PRIVITIZATION IN ITALY.   Term Paper ID:30817 Click to get this paper

Essay Subject: Discusses transference of some industries from pubic sector to the private sector.... More...

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Paper Abstract: Discusses transference of some industries from public sector to the private sector. Desirability of privatization for Italy, Its struggle to achieve greater economic growth in key sectors such as telecommunications. Privatization of Telecom Italia, Italy's financial markets, Atltalia Airline, ENEL telecommunications. Consideration of privatizing Italy's priceless arts and architectural holdings. Paper Introduction: The Privatization of Public Sectors in Italy Privatization is a strategy in which politicized bureaucracies are replaced with meritocratic investors, transferring control over selected industries or services from the public (i.e., governmental) sector to the private sector (The Economist 1 82). Few nations stood to benefit more from privatization than Italy, where large firms have typically been subject to state meddling. In recent years, as it struggled to achieve greater economic growth in key sectors such as telecommunications, Italy has engaged in a round of privatization that has generated what some analysts have characterized as mixed results (Edmondson 28). Managerial tools used in the transformation of a company such as Telecom Italia, a former state telecommunications for in which the Italian treasury s Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. It waseven feared that had the move succeeded, the government would have beenrequired to step in and take over the fixed-line network operated by thefirm. As Edmondson noted, these cuts were necessary and vital torestructure Telecom Italia and to make it a more profitable and competitiveoperation (28). 9 Oct. 3 Nov. Additionally, the OECDsurvey examined privatisation strategies at such companies as TelecomItalia and found that poor competitive strategies were in place at thefirm. The most striking changes took place in Telecom Italia,which was fully privatized in October of 1997. As Edmondson noted, Telecom is being threatened by theentry into its growing mobile market of players such as Hong Kong-basedHutchinson Whampoa Ltd (28). In essence, the move to privatize Telecom Italia, though necessary inlight of enhanced competition from other nations and firms, did notgenerate a smooth transition. At the present time,Italy's efforts in this context can be judged as partially successful. In May of 1999 Telecom Italia was purchased by Olivetti, a firm one-sixth its size, in a takeover bid (The Economist 1 82). Managerialtools used in the transformation of a company such as Telecom Italia, aformer state telecommunications for in which the Italian treasury still hasa 4 percent stake, have not always been adequate to achieved the goals andobjectives of the privatization effort. May 2 : 127 -43+. 8 Nov. As Mahmood Pradhan noted, "Most of the early privatisationswere carried out through private placements," with later efforts undertakenvia public offerings on the Italian stock market (9). 25 Dec. At ENI, a partially privatized energy and chemicals company,showed similar signs of tension in its own directorate. Management undertook a major restructuring in which amovement of the firm's mobile-phone subsidy was planned; this provedundoable and unacceptable to investors, who severely criticized RobertoColaninno, chairman and chief executive of the firm in late 1999. The Privatization of Public Sectors in Italy Privatization is a strategy in which politicized bureaucracies arereplaced with meritocratic investors, transferring control over selectedindustries or services from the public (i.e., governmental) sector to theprivate sector (The Economist 1 82). The same can be said of ENELand other companies that have been privatized as Italy's government movesto open its markets to new competition - and to reduce its ownresponsibilities for overseeing the day-to-day operations and solvency ofsuch companies. Its then-relatively underdeveloped capital markets andfragmented banking industry and its structure of corporate ownership andfinance were the driving factors behind the initial and later rounds ofprivatization. Few nations stood to benefit morefrom privatization than Italy, where large firms have typically beensubject to state meddling. Telecom Italia, says Edmondson, still enjoys market dominance inItaly, but does not have the same level of influence that it had when itwas a state-owned and operated monopoly (29). Unfortunately,shareholder and board concerns regarding the newly privatized firm werealmost immediately being expressed. Other major companiesundergoing this shift were Alitalia, the state-owned airline, and ENEL(another telecommunications player). 19 Feb. Italian regulators are trying to open the fixed-line market - asector in which Telecom Italia, due to its former public nature, commandsan 8 percent share. 2 2: 28-9."The Great Under-Achievers." The Economist 2. 2 2: 21+.Edmondson, Gail. 2 1: 27+."Telecom Italia: On Hold." The Economist 4. "The Cuts Worked...But." Business Week. "Privatization and the Development of Financial Markets in Italy." Finance & Development. Privatisation in general was increasing through the decade, largelyat the urging of government which sold off most of its participation in thefirst trance of ENEL (electricity) (OECD Economic Observer 127-8). However, despite these managerial efforts to realizegreater profitability and reduce operating expenses, the firm was stillburdened by excessive debt that impeded its restructuring. 1997: 62 - 64."The Colosseum is Not (Yet) For Sale." The Economist 3. The Italian government, having agreed toprivatize firms such as Telecom Italia, also recognises that it must makeits domestic markets more available to foreign companies to generatecompetition, create jobs, and satisfy consumers. Dec. 2 Dec. Telecom Italia's difficulties during the early stages of itstransformation from a public to a private entity were discussed by TheEconomist (4 29). At the same time, producing top-line growth has proven tobe more difficult than wringing efficiencies out of a former publicutility. Under new management, Telecom Italia sod off manynoncore assets, trimmed nearly 1 , jobs, and reaped over US $2.5 billionin cost savings. In 1995, Italy began to modernise and privatize its financial markets(Pradhan 9). Works Cited"Along Better Lines: Italian Telecoms." The Economist 4. In the wake of thefirst round of privatizations, analysts believed that a fundamentalmanagement shift had taken place in the newly independent companies, ashift that emphasized profitability and economic liberalization (TheEconomist 2 117). 1999: 82+.Pradhan, Mahmood. 1995: 9 -13."Telecom Italia: Gone Courting." Business Week. In recent years, as it struggled to achievegreater economic growth in key sectors such as telecommunications, Italyhas engaged in a round of privatization that has generated what someanalysts have characterized as mixed results (Edmondson 28). A study of Italy's privatization efforts undertaken by theOrganisation for Economic Cooperation and Development (OECD) in 2 foundthat while the productivity indices for Italy were considerably strongerthan the euro-area average during the 199 s, a failing export-market shareand inflation inertia suggested that obstacles to domestic competition andinternational competitiveness remained in place. By 2 1, Business Week (27) was reporting that Telecom Italia wasseeking new partners because of the heavy debt status of its holdingcompany, Olivetti. 1997: 117 12 ."Italian Business." The Economist 1. Some of the nation's most valuable(indeed, priceless) arts and architectural holdings are being privatized atthe behest of Parliament, which (under the leadership of Silvio Berlusconi)believes that selling shares in Italian cultural treasures will generatemuch-needed revenues, improvement operation and management and conservationof the facilities, and otherwise benefit the State. 18 Oct. 1999: 29-3 ."Toward More Balanced Growth: Progress in Structural Reform." OECD Economic Surveys - Italy. Government'sresponse in both cases was to insert itself into the firms' management onthe basis of its retained stock position. While privatization ofkey utilities such as energy and telecommunications is a far moresignificant form of retreat from government oversight of such entities, thevery fact that Italy has considered cultural facility privatisationsuggests that a new trend is underway. Italy is also giving some consideration to privatizing much of itscultural heritage (The Economist 3 21). Part of the impetus for ongoing privatization comes fromItaly's participation in the European union; another part comes from itsrecognition that globalisation is fostering open markets and greatertransparency in an era of government deregulation. Immediately after going private, thefirm's controlling directors found themselves unable to agree on key issuessuch as dividend management, expansion, and managerial goals andobjectives. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.