Because Italy is more than a geographic expression..

Alessi S.P.A. US

Thursday, August 26, 2010

SME's Drive Italy's Economy

I was perusing the net to see if I can find anything discussing the Italian business model. I really need to renew my library card so I can hit primary sources and periodicals. Anyway. This research report by Daniela di Berardino at the University of Pescara (Department of Business Studies) titled Marketing in Small and Medium Enterprises:

Disclosed is only the summary (with tiny grammatical corrections) as the paper is on word doc. But is easily found on Google:

"Small and medium enterprises are the typical business model of the Italian entrepreneurial system and a lot of these SME are family business. In Italy the 80% of working people are into SME, instead in the UK the 55%, in France the 67%, in Germany the 60%, in Spain the 79%.

More than 95% of all European enterprises belong to the SME size. The 55% of these SME in Europe was born between 1951 and 1970 years, the economic boom period, and a lot of them became medium firms.

The Sme’s features are: narrow management (one or more persons); small task environment; resources, equity and human capital assigned by propriety.

The Italian experience shows that the SME:

- can obtain relevant competitive advantage into the bound task environment;

- can make success into the large market by the focus or niche strategy or by the partnership with other firms (big or small);

The competitive advantage that SME can obtain in the large markets requires these conditions:

- No economy of scale;

- High flexibility;

- few big companies;

- fragmented market.

During the last ten years many events threatened the SME: globalisation, outsourcing, enterprises’trust, brief product life cycle, consecutive innovation.

However, the SME are able to change their organizations, manufacturing and process with more flexibility than global players and during the last years many SME opened their market to the foreign customers, especially in the country in growth. The tools used for this purpose are the relationship with foreign partner and internet, thought that the Italian SME doing e-commerce, e-procurement, global promotion and market penetration into the foreign markets. A lot of them have an internet web site where presents their product, their history, their distribution system, the price and other but few of SME, in Italy too, use internet channel for value generation.

The main relationship built with big enterprises are franchising and supply chain relations (to support the growth and the market penetration), licensing and joint venture (to support the innovation, the product development, the leaning organization, to receive financial resources), and other concracts. Greater cooperativeness, sense of community, innovation, strategic flexibility and core competence are necessary to SME’s growth and competitiveness. We can try these features into the network systems, where economic exchange is embedded inside a network of social and trust relations. Trust is necessary to create cooperation and value by the relations. The economic effects, largely, are low cost, learning, market penetration and growth of management competencies.

The main objectives of european SME, usually, are the sales growth and hight return on equity. The Italian core industry is the mechanical, especially in the North East. This industry is composed by tools and machinery for other industry, while textile industry, clothing factory, leather industry, shoe factory, and only the 9% of these SME has the 20% of sales by one client. These SME have many relations with suppliers and retailers to support their growth.

The Italian SME are much focused and produce speciality goods for the consumer market. These SME prefere niche strategies, focus on core competencies, differentiated goods and service, support more quality than price competition."

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