Gorenje in Italy

Taking into consideration the market of Italy in our analysis reference to the Uppsala
theory and by this we have come to a result which will be concluded in the ending of our study.
To begin with, we know as a fact that in year 1964 Gorenje has started the production of
washing machines, but due to some technical issues and legislation issues, Gorenje decided to
produce under the license from Zanussi. Production under license from Zanussi went very well,
in fact until the end of 1966, Gorenje produced over 10,800 unites. Many of them were
assembled in Yugoslavia, but all the components and parts came from Italy. In 1971 the indirect
export was started by selling products on the Italian market and by this they created their own
distribution and sale network. Due to the establishment of the distribution and sale network in
1976 in Trieste GorenjeKorting Italia SRL created which engages in distribution of domestic
appliances. In the mentioned year, GorenjeKorting operated as a subsidiary division of Gorenje
DD.
Based on the presented information we can determine that the growth of the company is
impressive and fast. We consider one of the best performance and economic growth of a private
company in Western Europe after the ending of WW2, mainly because the entire continent was
deeply affected by the war and the population didnt have the money to invest in new products.
To make our statements much stronger and reliable weve realized a graph which presents
the establishment chain of Gorenje Company in Italy.

Establshment Chain of Gorenje in Italy

5
4.3
3.9

4
3.5

Risk/ Resource commintment

Establshment Chain of Gorenje

in Italy

3
2.5

1
1964

1971

1976

1990

Time/ Market knowledge

As we can see the companies establishment chain suffered a continuous growth in the
passing of years and even though the risk and resources commitments have grown they did not
stop the company from evolving and becoming one of the most recognized and appreciated in
Western Europe.

As we can see Italy was the central point of Gorenjes development in order to prepare
itself for becoming one of the best seller and manufacturer. To make the study much clearer
weve made a comparison between Italy and another possible country which could easily had the
same story, as a result weve chosen Spain.
First of all we can see that the geographic positioning of Spain does not speak to its
advantage, because Italy is set in the center of Europe, which makes it an excellent export point

for a company which addresses itself to the majority of the population. Checking the data we can
see that even the distance would have greatly inflicted disadvantages to the companies build
process. The distance between Yugoslavia and Span is over 600 km and this would have resulted
in time consuming processes.
As mentioned in the first paragraph another advantage was the start of Gorenje in Italy
and its washing machines produced under the license of Zanussi, which guaranteed them
influence and a good name. Also being an Italian producer offered the local population courage
to buy products.
On the other hand, there was the possibility to go to Spain because of the approach between the
GDP per capita (783 vs. 11729,02, and in Italy 14837,1), but at that time in Spain was autocracy
which means the supreme power was concentrated in the hand of one person and in Italy, at that
time, the political regime was republic.
Also, if we look at the general government final consumption expenditure (% of GDP) , we
can see that in Italy is much closer to the market of Yugoslavia than Spain: 27-14,1433310,27185.
After the end of World War II, Italy was in rubble and occupied by foreign armies,
like Germany and other Axis powers, a condition that worsened the chronic development gap
towards the more advanced European economies. However, the new geopolitical logic of
theCold War made possible that the former enemy Italy, a hinge-country between Western
Europe and the Mediterranean, and now a new, fragile democracy threatened by the proximity of
the Iron Curtain and the presence of a strong Communist party, was considered by the USA as an
important ally for the Free World, and received under the Marshall Plan US$1,204 million from
1947-1951.
The end of aid through the Plan could have stopped the recovery but its end coincided with a
crucial point in the Korean War whose demand for metal and manufactured products was a
further stimulus of Italian industrial production. In addition, the creation in 1957 of theEuropean
Common Market, with Italy as a founding member, provided more investment and eased exports.
These favorable developments, combined with the presence of a large and cheap labor force, laid
the foundation for spectacular economic growth that lasted almost uninterrupted until the "Hot

Autumn's" massive strikes and social unrest of 196970, which then combined with the
later 1973 oil crisis and put an abrupt end to the prolonged boom. It has been calculated that the
Italian economy experienced an average rate of growth of GDP of 5.8% per year between 1951
63, and 5% per year between 196473. Italian rates of growth were second only, but very close,
to the German rates, in Europe, and among the OEEC countries only Japan had been doing
better.
Based on this information we can tell that the growth of the company was caused by the
economic boom and the help received by Italy after the WW2 events.
Last but not least we can rest our case and say that Gorenje now has a tradition of over 64
years, has contracts and designs household appliances for everyone and even has a special
division made with Pinifarina, the same company that helps Ferrari with their designs. We can
say that the company has evolved to become one of the top notches on the market with products
that have excellent quality and are extremely reliable.

References
http://www.gorenjegulf.ae/company/en/about_gorenje_group/group_companies/trade_and_servic
es/italy
http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=46721765)
http://www.gorenje.ro/company/red_dot_design_award/interviews/interview_with_janez_smerde
lj
http://www.britannica.com/EBchecked/topic/195957/European-Atomic-Energy-CommunityEuratom