Mary Kay to Italy Essay

Words: 8871
Pages: 36



Mary Kay, a corporation created and run by women, sells cosmetics and skin care products worldwide. The impact on the skin care and cosmetic industry has proved to be impressive at US $2.5 billion on an international level in 2010. Mary Kay’s headquarters and primary manufacturing facility is located in Addison, Texas. The corporation operates on a multi-level marketing structure, while implementing direct selling methods through hired beauty consultants. Mary Kay has enjoyed global expansion over the past 25 years in countries throughout Europe, South America, and Asia
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The issues with the budget deficit were exacerbated by high government spending and reductions in exports due to the global economic slowdown in 2008, as well as the country’s classically slow economic growth trends. Italy recorded a budget deficit of 5.4% in 2009 and 4.5% in 2010 (119% of GDP). The burdened country is aiming to reign in the budget deficit and is targeting a level of 3.9% for 2011, and hopes to ultimately fall within the acceptable range of less than 3% by 2012 (U.S. Department of State, 2011). The high level of public debt must be taken into consideration by Mary Kay, as high levels of public debt are shown to exhibit a direct negative impact upon a country’s ability to produce sustained economic growth (“The Impact of High and Growing Government of Debt on Economic Growth,” 2011). As a country saddled with both a large budget deficit and high public debt, Italy’s realized future economic growth rate may be sluggish, or flat at best. If Italy is unable to reign in government spending and reduce its debt obligations, a worst-case scenario includes a possible contraction in growth. Such considerations are critical to Mary Kay in examining whether to enter Italy or not.
As the Italian economy is in a recovery phase, growth is expected to continue slowly, at a projected rate of 1.5 percent in 2012. The growth rate, which is below the EU average,