Pest Analysis

PEST ANALYSIS Rovio Entertainment Ltd

Country of reference: ITALY

Political factors

Political factors are how and to what degree a government intervenes in the economy.

Political stability

The difficult economic situation of the last few years has provoked dissatisfaction with the Italian government among Italians and some political instability. With a new government headed by Prime Minister Mario Monti in 2011 political stability returned. However, a few days ago, the Prime Minister announced his imminent resignation, which could subsequently cause new instability in the government.

Tax policy

Taxes in Italy form a major part of the budget of country. Recently taxes seriously raised in Italy. Italy takes 6th place in the world among countries with the highest taxes. There are 3 main taxes which are related with the activities of enterprises in Italy:

- Taxes on corporate income - rate 27.5%

- Regional tax on productive activities - the rate of 4.25%

- Value added tax - the rate of 21%

Labor law

Until June 2012 Italian legislation was one of the most favorable for workers. According to Art. 18 of the Italian Labor Code company can fire worker only if he or she show open refusal to work, but in this case company will prove it in a court for a long time. This means that it was almost impossible to dismiss an employee. However, the labor reform in June 2012 repealed this article. In addition, firms are now allowed to cut staff when they have economic difficulties.

Trade restrictions, tariffs

Because Italy is part of the European Union, they are benefited by the EU’s free market, which prohibits any trade barriers or tariffs between its members.

All in all, there are some advantages like absent of trade barriers, improvements in trade law for companies, but there are some disadvantages like high taxes and possible political instability.

Economical

Economic factors include variables such as GDP, Interest rates, Inflation, unemployment...