Pet Supplies and Veterinary Services in Italy: A Strategic Reference, 2006
ICON Group International, July 2007, Pages: 108
How to Strategically Evaluate Italy
Perhaps the most efficient way of evaluating Italy is to consider key dimensions which themselves are composites of multiple factors. Composite portfolio approaches have long been used by strategic planners. The biggest challenge in this approach is to choose the appropriate factors that are the most relevant to international planning. The two measures of greatest relevance to pet supplies and veterinary services are “latent demand” and “market accessibility”. The figure below summarizes the key dimensions and recommendations of such an approach. Using these two composites, one can prioritize all countries of the world. Countries of high latent demand and high relative accessibility (e.g. easier entry for one firm compared to other firms) are given highest priority. The figure below shows two different scenarios. Accessibility is defined as a firm’s ease of entering or supplying from or to a market (the “supply side”), and latent demand is an indicator of the potential in serving from or to the market (the “demand side”).
Framework for Prioritizing Countries
Demand/Market Potential Driven Firm
Relative Accessibility
Accessibility/Supply Averse Firm
In the top figure, the firm is driven by market potential, whereas the bottom figure represents a firm that is driven by costs or by an aversion to difficult markets. This report treats the reader as coming from a “generic firm” approaching the global market - neither a market-driven nor a cost-driven company. Planners must therefore augment this report with their own company-specific factors that might change the priorities (e.g. a Canadian firm may have higher accessibility in Canada than a German firm).
Latent Demand and Accessibility in Italy
This report provides a detailed overview of factors driving latent demand and accessibility for pet supplies and veterinary services in Italy. Latent demand is largely driven by economic fundamentals specific to pet supplies and veterinary services. This topic is discussed in Chapter 2 using work carried out in Italy on behalf of American firms and authored by the United States government (typically commercial attachés or similar persons in local offices of the U.S. Department of State). I have included a number of edits to clarify the information provided. Latent demand only represents half of the picture. Chapter 2 also deals with micro-accessibility for pet supplies and veterinary services in Italy. I use the term “micro” since the discussion is focused specifically on pet supplies and veterinary services.
Chapter 3 deals with macro-accessibility and covers factors that go beyond pet supplies and veterinary services. A country may at first sight appear to be attractive due to a high latent demand, but it is often less attractive when one considers at the macro level how easy it might be to serve that entire potential and/or general business risks. While accessibility will always vary from one company to another for a given country, the following domains are typically considered when evaluating macro-accessibility in Italy:
Openness to Trade in Italy
Openness to Direct Investment in Italy
Local Marketing and Entry Strategy Alternatives
Local Human Resources
Local Risks
Across these domains, a number of not-so-obvious factors can affect accessibility and risk. These are covered in Chapter 3, which is a general overview of investment and business conditions in Italy. Chapter 3 is also presented from the perspective of an American firm, though is equally applicable to most firms entering Italy. This chapter is also authored by local offices of the U.S. government, as is Chapter 2. Likewise, I have included a number of edits to clarify the provided information as it relates to the general strategic framework mentioned earlier.
