ASSIGNMENT 1

Risk and Opportunities

18 DE FEBRERO DE 2022
GERENCIA DE MARKETING NRC 2158
Artieda Josué
Contenido

Cultural Analysis.................................................................................................................3

Power Distance................................................................................................................3

Individualism...................................................................................................................4

Masculinity......................................................................................................................4

Uncertaint Avoidance......................................................................................................5

Long term orientation......................................................................................................6

Indulgence........................................................................................................................7

Pest Analysis........................................................................................................................7
 Cultural Analysis

Power Distance

In the following graphic, it is being represented 6 variables about the countries selected.

In one hand, Hofstede´s compares power distance, which says that all individuals in a society are

not equal. In other words, power distance evaluates if the members of institutions and

organizations acknowledge that power is distributed unequally. With a 61, Uruguay

demonstrates a tendency to the higher side of PDI and a hierarchical society.

In this Hierarchical country reflect inequalities and the different distribution of power justifies

that the power remains with whom, who have more benefits.

In case of Italy, with a score of 50, its tendency is to prefer equality and decentralization of

power. Control and supervision are disliked amount new generations, which preferences are now

teamwork and an open management style (Hofstede Insights, 2022).

 Individualism

The individualism variable has to do with whether people´s self-image is defined in terms

of “I” or “We”. In Individualist societies people are supposed to look after themselves and their

direct family only.

Uruguay with a score of 36 tends to be a collectivist culture. It is characterized by an early

integration and close, long-term commitment to a strong, cohesive ‘in-group’. In this society

everyone takes responsibility for and protects fellow members of the group.

Italy with a score of 76 is an Individualist culture, especially because Italy has big and rich cities

such as the north ones.

Family and friends becomes an important antidote to this feeling; but the word “friend” should

not be misinterpreted it may differ when say that you know someone or can be used for

introducing you to important or powerful people.

For Italians having their own personal ideas and objectives in life is very motivating and the

route to happiness is through personal fulfillment. People going from Southern Italy to the North

say that they feel cold not only for the different climate but for the less “warm” approach in

relationships (Hofstede Insights, 2022).

Masculinity

Another variable is masculinity, which indicates that the society will be driven by

competition, achievement, and success, normally it starts in school and continues throughout

organizational life. If the score is low, then masculinity turns into feminine, the values in this

kind of society are caring for others and quality of life.

At 38, Uruguay scores low, making it a moderately feminine society. In other words, this society

is driven by a certain amount of modesty and fairness. People in such societies value equality,
solidarity, and quality in their working lives. Conflicts can be threatening because they endanger

the wellbeing of everyone; they are resolved by compromise and negotiation.

Italy scores 70 making it a Masculine society – highly success oriented and driven. Children are

taught from an early age that competition is good and to be a winner is important in one’s life.

Italians show their success by acquiring status (Hofstede Insights, 2022).

Uncertain Avoidance

Uncertain Avoidance variable has to do with the way that a society deals with the fact

that the future can never be known. This situation brings anxiety and different cultures have

learnt to deal with this anxiety in different ways. 

At 98, Uruguay scores very high on Uncertainty Avoidance, demonstrating that as a nation they

see mechanisms to avoid ambiguity. People do not readily accept change and are very risk

adverse. They maintain rigid codes of belief and behavior and are intolerant of unorthodox

behavior and ideas. To minimize the level of uncertainty, there is an emotional need for strict

rules, laws, policies, and regulations.

Italy with a high score of 75 stipulates that Italians are not comfortable in ambiguous situations.

Formality in Italian society is important and the Italian penal and civil code are complicated with

clauses, codicils etc. In work terms high Uncertainty Avoidance results in large amounts of

detailed planning. The low Uncertainty Avoidance approach (where the planning process can be

flexible to changing environment) can be very stressful for Italians.

