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MGT614 Greenfield Study. Group 4. 6.27.18
1. Prepared for MGT614 by:
Jennifer McAndrew
Sarah McGee-Gentry
Krista Murray
Brett Norton
2. ● Naples is located in southern Italy and is the third largest city in the country
● Population of 3,128,702
● Most lucrative industries are tourism, commerce, and agriculture
● Primary religion is Roman Catholic
● Italy has a Parliamentary Republic government which includes Executive,
Judiciary, and Legislative
● 99.2% of the Italian population is literate
Characteristics of Italy
3. Characteristics of Target
● Established in 1902 in Minneapolis, Minnesota
● A company culture committed to inclusion, diversity, and social responsibility
● Target is committed to partnering with suppliers who are certified, minority, or
women-owned
● As of 2018, Target has stores in the United States, Canada, and India
● As of 2018 ,Target employs 345,000 individuals
● Target stores have donated more than 447 million pounds of food to local
food banks since 2005
5. Italy’s Economic Conditions
● Prefer owning than renting
○ 72.3% home ownership
○ Housing costs less expensive in Italy than in United States
● Italy’s GDP = 34620 (9th in world) vs. USA GDP = 53272 (2nd in world)
○ Purchasing power = 31.8% lower than US
● Income Distribution
○ 20% upper/50% middle/30% lower
● Employment Levels
○ 11.2% total unemployment rate/33.1% youth unemployment rate
○ 54.9% men
○ 33.4% women
○ 24.7% youth (ages 15-24)
6. Italian Wages and Benefits
● No national minimum wage like in United States
● Wages and Benefits determined by collective bargaining agreements
○ Vacation time/sick days/maternity leave/termination pay/13th month bonus pay
● Income tax = 23% to 43% of salary
● Local tax = 0.9% to 2% of salary
● Social Security tax = approximately 10% of salary
● Health insurance provided nationally (Italian National Health Service)
8. Italian National Health Service (SSN)
● Established in 1978
● Modeled after British National Health Service
● Ranked 2nd best by World Health Organization
● Funded by Imposta Regionale Sulle Attivita Produttive (IRAP) tax
○ Paid by employers on behalf of employees
○ Self-employed pay through their taxes
● Provides free or low-cost health care to
○ Residents and their families
○ University students
○ Retirees
○ Citizens among the European Union (EU)
9. Italian National Health Service (SSN)
● Focuses on cure not preventive medicine like in United States
● Treats sickness instead of promoting wellness
● Limited resources for out-patient treatment, geriatric assistance, terminal
illness, or psychiatric assistance
● Funding issues like with United States Social Security/Medicare plans
○ Shrinking working population = less tax revenue
○ Aging population - living longer due to advancements in medicine/devices/technology
○ Aging population requiring more health services as well as medical facilities to provide
services
10. Role of Unions
● Provisions within the Italian Constitution for unions
● 3 main trade union confederations
○ General Confederation of Italian Workers
○ Italian Confederation of Workers’ Trade Unions
○ Union of Italian Workers
● Main unions affiliated with European Trade Union Confederation (ETUC) &
International Trade Union Confederation (ITUC-CSI)
● Some smaller confederations & autonomous unions also
● Approximately 12 - 15 million members (includes retirees)
11. Working Conditions
● Controlled mostly by collective bargaining agreements
● Law prohibiting unlawful dismissal based on:
○ Political opinion
○ Trade union membership
○ Sex
○ Race
○ Language
○ Religious affiliation
● Illegal garment factories do exist with deteriorating conditions and low pay
12. Working Conditions
● 86% of agricultural workers in Southern Italy do not have a work contract
● 45% of seasonal workers sleep on mattresses on the ground
● 18% of seasonal workers sleep directly on the ground in structures without
water, light, or hygiene services
● Pay is 30% to 50% less than those with set contracts within the province
● On average for a day of harvesting kiwis or olives
○ 25 EUR to 30 EUR ($27 - $32) per day
15. Cultural Considerations
Achievement Vs. Ascription
● Italian’s value achievement
● In order to be a manager, it is expected for the individual to have the resume
to match their position
● However, first opinions matter, the way an individual dresses matters, and it is
believed one has to have certain connections to make it in society
16. Cultural Considerations
Sequential Vs. Synchronic Time
● Time really is not important to Italians
● Italians have a synchronic viewpoint of time
● They do not keep a strict agenda
● Multitasking is a part of life and is expected in order to keep up
17. Cultural Considerations
Universalism Vs. Particularism
● Italians do not have a strong sense of rules being an important part of life
● However, Italians do respect the rules in a sense of maintaining guidelines
● Italians tend to use more rules than relying on universal truths
18. Cultural Considerations
Individualism Vs. Collectivism
