G ino Pozzo will be familiar with the status of his club when they face Manchester City today.

Watford will be classed as the underdogs in the FA Cup third round, but then Pozzo and his father, Giampaolo, are used to overcoming expectations with Udinese, the Serie A team they also own. The two men developed such a successful business and sporting plan at the Italian side that they are now exporting it, first to Granada in Spain, and now to Watford, with the intention of recreating the achievement of a small club being able to compete with larger, richer, grander teams.

The tie, at the Etihad Stadium, will come too early in the London club's development to properly gauge their progress, and Pozzo has continually emphasised that their work is based on long-term goals. Even so, the game still represents a clash of opposing cultures. City are the arrivistes of the Barclay's Premier League, since the vast wealth available to Sheikh Mansour enabled them to abruptly change from being a maverick club, with a history of epic and emotional failures, to one of the division's small handful of elite competitors. Winning the title last season was the culmination of five years of accumulating top-class footballers, and an outlay of more than £480m.

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Gino Pozzo, who moved his family to London from their home in Barcelona after his father bought Watford for £15m last summer, will measure the success of his project with the amount of money raised in the transfer market. His intention is to build on the impressive work of the club's youth academy by taking advantage of the global network of scouts and contacts built up in the 27 years since his father bought Udinese. The Serie A side is now renowned for an approach that involves identifying the best emerging talents in under-utilised markets, developing them, then selling the players on for significant profits.

Among the talents brought through then moved on at Udinese under the Pozzos have been Alexis Sanchez, Marcio Amoroso, Oliver Bierhoff, Gokhan Inler, Asamoah Gyan, Stephen Appiah, Sulley Muntari, Fabio Quagliarella, Andrea Dossena, Marek Jankulovski and Samir Handanovic. All are internationalists, and many generated multi-million pound fees. Udinese have reportedly made a profit of £100m on player trading, but they have also challenged for the Champions League qualification places in Serie A in recent seasons, and impressed in the Europa League.

Pozzo might welcome the resources available to Manchester City, but his way of working is so ingrained that he would likely still use it to search for bargains. At Udinese, he used to shun the last-minute horse-trading at the end of each transfer window, preferring to concentrate on buying players when the market was not at a premium. The concern for Watford fans was that the club would lose something of its own identity, since 11 loan signings arrived at Vicarage Road, but the best of them – Matej Vydra, the Czech international, and Swiss midfielder Almen Abdi – have integrated into the side without disrupting it, while the most impressive academy graduates, Connor Smith, Sean Murray and Tommie Hoban, all recently signed extended contracts.

Pozzo considers this the ideal, and his aim of establishing Watford in the Premier League is not based on speculating money in the transfer market to accumulate short-term success. The manager, Gianfranco Zola, is even expected to trim his squad this month, and all at the club are sensitive to the notion of Watford being depicted as a feeder team for Udinese. The way the Italian side operates is to sign so many players that an extensive number of loan deals are part of the process, with many of their talents developing elsewhere before returning to Udine and making their name. Granada, for instance, have thrived since becoming part of the Pozzo empire – and are in their second season back in La Liga – having benefited from taking a number of Udinese players on loan.

Yet Zola recently emphasised that during the negotiations for him to become head coach, Gino Pozzo insisted that Watford would become the owners' priority. This seems unlikely, at least while the club is the Championship and Udinese are among the leading teams in Serie A, but there is no doubt that Pozzo is committed to the English side.

He is generally considered to be the main influence behind Udinese's philosophy, and Watford's circumstances – London-based, available for a cheap price and with strong youth development foundations – must have appealed, even if administration was a constant threat under the club's previous owners. There are more difficulties to operating in the UK, since the work permit regulations are strict and Udinese concentrate their talent search in the likes of Chile and Colombia, as well as Africa and some Eastern European countries, but then loan deals can still be utilised until players become eligible to play in the UK.

Watford are currently sixth in the Championship, nine points off the automatic promotion places, and have quietly impressed in what is a harshly-competitive environment. Reading and Southampton have found this season how steep the rise in standards is between the Championship and the Premier League, and they are both well-run and astutely managed clubs. Udinese were able to compete with Juventus, Milan, Internazionale, Roma and Lazio because they built their football operation up over time, so that the team has evolved into a formidable outfit but also the renewal of it. When players are sold, their replacements are already in place.

"Football is a long-term project," Pozzo said. "This is a club that can grow much further in the Premier League and a club where we can recognise our values and can grow our values."