In Italy the combination of high Masculinity and high Uncertainty Avoidance makes life very

difficult and stressful. To release some of the tension that is built up during the day Italians need

to have good and relaxing moments in their everyday life, enjoying a long meal or frequent

coffee breaks. Due to their high score in this dimension Italians are very passionate people:
emotions are so powerfully that individuals cannot keep them inside and must express them to

others, especially with the use of body language (Hofstede Insights, 2022).

Long-term orientation

The long-term orientation variable describes how each society should maintain some

relationship with its own past while dealing with the challenges of the present and future. There

are Normative societies, which score low on this dimension, for example, prefer to maintain

time-honored traditions and norms while viewing societal change with suspicion. Those with a

culture which scores high, on the other hand, take a more pragmatic approach: they encourage

thrift and efforts in modern education to prepare for the future.

The low score of 26 indicates that Uruguay has a normative culture. People in such societies

have a strong concern with establishing an absolute Truth; they are normative in their thinking.

They exhibit great respect for traditions, a relatively small propensity to save for the future, and a

focus on achieving quick results.

Italy’s high score of 61 on this dimension shows that Italian culture is pragmatic. In societies

with a pragmatic orientation, people believe that truth depends very much on situation, context,

and time. They show an ability to adapt traditions easily to changed conditions, a strong

propensity to save and invest, thriftiness, and perseverance in achieving results (Hofstede

Insights, 2022).

Indulgence

Finally, Indulgence variable involve desires and impulses which people try to control,

based on the way they were raised. Relatively weak control is called “Indulgence” and relatively

strong control is called “Restraint”.

With an intermediate score of 53, no clear preference between Indulgence and Restraint can be
established for Uruguay.

A low score of 30 indicates that Italian culture is one of Restraint. Societies with a low score in

this dimension tend to cynicism and pessimism. People with this orientation have the perception

that their actions are Restrained by social norms and feel that indulging themselves is somewhat

wrong (Hofstede Insights, 2022).

Comparing Italy and Uruguay we can notice that the two countries are in many variables
different, however, both countries are successful in their continents. It is very important to
remark that Uruguay population is nearly the 17 times less than Italy, but the quality of living in
this countries are quite the same.
Both countries have barely the same score in their political stability and civil rights variables that
compose quality life.
On the other hand both countries have almost the same unemployment rate, Uruguay has 10,4%
and Italy has 9,2% (WorldData).
 Pest Analysis

Uruguay

Political/Legal/Government Policy: Economic and Financial Factors:

Degree of government involvement in Economic system classification

business
Uruguay has a free-market economy
The government is a presidential characterized by an export-oriented
republic. Uruguay accepts compulsory ICJ agricultural sector, a well-educated workforce,
jurisdiction; accepts ICCt jurisdiction. and high levels of social spending. Uruguay
has sought to expand trade within the
Alignment with other countries Common Market of the South (Mercosur) 
Mercosur member countries
(Argentina, Brazil, and Paraguay)
Per capita income and growth pattern
Type of legal system $21,600 note: data are in 2017 dollars
(2020 est.)
Uruguay has civil law system based on $23,000 note: data are in 2017 dollars
the Spanish civil code. (2019 est.)
Regional trading relationships $23,000 note: data are in 2017 dollars
(2018 est.)
CAN (associate), CD, CELAC, FAO, note: data are in 2017 dollars
G-77, IADB, IAEA, IBRD, ICAO, ICC
(national committees), ICCt, ICRM, IDA,
IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Purchasing power adjustments
Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, $75.06 billion note: data are in 2017
LAES, LAIA, Mercosur, MIGA, dollars (2020 est.)
MINUSTAH, MONUSCO, NAM (observer), $79.73 billion note: data are in 2017
OAS, OIF (observer), OPANAL, OPCW, dollars (2019 est.)
Pacific Alliance (observer), PCA, SICA $79.45 billion note: data are in 2017
(observer), UN, UNASUR, UNCTAD, dollars (2018 est.)
UNESCO, UNIDO, Union Latina, UNISFA, note: data are in 2017 dollars
UNMOGIP, UNOCI, UNWTO, UPU, WCO,
WFTU (NGOs), WHO, WIPO, WMO, WTO. Labor and Employment

