connections is now 82.33% as per
the latest statistics available for December 2009 as against a meager 5% in 1999.
Lower capital expenditure
The Indian telecom market is a high density area, which means more population
per tower. This means lower capital expenditure cost.
Weakness
Poor Telecommunication Infrastructure
Result : Large number of call drops.
Late adopters of New Technology
India will be among the last countries in the world to get access to 3G technology.
Some estimates suggest that nearly 132 countries across the world already have 3G technology
and mobile services in one form or the other.
Most competitive market
10 to 12 companies offer mobile services in most parts of India, globally, the
average is 4.
A market strongly regulated by Government.
Difficult to enter because of requirement of huge financial resources.
E.g Auction of 3G license has reached Rs 15814.15 crores.
Opportunities
3G Telecom services and 4G services
More Quality Service
Mobile Number Portability will force the Service provider to improve their
quality to avoid losing subscribers
Value added Services (VAS)
The mobile value added services include, text or SMS, menu based services,
downloading of music or ringtones, mobile TV, videos, streaming, sophisticated m-commerce
applications etc.
Mobile banking, Mobile Ticketing etc
Boost to Telecom Manufacturing Companies
Production of telecom equipments in value terms has increased from Rs. 412700
million (2007-08) to Rs.488000 million during 2008-09 and expected to increase to Rs. 575840
million during 2009-10.
Telecom Equipment Exports
The Indian telecom industry is expected to reach a size of Rs 344,921 crore by
2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10
million people during the same period.The sector would create direct employment for 2.8 million
people and for 7 million indirectly, according to a Frost and Sullivan report.
Horizontal Integration
Entry Into other consumer segments leveraging the present channels
E.g. DTH service like Reliance BIG TV, Tata SKY, Airtel digital TV by telecom
majors like Reliance, Tata and Airtel Respectively.
Other examples : Airtel website builder
Providing fibre Connectivity to 2,50,000 village panchayat by 2012.
More scope in content related services, since, the consumer is influenced by local
culture.
Local festivals like Baisakhi, Chhath Puja, religious festivals like Diwali,
Chrismas etc., National festivals like Independence Day etc.
Threats
• Telecommunication Policies
e.g. Trai's 2G direction affecting new players most notably Tata Teleservices,
Norway’s Telenor and Essar-owned Loop Telecom
Renewal of 2G license on the basis of market rates of 3G auctions
TRAI intentions of rolling out 4G or the fourth-generation technology, known as
the ultra-broadband in 2-3 years raising fears rendering 3G services somewhat obsolete.
• Declining ARPU (average Revenue per user)
E.g. price wars like per-second billing which is deflating revenues and making
sure the ‘survival of the fittest’
• Partiality on the part of the Govt.
E.g.Allowing 3G service in a PSU (MTNL,BSNL) before auctioning to Private
Sector.