● Italians are individualistic in nature, they place a high value on taking care of
their immediate family instead of their community
● They believe bonuses and personal goals help you do your best
● However, they generally will not hurt their family in order to achieve their
goals
19. Cultural Considerations
Inner Vs. Outer directed
● Italians generally do not believe they are controlled by faith
● This means they are planners who try and get things ironed out in advance to
try and control the outcome
● While still understanding things can change, meaning they are naturally good
at improvisation
20. Cultural Considerations
Specific Vs. Diffuse
● Italians love to integrate their professional life into their personal life so their
partner does not feel excluded
● They do not however, mix their personal life with their professional
● Responsibility is usually assigned to the most qualified person
21. Cultural Considerations
Affective Vs. Neutral
● Italians are warm hearted people who tend to dramatize things
● However at work, emotional outbursts are frowned upon
● They tend to use hand signals a lot while talking as well
22. Cultural Considerations
Takeaways
● Achievement is very important to Italians
● Having an in depth plan is viewed as valuable to italians
● Italians believe they control their own destiny
● They are very expressive with their hands and body language
● Family is very important
● Experience is extremely valued
24. Industry Analysis of Italy
● Italy is one of the main agricultural players in the EU
○ biggest European producer of rice, fruits, vegetables and wine
● Heavily reliant on the import of raw
○ responsible for more than 80% of the country’s energy
● Industrial activity is concentrated in the north from Turin in the west through
Milan to Venice in the east
○ accounts for more than 50% of Italy’s national income
25. Industry Analysis of Italy Cont.
● Much of Italian industry is comprised of small and medium-sized family
businesses
○ over 90% of Italian industrial companies having less than 100 employees
● Italy is the largest global exporter of luxury goods
● Major Italian industries
○ include precision machinery, motor vehicles, chemical products, pharmaceuticals, electrical
items, fashion and clothing
● Italy is Europe's second largest manufacturing power and the seventh largest
worldwide
● Tourism is one of the fastest growing and most profitable industries in
○ Italy is the fifth most visited country internationally and the third most visited in the European
Union.
27. Market Segmentation
Italian Market Target’s Average Customer (U.S.)
● 33.4 % Female / 54.9% Male
● 60.8% are 25-69 years old
● Average wage $34,838
● 60-60% are Female
● 58-62% are 18-44
● Smallest portion of consumers
age 65 or older (12%)
● Make more than $50,000 per year
● About 60% of the consumers are
Caucasian
○ 20% Hispanic
28. Competition to Target in Italy
List of Department Stores
● 10 Corso Como
○ Department store in Milan
● Coin
○ Part of Gruppo Coin
● Excelsior Milano
○ Part of Gruppo Coin
● Magazzini Mas
○ Department store in Rome
● OVS
○ Part of Gruppo Coin
● Peck
○ Department store in Milan
● La Rinascente
○ Part of Central Group (Thailand)
● UPIM
○ Part of Gruppo Coin
29. Marketing Considerations
● Italian economy remains burdened by political interference, bureaucracy,
corruption, high levels of taxation, a rigid labor market, an ineffective judicial
system, a complex regulatory framework and the high cost of conducting
business.
● The Italian management style is also very different
○ considerable quantity of management time is spent networking, maintaining or improving
existing relationships with the real decision makers
○ the management structures are often weak and very hierarchical
● About 60% of Italian use the internet
● Italians Communicate very differently than Americans
30. Market Analysis Conclusion
● Business is conducted very differently in Italy than the U.S.
○ It is more about connections and relationships
● Italian market is dominated by family run small businesses
● The Country does not have a high number of Target’s average customer
● There is a lower average wage
● Italy’s top industry is the service industry because of tourism
31. Potential Market Entry Strategy
● The cultivation and maintenance of personal relationships are a vital part of
doing business in Italy.
● The ideal candidate should already have a network of relationships that will
open doors in the market and solid understanding of local business practices
and regulations.
● Patience is essential as it may take two to three times longer than expected to
make relationships, establish a market presence or set up a business.
● The U.S. Commercial Service has offices in the U.S. Embassy in Rome and
the U.S. Consulate in Milan to help U.S. exporters enter the market
33. Strengths
● Target’s brand is recognizable to many
● Target stores have variety of products
○ clothing, shoes, jewelry, health and beauty products, electronics, compact discs, DVDs,
bedding, kitchen supplies, sporting goods, toys, pet supplies, automotive supplies, and
hardware supplies.