Political attitude toward foreign firms Labor Force, Total: 1,686,696 (2020)
Employment in Agriculture (% of total
The Government of Uruguay (GoU) employment) 7.922% (2020)
recognizes the important role foreign Employment in Industry (% of total
investment plays in economic development employment) 18.728% (2020)
 and offers a stable investment climate that Employment in Services (% of total
does not discriminate against foreign employment) 73.351% (2020)
investors. Uruguay’s legal system treats Unemployment Rate 12.67% (2020)
foreign and national investments equally,
most investments are allowed without prior Inflation Rates
authorization, and investors can freely transfer
the capital and profits from their investments 7.8% (2019 est.)
abroad. International investors can choose 7.5% (2018 est.)
between arbitration and the judicial system to 6.2% (2017 est.)
settle disputes. Local courts recognize and
enforce foreign arbitral awards.

Sociological and Cultural Factors: Technology/Infrastructure Factors:

Population General Infrastructure quality

3,398,239 (July 2021 est.) Uruguay presents several negative
gaps in infrastructure compared to
Language countries with similar income per
capita. 20 The largest negative gap is
Spanish (Official) related to transportation. Although
energy displays a small positive gap,
Urban/rural concentration energy prices remain high. The
country is well positioned in water and
Most of the country's population sanitation, but there are challenges
resides in the southern half of the country; in the provision of sanitation
approximately 80% of the populace is urban, services. In telecommunications,
living in towns or cities; nearly half of the Uruguay is particularly well positioned
population lives in and around the capital of in digital connectivity indicators such
Montevideo. as internet users, fixed broadband
Internet subscribers, and mobile
Attitude toward foreign firms cellular subscriptions.

Key industries/sectors
Uruguay’s export and investment
promotion agency, Uruguay XXI Exp-Imp, Tourism, Hospitality,
(http://www.uruguayxxi.gub.uy/) provides Agriculture, Service, Manufacturing and ICT
information on Uruguay’s business climate industries.
and investment incentives, both at a national
and a sectoral level. The agency also has Rate of Industrialization
several programs to promote the The expansion of manufacturing
internationalization of local firms and industries from the nineteenth century
regularly participates in trade missions. forward, and
especially from the 1930s until the late
Views toward globalization 1970s, was an exceptional stage in the
Latin
American countries, which was not
repeated again in their economic
history. However, the
rate of industrialization was different
in Brazil and Chile compared to
Uruguay. While in
Brazil and Chile the manufacturing
share of GDP grew steadily until the
1970s and 1980s
reaching 30%; in Uruguay, it remained
stable at around 25% from the 1950s
on.

Size and skill of labor force

Labour Force data was reported at
1,769,073.000 Person in 2017. This
records an increase from the previous
number. Labor force comprises people
ages 15 and older who supply labor for
the production of goods and services
during a specified period. It includes
people who are currently employed
and people who are unemployed but
seeking work as well as first-time job-
seekers.

Labor cost and productivity

Uruguay Labour Productivity dropped
by 0.78 % YoY in Dec 2019,
compared with a growth of 2.03 % in
the previous year
Uruguay Labour Productivity Growth
data is updated yearly, available from
Dec 1992 to Dec 2019, averaging at
2.47 %
The data reached an all-time high of
7.68 % in Dec 1997 and a record low
of -4.46 % in Dec 2002
7,920 Uruguayan pesos ($390) per
month.
 Italy

Political/Legal/Government Policy: Economic and Financial Factors:

