Pestel Tesco

1. PESTEL ANALYSIS

The PESTEL Analysis takes into consideration the operations of Tesco situated in Hungary.

1.1. Political Environment
Political factors such as influence by means of power as well as abuse of power affect the efficiently and effectiveness of businesses. Thus clearly understanding the political aspects which govern the country of business indulges a thorough control of the business 's life expectancy. Therefore it is crucial that Tesco is aware of the environment for further success. For the purpose of understanding Hungary 's political background the following information is available.

1.2. Government Information
• Hungary 's Government is of a Parliamentary Democracy.
• According to U. S. Department of Commerce (n.d.), The Orban Administration (1998 - 2002) has effectively accomplished their promises with regard to the tax evasion, organized crime, corruption as well the EU and NATO memberships. Hungary is stable country.
• Hungary entered NATO in the year 1999
• Member of the Organisation for Economic Corporation and Development (OECD)

Political Parties
According to Wetzel, H. (2004), the following include the political parties in Hungary;
Main Political Parties
Alliance of Free Democrats or SZDSZ
Christian Democratic People 's Party or KDNP
Hungarian Civic Alliance or FIDESZ
Hungarian Democratic Forum or MDF
Hungarian Justice and Life Party or MIEP
Hungarian Socialist Party or MSZP
Hungarian Workers ' Party or MMP
Independent Smallholders or FKGP

1.2.1. Trade Regulations
Trading Policies & Barriers
• Association Agreement with the EU
• Gradual elimination of tariffs for industrial products imported from EU and CEFTA.

Standards
• GATT Agreement on Technical Barriers to Trade (Standards Code)
• International Standardization Organization (ISO)
• International Electro-technical Commission (IEC)
• Commercial Quality Control Institute (KERMI)
• Hungarian Electro-technical Control Institute (MEEI)

Import/Export Documentation Requirements
• All importers and/or exporters must obtain a VAM 91 document from the Hungarian Customs. The VAM 91 serves as a declaration of the type and number of goods being imported and exported.
• For consumer distribution, a certification document must be obtained from the Commercial Quality Control Institute (KERMI). Goods cannot be cleared from customs unless a KERMI permit is present.

Free Trade Agreements
• Central European Free Trade Agreement
• European Free Trade Agreement

Pressure Groups
• GATE Green Club Association
• Tescopoly Alliance
• Tölgy Nature Conservation Association

Wars and Conflicts
• No ongoing war or conflict, however according to Ganse, A.(2004),Hungary participated in the Liberation of Kuwait in 1999

Government Policies
• Production Policy - Grain, Oilseeds, Oils, Meals, Meat, Milk, Milk Products
• International Trade Policy- Oilseeds, Oils, Meals, Meat Milk, Milk Products
• Consumption, Marketing and Stock Policy – Grain, Oilseeds, Oils, Meals
• Domestic Policy – Grain
• General Energy Policy (International Energy Agency (2000))
• Science and Technology Policy –( Food and Agriculture Organizations of the United Nations (2002))

Government Term
• Viktor Orban , elected in 1998.
• Hungary acquired democracy in 1990

Inter-Country Relationships
U. S. Department of Commerce (n.d) states the following countries with relations to Hungary;
• United Nations
• European Union
• Council of Europe
• United States

1.3. Economic Environment
Economical Environment pertains to the changing economy of the country as well as the factors such as the consumer 's purchasing power with regard to the organizations income and expenses. The following provide evidence of the UK 's economic stability;

1.3.1. Home Economy Situation 1999 2000 2001 2002
Gross domestic product (GDP) 4.2 5.2 3.9 3.7
Final consumption 4.2 3.9 3.9 3.4
Personal consumption 4.6 4.1 4.3 3.8
Collective consumption 1.8 1.6 1.6 1.5
Accumulation of basic stock 5.9 7.7 3.1 5.1
Gross stock accumulation 3.6 7.9 3.6 4.9
Domestic use 4.0 5.1 3.7 3.9
Export 13.1 21.8 12.5 9.5
Import 12.3 21.1 12.0 9.7
Inflation 10.1 9.9 9.1 6.2
Change of producer prices 4.1 11.6 5.6 5.1
Exchange rate (HUF/EU) 252.8 260.1 256.0 252.6
Current balance of payment (million euro) -1970.1 -1620.0 -1408.9 -1681.1
Current balance of payment (GDP %) -4.4 -3.2 -2.5 -2.6
Budget deficit -338.1 -369.4 -349.8 -343.3
Budget deficit in the percentage of GDP -3.0 -2.8 -2.3 -2.0
Balance of the state budget -424.1 -455.5 -473.5 -489.8
The state budget (GDO %) -3.7 -3.5 -3.1 -2.8
Source: ECOSTAT (2002)
1.3.2. Government Debt
1999 61.9%
2000 55.4%
2001 53.2%
Source: McKeever (n.d.),
According to the data above, government debt has been reducing over the years.