● Target Corporation differentiates itself from other competitors
○ providing quality products to customer rather than cheap products.
○ Italians like higher end products
● Target has great systems of distribution in the U.S. and may be able to apply
those to Italy
● Formally launched International shipping through Target.com
34. Weakness
● Business operations very different to normal Italian set up
● Target wants to market to higher income individuals
○ Italians make about $20,000 less on average than Americans
● Its business model is based on supercenters and other big box stores. Many
shoppers seem to prefer the convenience of smaller neighborhood stores.
● E-Commerce remains less developed in Italy due to
○ high level of credit card fraud,
○ lack of trust in the postal system,
○ limited broadband connectivity,
○ traditionally less favorable return practices of Italian merchants.
● Italy has the lowest level of Internet penetration of all European
countries
35. Opportunities
● Italy hosts major trade shows that attract buyers from throughout Europe and
beyond.
○ Key trade shows taking place in Italy in 2017-2018 include Cosmoprof Bologna, European
Utility Week, EICMA and Showcase USA-Italy.
● U.S. firms enjoy opportunities in sectors where new regulations or programs
(often imposed or initiated at the EU level) are creating demand
● little or no domestic competition
● U.S. products offer clear technological, design, or price advantages.
○ Best prospects for U.S. exports to Italy include: Advanced Manufacturing, Airport and Ground
Support Equipment, Automotive Components, Biotechnology, Cosmetics and Toiletries,
Cybersecurity, Medical Devices and Technologies, Pet Products, Safety and Security
Equipment, Smart Grid Technologies and Travel and Tourism.
36. Threats
● Italy’s regulatory environment is complex and at times lacks the transparency,
clarity, efficiency and certainty found in other developed economies.
● Italy’s growth lags below the EU average although domestic consumption
appears to be rebounding. The Italian GDP grew marginally in 2016 and
unemployment remains above EU averages.
● Competition from local companies.
● Unions play a large roll in Italy and make it difficult to reducing staff difficult
38. Conclusion and Analysis
● Target will have to shift their business model to target lower income
individuals in Italy, which is not their target audience in America
● Italians prefer a more intimate shopping experience with traditional
neighborhood stores instead of large impersonal discount stores
○ 90% of business have 100 or less employees and most are family run businesses
● Targets average customer is a female from 18-44 and Italy is a male
dominated country with only 33% of the country’s population being female
● Italians have a very structured business, in which the leader makes a
majority of the decisions and networking is critical in the success of any
company
40. References
Capuano, M. (2011). Challenges of Doing Business in Italy - La Gazzetta Italiana. [online] Lagazzettaitaliana.com. Available at:
https://www.lagazzettaitaliana.com/region-of-italy/7661-challenges-of-doing-business-in-italy [Accessed 23 Jun. 2018].
Cost of Living Comparison between United States and Italy (2018). [online] Available at https://www.numbeo.com/cost-of-
living/compare_countries_result.jsp?country1=United+States&country2=Italy
Encyclopedia Britannica. https://www.britannica.com. (2018, June 20). Retrieved from https://www.britannica.com/place/Naples-Italy
En.portal.santandertrade.com. (2018). Reaching the Italian consumer - Santandertrade.com. [online] Available at:
https://en.portal.santandertrade.com/analyse-markets/italy/reaching-the-consumers [Accessed 22 Jun. 2018].
European Trade Union Institute (n.d.) [online] Available at https://www.etui.org
Export.gov. (2017). Italy - Political Environment | export.gov. [online] Available at: https://www.export.gov/article?id=Italy-Political-
Environment [Accessed 23 Jun. 2018].
Italy Home Ownership Rate (n.d.) [online] Available at https://tradingeconomics.com/italy/home-ownership-rate.com
41. References
Index Mundi. https://www.indexmundi.com. (2018, June 19). Retrieved from https://www.indexmundi.com/g/r.aspx?v=39
Italy's migrant workers face 'dire' conditions (2015, December 18). The Local It. https://www.thelocal.it/20151218/italys-migrant-
workers-face-dire-conditions.com
Italy: Mismatch priority occupations (2018). [online] Available at http://skillspanorama.cedefop.europa.eu
PYMNTS (2016). Average Target Shopper & Customer Demographics | PYMNTS.com. [online] PYMNTS.com. Available at:
https://www.pymnts.com/news/retail/2016/average-target-shopper-customer-demographics/ [Accessed 23 Jun. 2018].