Degree of government involvement in

business Economic system classification

The government is a parliamentary Italy’s economy comprises a

republic. Italy accepts compulsory ICJ developed industrial north, dominated by
jurisdiction with reservations; accepts ICCt private companies, and a less-developed,
jurisdiction. highly subsidized, agricultural south, with a
legacy of unemployment and
Alignment with other countries underdevelopment. The Italian economy is
driven in large part by the manufacture of
European Union member countries high-quality consumer goods produced by
(Austria, Croatia, Denmark, France, Hungary, small and medium-sized enterprises, many of
Malta, Portugal, Germany, etc) them family-owned.
Per capita income and growth pattern
Type of legal system
$39,000 note: data are in 2017 dollars
Italy has civil law system, judicial (2020 est.)
review of legislation under certain conditions
in Constitutional Court. $42,700 note: data are in 2017 dollars
(2019 est.)
Regional trading relationships
$42,100 note: data are in 2017 dollars
ADB (nonregional member), AfDB (2018 est.)
(nonregional member), Arctic Council
(observer), Australia Group, BIS, BSEC note: data are in 2010 dollars
(observer), CBSS (observer), CD, CDB, CE,
CEI, CERN, EAPC, EBRD, ECB, EIB, EITI
(implementing country), EMU, ESA, EU, Purchasing power adjustments
FAO, FATF, G-7, G-8, G-10, G-20, IADB,
IAEA, IBRD, ICAO, ICC (national $2,322,140,000,000 note: data are in
committees), ICCt, ICRM, IDA, IEA, IFAD, 2017 dollars (2020 est.)
IFC, IFRCS, IGAD (partners), IHO, ILO, $2,548,190,000,000 note: data are in
IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, 2017 dollars (2019 est.)
ISO, ITSO, ITU, ITUC (NGOs), LAIA $2,540,890,000,000 note: data are in
(observer), MIGA, MINURSO, MINUSMA, 2017 dollars (2018 est.)
NATO, NEA, NSG, OAS (observer), OECD,
OPCW, OSCE, Pacific Alliance (observer), Labor and Employment
Paris Club, PCA, PIF (partner), Schengen
Convention, SELEC (observer), SICA Labor Force, Total: 1,686,696 (2020)
(observer), UN, UNCTAD, UNESCO, Employment in Agriculture (% of total
 UNHCR, UNIDO, UNIFIL, Union Latina, employment) 7.922% (2020)
UNMOGIP, UNRWA, UNTSO, UNWTO, Employment in Industry (% of total
UPU, Wassenaar Arrangement, WCO, WHO, employment) 18.728% (2020)
WIPO, WMO, WTO, ZC. Employment in Services (% of total
employment) 73.351% (2020)
Unemployment Rate 12.67% (2020)
Political attitude toward foreign firms
The government remains open to Inflation Rates
foreign investment in shares of Italian
companies and continues to make information 7.8% (2019 est.)
available online to prospective investors. 7.5% (2018 est.)
6.2% (2017 est.)

Sociological and Cultural Factors: Technology/Infrastructure Factors:

Population
62,390,364 (July 2021 est.) General Infrastructure quality
Italy has an efficient and modern
Language infrastructure, even though it performs
poorly compared to other Western
Italian (official), German (parts of
European countries of comparable
Trentino-Alto Adige region are size. The whole peninsula is well
predominantly German speaking), connected through an extensive system
French (small French-speaking of railways, expressways, national
minority in Valle d'Aosta region), roads, airports and seaports. Most of
Slovene (Slovene-speaking minority in the infrastructure was rebuilt after the
the Trieste-Gorizia area) ravages of World War II

Urban/rural concentration Key industries/sectors

Italy’s economic strength is in the
Urban population: 71.7% of total processing and manufacturing of goods,
population (2022) primarily in small and medium sized family-
rate of urbanization: 0.27% annual rate owned firms. Its major industries are tourism,
of change (2020-25 est.) precision machinery, motor vehicles,
Attitude toward foreign firms chemicals, pharmaceuticals, electrical goods,
textiles, fashion, clothing and footwear.

