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Political, Legal and Regulatory Risks

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Political, legal, and regulatory risks The Rules on the Regulation of Franchise (Italian Senate) in articles 2-3 under the Scope of Law demands that any third party business relations must be in writing or will be considered null in void. A distinct plan of organization will be key in handling all written documentation as well as third party witnessing. The Rules on the Regulation of Franchise also states that all documentation must by law, must coincide with the original agreement made by franchisor and cannot be changed without further consent. Any misleading or false information can be due to lack of accurate translation and is punishable by annulment of agreement. To avoid this risk any form of communication, as well as product journalism and financial documents, should be translated into Italian by a professional, and preferably followed with an e-mail or telephone call. Also, there are business schools that can offer placements to aid with the subject of translation. Furthermore, using the Italian language in documents, such as invoices, will aid in the clarification of all intentions and eliminate confusion or misunderstanding. Market Risks (four Ps)

PRICE The average cost of a cup of coffee in Italy (4.92 EU or $7 USD) is doubled the price of an average sized breakfast (2.35 EU or $3 USD). The

subject of price must be paid close attention as to not be deemed as “overpriced” in a country filled with locals who know the value of a good cup of coffee. The price must be strategically set to be competitive without the potential loss of quality. PRODUCT The risk of opening a Starbucks in Italy is that Italians are big coffee drinkers. Italy has 110,000 coffee bars and the quality would have to improve %100 in order to make an impact and divert the consumer from their favorite family owned business. Solution: the product itself would have to be revamped by focusing more on the coffee and not the brand as well as the types of coffee as well as the time frame that the locals consume coffee will have to be taken into effect for a positive business market. PLACEMENT The subject of placement is a difficult because the people of Italy are known to be protectors of their coffee culture and with an association formed to protect it’s historic cafés, placing a major American Based franchise would be nothing short of a risk. A possible solution to this dilemma would be to adapt as much as possible to the culture of the land and adopt the ways of the historic cafés in hopes to gain the respect and pride of the people. PROMOTION

The Promoting of Starbucks will have to be completely repackaged and remodeled to reflect the strong culture that Italy has to offer. A noncommercial approach to the brand and product will be the primary center of all campaigns. Not doing so could result in a strong backlash of the people and the association to protect the historic coffee bars.

Distribution and supply chain risks
A practical coordination strategy for the supply chain would be to make sure the wholesale price between the producer and the distributor is competitively met. The wholesale price of the product alone will have to be sufficient to accomplish the management that maximizes both supply chain probable profit and each contributor profit. To help with competitive pricing a solution may be to house local products and eliminate further shipping costs when necessary.

Mode of Entry Franchising involves the franchiser to supply concepts, branding, expertise and the majority of the elements required to function in an overseas market. Management tends to be controlled by the franchiser and because of this, Licensing would be an ideal mode of entry for this particular venture.

SOURCES:

 Innovationzen.com
 Quickmba.com


Marketingteacher.com
 Buyusa.gov/italy/en/mritaly.html

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