1.3.3. Taxation
Income Rates
Taxable Income (HUF) %
0 – 600,000 20
600, 001 – 1, 200, 000 30
1, 200, 000 + 40
Source: Organisation for Economic Co-operation and Development (2002)
1.3.4. Pensions
Pension Contribution 8%
Health Insurance Contribution 3%
Solidarity Fund Contribution 1.5%
Source: Ministry of Finance (2005)
1.3.5. Family Support System
Minimum Pension (m.p.) 20, 100
Child Care Aid 1 x m.p.
Maternity Benefit 1.5 x m.p
Family Support Increased for all number of children
Source: Ministry of Finance (2005)
1.3.6. Unemployment
• According to World Press (2001), unemployment rate was 9.4% in the year 2000
• During the year 2002, it is stated by CIA (2002), that the unemployment gas decreased to 5.8%.

1.4. Social Environment
Social aspects govern the way in which consumers wish to use their purchasing power. Such aspects include religion, background, lifestyle, attitudes and etcetera. The following include information pertaining to the social aspects governing UK.

1.4.1. Demographics
Population: 10,075,034 (July 2002 est.)
Age structure: 0-14 years: 16.4% (male 847,081; female 802,340)
15-64 years: 68.8% (male 3,406,701; female 3,528,087)
65 years and over: 14.8% (male 544,956; female 945,869) (2002 est.)
Population growth rate: -0.3% (2002 est.)
Ethnic groups: Hungarian 89.9%, Roma 4%, German 2.6%, Serb 2%, Slovak 0.8%, Romanian 0.7%
Languages: Hungarian 98.2%, other 1.8%
Literacy: definition: age 15 and over can read and write total population: 99% male: 99% female: 98% (1980 est.)
Source: CIA (2002)
1.4.2. Health Indicators
Birth rate: 9.34 births/1,000 population (2002 est.)
Death rate: 13.09 deaths/1,000 population (2002 est.)
Net migration rate: 0.76 migrant(s)/1,000 population (2002 est.)
Sex ratio: at birth: 1.07 male(s)/female under 15 years: 1.06 male(s)/female
15-64 years: 0.97 male(s)/female
65 years and over: 0.58 male(s)/female total population: 0.91 male(s)/female (2002 est.)
Infant mortality rate: 8.77 deaths/1,000 live births (2002 est.)
Life expectancy at birth: total population: 71.9 years female: 76.55 years (2002 est.) male: 67.55 years
Total fertility rate: 1.25 children born/woman (2002 est.)
Source: CIA (2002)
1.4.3. Social Factors
Westernized brand influence
Brands are a focus of attention as branded products are preferred to an identical generic product even though it is sold at a lower price.

Convenience goods
Customers tend to purchase 30% smaller microwavable products (e.g Baked Beans) more nowadays rather than purchasing a product which would have to be made in the normal way even though it costs 50% more.

Globalisation
The influence of other countries has achieved its goal. It has attracted the customers to their hearts. Therefore nowadays products which were previously unavailable in Hungary are available
1.5. Technological Environment
1.5.1. Research Project and Funding
• Research Development Division of the Ministry of Education
• Information and Communications Technologies and Applications (IKTA) - IKTA-1, IKAT-2, IKTA-3 , IKTA-4. Organisation for Economic Co-operation and Development (2002), states that the following include the funding for the IKTA projects.
Call Proposals
Received Proposals
Supported Amount of Support EUR (XEU)
1 = HUF In M HUF In K EUR
IKTA-1 258 105 1200 5660 212
IKTA-2 55 14 520 2100 248
IKTA-3 193 54 1620 6160 260
IKTA-4 140 n.a. n.a. n.a. 254
Source: Organisation for Economic Co-operation and Development (2002)
• National Research and Development Program
• Research and Development Project for the Government Commissioner 's Office for ICT
• Jekkel, A. (2002) states the following projects are in progress; o EU CRAFT Programme o Integrator Programme o Innovative Human Resources Programme for SMEs o Five Counties Innovation Programme o Thematic applied R&D programmes
Thus in terms of Technological aspects the country is stable and sound.
1.5.2. Communications
Telephones - main lines in use: 3.095 million (1997)
Telephones - mobile cellular: 1.269 million (July 1999)
Radio broadcast stations: AM 17, FM 57, shortwave 3 (1998)
Radios: 7.01 million (1997)
Television broadcast stations: 35 (plus 161 low-power repeaters) (1995)
Televisions: 4.42 million (1997)
Internet Service Providers (ISPs): 16 (2000)
Internet users: 1.2 million (2001)
Source: CIA (2002)