the Italian government may block Rate of Industrialization

mergers and acquisitions involving In October 2021, industrial production
foreign firms under its investment in Italy was recovering compared to
screening authority (known as last year. The overall production grew
 “Golden Power”) if the proposed by around two percent compared to
transactions raise national security October 2020 (-2,1%). As a
concerns. consequence of the rising number of
coronavirus cases.
Views toward globalization
Size and skill of labor force
The outcome in Italy resonates beyond
The size of the labor force in Italy
Europe, because political from 2012 to 2019, with projections
developments there are consistent with up until 2022. In 2019, Italy had a
a worldwide retreat from globalization labor force of around 23.33 million
and growing demands for national people. Italian labor market has been
governments to reassert control over characterized by a
the flow of goods and services, capital, high share of self-employment and a
significant growth in non-standard
people, and information/data.
jobs in recent years.

Labor cost and productivity

Productivity in Italy averaged 73.42
Index Points from 1960 until 2017,
reaching an all-time high of 108.50
Index Points in the second quarter of
2009 and a record low of 24.50 Index
Points in the fourth quarter of 1960.
This page provides the latest reported
value for - Italy Productivity - plus
previous releases, historical high and
low, short-term forecast and long-term
prediction, economic calendar, survey
consensus and news. Italy Productivity
- values, historical data and charts -
was last updated on February of 2022.
Labor Costs in Italy averaged 90.44
points from 1980 until 2021, reaching
an all-time high of 117 points in the
second quarter of 2020 and a record
low of 44.50 points in the first quarter
of 1980.

What this means for our business - Uruguay:

The variables analyzed confirm that Uruguay has many advantages for doing business.
First of all, Uruguay is a stable and predictable country, it is reconized in Latin America for its
reliability. For years, the country has had strong political and social stability. This factors made
Uruguay a good and safest country to invest.
It also has a good business environment. Uruguay is always in tendency to grow.
According to the main international rating agencies, this country has world class infrastructure
and good quality of life making it attractive to investors.
Another very important advantage is that Uruguay is on a strategic location. The country
has stable agreements with MERCOSUR. Has developed solid, intercommunicate commercial
activities in benefit of the country and all along the South Latin American continent.
One of the most important advantages is the relationship with the government. For
instance, there is a law that promote equal treatment not only for local, but also for foreign
investors.
And last but not least, Uruguay is a good place to enjoy. The country is getting into a
higher per capita growth. Its economy has the highest gross product in Latin America.

What this means for the business - Italy:

Strategic logistics hub

Located at the center of the Mediterranean Sea, Italy gives businesses a strategic
gateway to consumers across the European Union, Northern Africa and the Middle
East. It is also a primary hub that links southern, central and eastern Europe.

Much of Italy’s extensive transportation network is among Europe’s priority logistic nodes.

Due to its central Mediterranean position, 20% of world maritime traffic, 30% of fuel
traffic, and 25% of container traffic pass through Italy’s ports.
A total of 432 million tons of goods and 1 billion people move through Italy’s 40 major
ports and 42 airports. As a member of the European Union, businesses in Italy have
duty-free access to over 50 million consumers in over 30 national markets within the
European Economic Area.
 Pro-investment culture
Italy’s open economy welcomes investors. The country has implemented significant
reforms to gain investor trust and confidence, including forming a high-level committee
within the Ministry of Economic Development. The Italian Trade Agency offers a “one-
stop shop” for pre-investment information, business set-up support, and ongoing after-
care for incentives and contracts.

The government offers numerous tax credits and incentives to attract FDI. These
include tax credits for employment (especially for hiring women and younger workers),
tax deductions for energy efficiency, and tax reductions on income derived from
specified intangible assets. The government also offers significant tax credits for R&D:
25% for private investments in R&D which increase to 50% for projects within
universities or research institutions; and 15% for investments in machinery and capital
goods. Businesses investing in new manufacturing and R&D in Italy’s southern regions
are eligible for additional public support.