1 INTRODUCTION & METHODOLOGY 1
1.1 What Does This Report Cover? 1
1.2 How to Strategically Evaluate Italy 1
1.3 Latent Demand and Accessibility in Italy 3
2 PET SUPPLIES AND VETERINARY SERVICES IN ITALY 4
2.1 Latent Demand and Accessibility: Background 4
2.2 Latent Demand: Market Composition 4
2.2.1 Pet Supplies 5
2.2.2 Veterinary Services 6
2.2.3 The Private Label Phenomenon 7
3 MACRO-ACCESSIBILITY IN ITALY 8
3.1 Executive Summary 8
3.2 Fundamental Dynamics 9
3.3 Dynamics in Agriculture 9
3.4 Dynamic Markets 9
3.5 Government Intervention Risks 10
3.6 Infrastructure Development 10
3.7 Economic Relationship with the United States 11
3.8 The Political System 11
3.8.1 Political Risks for Agriculture 12
3.9 Marketing Strategies 13
3.9.1 Distribution Channel Options 13
3.9.2 Agents and Distributors 14
3.9.3 Franchising 15
3.9.4 Direct Marketing Options 17
3.9.5 E-Commerce 17
3.9.6 Leasing 19
3.9.7 Joint Ventures and Licensing Options 20
3.9.8 Creating a Sales Office 20
3.9.9 Advertising and Trade Promotion 20
3.9.10 Pricing Issues 28
3.9.11 Quotes and Payment Terms 29
3.9.12 Selling Strategies 29
3.9.13 Public Sector Marketing 30
3.9.14 Hiring Local Counsel 30
3.9.15 Performing Due Diligence 30
3.9.16 Marketing Agricultural Products 31
3.10 Trade Barrier Risks 32
3.10.1 Broadcast Directive and Motion Picture Quotas 32
3.10.2 Civil Aviation 33
3.10.3 Government Procurement 33
3.10.4 Customs Regulations, Tariff Rates, and Import License Requirements 33
3.10.5 Value-Added Taxes 34
3.10.6 Temporary Goods Entry Requirements 34
3.10.7 Special Import/Export Requirements and Certifications 35
3.10.8 Labeling Issues 35
3.10.9 Restrictions on Imports 36
3.10.10 Controls on Exports 36
3.10.11 Local Standards 36
3.10.12 Free Trade Zones and Warehouses 43
3.10.13 Adherence to Free Trade Agreements 43
3.10.14 Customs Contact Information 44
3.10.15 Warranty and Non-Warranty Repairs 44
3.10.16 Trade Regulations and Standards for Agriculture 44
3.11 Investment Climate 45
3.11.1 Openness to Foreign Investment 45
3.11.2 Right to Private Ownership and Establishment 46
3.11.3 Intellectual Property Risks 46
3.11.4 Laws Governing Intellectual Property Rights 47
3.11.5 Foreign Trade Zones and Free Ports 49
3.11.6 Taxation Issues 49
3.11.7 Performance Requirements and Incentives 50
3.12 Transparency of the Regulatory System 50
3.12.1 Corruption 50
3.12.2 Labor 51
3.12.3 Capital Market Risks 52
3.12.4 Conversion and Transfer Policies 53
3.12.5 Expropriation and Compensation 53
3.12.6 Dispute Settlement 53
3.12.7 Political Violence 54
3.12.8 Bilateral Investment Agreements 54
3.12.9 OPIC and Other Investment Insurance 56
3.12.10 Capital Outflow Policy 56
3.12.11 Major Foreign Investments 56
3.13 TRADE AND PROJECT FINANCING 57
3.13.1 The Banking System 57
3.13.2 Foreign Exchange Control Risks 58
3.13.3 General Financing Availability 58
3.13.4 Financing Export Strategies 58
3.13.5 Financing Options 59
3.13.6 Availability of Project Financing 59
3.13.7 Banks with Correspondent U.S. Banking Arrangements 60
3.14 Travel Issues 63
3.14.1 Local Business Practices 63
3.14.2 Travel Advisory and Visas 63
3.14.3 Work Week 64
3.14.4 Infrastructure for Conducting Business 64
3.14.5 Temporary Entry of Goods 66
3.15 Key Contacts 67
3.15.1 U.S. Embassy Trade Contacts 67
3.15.2 American Chamber of Commerce 69
3.15.3 Italian Government Agencies 69
3.15.4 Italian Trade Associations 72
3.15.5 Market Research Firms 79
3.15.6 Italian Commercial Banks 80
3.15.7 Contacts in Washington D.C. 82
3.15.8 U.S.-Based Multipliers Relevant for Italy 82
3.15.9 Agricultural Contacts By Industry 83
4 DISCLAIMERS, WARRANTEES, AND USER AGREEMENT PROVISIONS 100
4.1 Disclaimers & Safe Harbor 100
4.2 Icon Group International, Inc. User Agreement Provisions 101
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