Italy’s political environment
The nature of the political environment of any nation influences investment decision, to the large extent. There are different ways through which the political divide of any nation or region is deemed to affect the operation of globally originated firms that invest within its boundaries. For any global company to accept to invest in a foreign country, the political environment should be encouraging. Conducive environmental factors that are deemed to attract ambitions to invest in any place within the global divide incorporate the political stability. Ideally, a country that is muddled with crime-hosting environment, nationalism as well as regional disagreement is identified as unfavorable (Cotta 97). Ideally, the political environment in Italy has been one of the factors that other investors have been seen to consider before moving within it's boundaries. However, there are other essential factors that can be considered for the investors to feel comfortable investing in Italy. This paper aims at discussing the current political- environment factors that may encourage or discourage investment of the Starbucks within the Italian Geographical boundaries.
Italy is one, among the countries that have had dozens of government ever since the end of the Second World War. It has had a very notorious, as well as precarious political life that has signified a high possibility of instability. Dating back in history, Italy has experienced seismic shifts in its political landscape. Recent elections that were carried out in Italy are said to have been disorderly. That is; one of the most renowned presidents who led in the post- war- Italy was elected once more. This is one of the signs that the political environment has not taken the preferred dimension. The decay in the democratic system, in Italy, has led to some discouragement in the economic development by global and local investors. However, there are some encouraging factors that have led to some hopeful measures within the political developments. Though political turmoil has led to internal disagreements, it has created by some efforts as formation of grand coalitions. The most dominant factors, which could lead to poor investment-environment is experienced by nation’s habit to adopt the nationalism.
Political environment that supports foreign investment
Accordingly, Italy has the eight largest economies globally. It is characterized by full diversification as well as small and medium sized firms. The government in Italy has illustrated its strengths and weaknesses when it comes to adopting international investment. Primarily, the government of Italy has encouraged the efforts by the international as well as local investors to make a change within the investment world. Within the country’s economy, the budgetary tools provide finances for starting businesses. However, there remain some significant stumbling barriers (Cotta 99). These barriers include rigid labor laws, taxes, high input costs and other inefficient public services. Ideally, the current government is characterized by absenteeism, as well as poor work habits that are identified in government offices within the public sectors. Ideally, these factors affect both the internal and global investors.
Political environment that restricts foreign investment
An additional factor that can discourage the investment of Starbucks into Italy is that there is a deficiency of the legal system that is responsible for enforcement of property rights and contractual rights. Warning statements have continually been given towards any businessman and traveler should possess the awareness that the Italian legal system does not incorporate basic rights. These basic rights that are deemed necessary to any international figure include protection rights. That is; investing in Italy may appear to be a risk. According to the political forums and the judicial propositions, if the investment of Starbucks is incorporated, the investor has to choose the preferred method of solving protection disputes. In that case, it is proposed that foreign investors in Italy are given the chance to choose one among the provided methods of dispute resolution. These methods include binding arbitration. Legal arbitration can then be enforced by the nation’s judicial system. This is the ultimate risk since the policy may not work if the parties that are included in the petition or disagreement are not assured of any success. This is experienced when one of the parties is not willing to cooperate. It is deemed that the prior political instability and disagreement has continually influenced decrease in foreign investments.
In addition, there are some politically influenced factors that either discourages investment in Italy. Italy is described as welcoming and encouraging when it comes to foreign investors. This poor economic strategy employed and utilized under political influence has led to loopholes within which organizations such Starbucks can invest. On the other side, the environment that Italy provides to foreign investors is not conducive. First, Italy is a member of the European Union (E U) (Schludi 74). That is; it is obliged to abide by some legislation and treaties which have a negative impact on the investments. For instance, there is the restriction that would be considered severe including the shipping restrictions. In case the Starbucks Company wants to make shipping in and shipping-out transactions, the legislative requirements are completely against it. The situation worsens off when the government demands a dominant share in the ownership of the foreign firms. This becomes an oppressive strategy towards the international investors.
Conclusively, the political structure and framework of Italy should incorporate a different strategy of addressing international investments. This can make the investment efforts by foreign firms like the proposed Starbucks Company to establish it without restrictions. Accordingly, the Italian government is supposed to ensure that the judicial systems, as well as the legislative acts, are revised (Tamer 52). That is; it should make better the protective legislature within the constitution. In addition, it ought to make sure that restrictions concerning off boarder transactions are not restricted to ensuring that the global investment efforts are actualized. In this case, Starbucks Company can refer to Italy as a destiny for investment.
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Schludi, M. Reform of Bismarckian pension systems: A comparison of pension politics in Austria, France, Germany, Italy and Sweden. Amsterdam: Amsterdam University Press, 2005. Print.
Tamer, C, G. Gurcan, and Izak Atiyas. Reforming Turkish Energy Markets: Political Economy, Regulation and Competition in the Search for Energy Policy. Springer New York, 2012. Print.