Robust manufacturing base

Italy is among the largest manufacturing countries in Europe, second only to Germany.
Products made in Italy continue to enjoy a reputation for high quality and design.
Investors can seek to partner with a large pool of experts in diverse sectors such as
machine tools, fashion items, food products, automotive and pharmaceuticals.
Companies can also access an extensive network of intermediate suppliers in a wide
range of sectors, including industrial machinery, metals, chemicals, plastics, paper,
ceramics, textile, marine industries, among others.

Italy is one of only five countries with an export trade surplus. Italian manufacturers are
keen to protect this export advantage by investing in advanced manufacturing
technologies that improve production and reduce costs, including industrial automation,
robots and additive manufacturing.
 A tradition of innovation
Italy spends over 25 billion euro per year in R&D, making it the fourth-highest in R&D
investment in Europe. Its manufacturing base is increasingly integrating digital
technologies in their production processes.

Italy is developing a network of innovation incubators and science and technology

parks, many of which are connected to universities and local development agencies.
Italy has encouraged thousands of spinoffs and startups to disseminate new knowledge
and technologies into the market from this network.

The government agency, Invitalia, provides extensive incentives to both Italian and
foreign companies by financing all sizes of projects in strategic sectors in industry,
tourism and environmental protection.

High-tech performance
Consistent with Italy’s goal to attract FDI focused on innovation and advanced
technologies, investors can find opportunities in several high-tech sectors with a range
of government incentives, depending on the region and the sector. The biotechnology,
chemicals, aerospace and automotive industries can offer attractive opportunities.

Biotech is recognized as a “Key Enabling Technology” across Europe. Accordingly,

Italy’s biotech industry is among its faster-growing sectors and is helped by a well-
established academic and industrial research infrastructure. Most of the sector is
focused on R&D, with a high concentration in the life sciences, including medicine and
human healthcare, agriculture, veterinary, and the environment.

Italy is Europe’s third-largest chemicals producer, primarily targeting the agriculture,

food and beverage markets. Many large multi-national companies have a well-
established presence in Italy, leveraging Italy’s skilled labor and strategic location in
Europe.

In the aerospace sector, Italy is a leading producer of helicopters and is a partner in the
construction of the international space station. Italy’s automotive industry is known for
its high-level design and technology, with well-developed manufacturing facilities and
skilled labor.
 References:

https://www.cia.gov/the-world-factbook/countries/uruguay/#energy

https://globaledge.msu.edu/countries/uruguay/government

https://www.hofstede-insights.com/country-comparison/italy,uruguay/

https://www.state.gov/reports/2020-investment-climate-statements/uruguay/

https://uy.usembassy.gov/wp-content/uploads/sites/113/2017-ICS-Uruguay-OIA-edits.pdf

https://read.oecd-ilibrary.org/development/multi-dimensional-review-of-uruguay/transport-
infrastructure-for-development-in-uruguay_9789264251663-6-en#page1

https://www.worldatlas.com/articles/the-biggest-industries-in-uruguay.html

https://www.ceicdata.com/en/uruguay/labour-force/uy-labour-force

https://www.state.gov/reports/2021-investment-climate-statements/italy

https://www.nationsencyclopedia.com/economies/Europe/Italy-INFRASTRUCTURE-POWER-
AND-COMMUNICATIONS.html

https://www.globalsecurity.org/military/world/europe/it-economy.htm#:~:text=Italy's
%20economic%20strength%20is%20in,%2C%20fashion%2C%20clothing%20and
%20footwear.

https://tradingeconomics.com/italy/productivity#:~:text=Looking%20forward%2C%20we
%20estimate%20Productivity,according%20to%20our%20econometric
%20models.&text=In%20Italy%2C%20Productivity%20is%20the,labor%20during%20a
%20certain%20time

https://www.worlddata.info/country-comparison.php?country1=ITA&country2=URY
https://www.wolterskluwer.com/en/expert-insights/doing-business-in-italy
https://www.uruguayxxi.gub.uy/en/news/article/seven-reasons-that-make-uruguay-the-best-
place-to-do-business/