Principles of the Sevizio Sanitario Nazionale (Italian National Health Service) (n.d.) [online] Available at
https://www.understandingitaly.com
Target Corporate. https://corporate.target.com. (2018, June 20). Retrieved from https://corporate.target.com/about
The National Health Service (n.d.) [online] Available at https://www.justlanded.com
Trade Unions (2016) Available at http://www.worker.participation.eu
Editor's Notes
Most collective bargaining agreements include at a minimum 4 weeks per year vacation (holiday) time, sick days, 5 month maternity leave, other leave options can be negotiated (such as education,etc.)
The seven dimensions of culture as defined by Frons Trompenaars was used in this presentation. The seven dimensions are a scale based system which compares various dimensions, becaus Trompenaars believs each cultures is defined by the dimensions they fall in. The dimensions are a Vs. outlook, where one trait is more dominant among a culture than the other one. A survey conducted by a European Consulting group on Italy was used to determine the traits and dimensions Italy shows.
This dimension measures whether a culture believes they must achieve in order to achieve success or whether they believe they are born into the lives they live. Italy scored high on the Achievement side and it is obvious achievement matters to them, however the way they act and dress matters as well, which means there is a general status quo.
Sequential vs. synchronic is how a culture measures time. Sequential thinking is the belief that time happens in a timeline manner, one event after another. Synchronic is more like the circle of life, events have the habit of repeating themselves. Italians really do not value time, they believe things repeat themselves and if they miss an opportunity they will get another chance.
Universalism vs. particularism is the view of rules in a culture. Universalism means rules are always true and have to be followed no matter what. Particularism tends to bend the rules for friends and families, people they might know. In this dimension, rules are more of guidelines than set in stone.
Individualism vs. collectivism is how a society views themselves vs their community. Individualism tend to put the needs of their immediate family before the needs of their community. Collectivism always think about their community first. Italians place a very high priority on their families and providing for those very close to them.
Inner directed vs. outer directed weigh whether a culture believes fate is going to occur no matter what or if an individual has a say on their destiny. Italians do not believe in fate, they believe they can control their own destiny.
This dimensions views whether a culture separates their personal life with their professional life. Italians do not mix their personal and professional lives at work but share their work at home. This is the closest 50/50 dimension.
This dimension measures how much individuals control their emotions. Neutral individuals tend to control their emotions and maintain their composure. Italians are very expressive but tend to control themselves at work because they value their jobs.
If Target is going to be successful in Italy, they have to place a high value on families of employees. Ensure they are always valuing the lives of their employees and offering them time off and a stable work environment. Schedules should be completed in advance because Italians like to plan. They like to use their hands and body language, which can be viewed as disrespect in America, this cultural trait should be noted because it is a sign of disrespect in America and everyone should be aware of it. People with experience are trusted with higher positions, which means a qualified management team should be sought out before anyone is hired to be successful.
•Italy’s largest sector is the service sector at 70% followed by the industry sector at 26% finally the agricultural sector is only at 4%
•Italy is heavily reliant on the import of raw materials utilized in agricultural production due to the country’s limited natural resources
•This industrial activity in the north accounts for more than 50% of Italy’s national income
•Italy’s companies are largely family run, they do not have very many “superstores”
•Italians spend a majority of their wages on housing, food and transportation.
•Only 7% of their income is spent each on clothing and home furnishings
•These products are a staples of the Target brand
•There are very few department stores in Italy
•Italians prefer small family run businesses
•Most, if not all, of the decisions are made by the owner of the business, by the family or by the very few key decision makers in a company.
•The decision making process often takes place outside company meetings and board rooms, with the management often notified about critical decisions without having had opportunity to offer input.
•Italians have respect and admiration for the decision-maker and leaders. However, often a manager's power is determined by the strength of the relationships that individual has with the senior management and/or the owner of the business.
Target will have a very hard time reaching the Italian market. The companies are run very differently than the Target Corporation in the United states. Italians prefer family run business and because of that there are very few successful department stores. The lower average wage goes against Target’s desired higher end customer. The Italian market is dominated with males and that also goes against the targeted consumer.
Finding the right Italian agent, distributor, or business partner is therefore essential to enter the Italian market. It is usually not effective to rely on agents or distributors in neighboring markets, despite the existence of the EU common market.
Target would have a hard time establishing a store in Italy. The country has a lower amount of the average customer and even lower numbers of companies like Target that have been successful. Relationships and connections are very important and a large corporation like target would have a hard time building the family connections necessary. Our group recommendation is for Target to not try and expand into Italy.