• According to De Argaez, E. (2005), by the year 2002, there were 260,000 broadband subscribers
• P2PNet (n.d.) states that overall Internet Use (Ages 14 +) -is17.5 %. People watch 5.7 hours less television than people who do not use the internet.
1.6. Ecological Environment
1.6.1. Ecological Divisions
• Hungarian National Committee (HNC)
• Ecological and Educational Departments
1.6.2. Environmental Issues
Water/ Wastewater
Globe Foundation of Canada (2005), states that although Hungary is not affected by means f such an epidemic, the government has put out a program to improve water quality by minimising chemical and mineral content by 2009.
Solid Waste Management
According to GLOBE Foundation of Canada (2005),
Approximately 90.7-99.8 million tonnes of agricultural and industrial waste is produced annually in Hungary. Only half of this waste is reused for other purposes. Hungarian municipalities also produce approximately 4.2 million tonnes of waste. Although 86.5% of municipal waste is collected from households and commercial enterprises, 83% of this waste is treated and put in one of Hungary 's 1300 legal or illegal landfills. Only 330 000 tonnes of this waste is incinerated in Hungary 's only waste-to-energy incinerator in Budapest.
Air Pollution
According to GLOBE Foundation of Canada (2005),
Although air pollution has largely been reduced by the closure of the inefficient factories of the Soviet era, it is widely believed that it will reemerge as an environmental problem with the rise Hungarian living standards and, particularly, the mass purchase of automobiles. Investments must be made to reduce air pollution for Hungary to meet its commitments under the Kyoto Protocol.
Renewable Energy
According to GLOBE Foundation of Canada (2005),
In line with its commitments from its energy conservation policy, Hungary has targeted a realistic increase to its renewable energy (heat and electricity) generation from 3.6% in 2003 to 7.2% by 2010, and an increase in electricity use from renewable sources from 0.5% to 3.6% in the same period. To meet these targets, Hungary recently established six wind farms with a total energy generation capacity of 3.25GWh and, in 2002, developed one of the largest biomass-to-energy generation plants in Europe.
1.7. Legal Environment
1.7.1. Legal System
• Hungarian Citizens are subject to rules of the Hungarian Constitution
1.7.2. Legislation
According to OECD (2002) 's Annual Report for 2002, the following acts are available;
• Act XXXVI of 2002 amending Act IV of 1959
• Act CLV. of 1997 on Consumer Protection
• Act XCVI of 2001

1.7.3. Labour Laws
• Individual Labour Law
• Collective Labour Law

References

U. S. Department of Commerce (n.d.),

Hungary - Trade Regulations and Standards,[Online] , Available :http://www.factbook.net/countryreports/hu/HuTradeRegs.htm [Accessed 31 May 2007] Wetzel, H. (2004), Country Commercial Guide FY 2004: Political Environment [Online], Available: http://strategis.ic.gc.ca/epic/site/imr-ri.nsf/en/gr120081e.html [Accessed 31 May 2007]

Ganse, A.(2004) Wars of Hungary [Online], Available :http://www.zum.de/whkmla/military/eceurope/milxhungary.html [Accessed 30 May 2007]

International Energy Agency (2000), Hungary [Online] Available: http://www.iea.org/textbase/nppdf/free/2000/hungary_comp01.pdf [Accessed 29 May 2007]

Food and Agriculture Organizations of the United Nations (2002), Review of Basic Food Policies 2002, [Online], Available: http://www.fao.org/docrep/007/y5073e/y5073e07.htm#TopOfPage [Accessed 31 May 2007] [Online] Available :http://www.factbook.net/countryreports/hu/HuTradeRegs.htm [Accessed 28 May 2007]

ECOSTAT (2002), ECOSTAT Newsletter January 2002, [Online],Available: http://www.ecostat.hu/english/newsletter/newsletter03.htm [Accessed 31 May 2007]

Ministry of Education (2002), Research and Development in Hungary [Online], Available: http://www.om.hu/research/national_projects/kmufa/index.html [Accessed 1 June 2007]

Organisation for Economic Co-operation and Development (2002), Hungary [Online], Available: http://www.oecd.org/dataoecd/2/63/34004673.pdf [Accessed 30 May 2007]

CIA (2002), The World Fact Book - Hungary [Online], Available: http://www.faqs.org/docs/factbook/print/hu.html [Accessed 31 May 2007]

Ministry of Finance (2005), ASSESSMENT OF INCOME DISTRIBUTION IN HUNGARY
USING A MICROSIMULATION MODEL,[Online], Available: http://www2.pm.gov.hu/web/home.nsf/portalarticles/58E8E9543CB9B423C1256FB90032084E/$File/10_eng_050408.pdf [Accessed 31 May 2007]

OECD (2002), Annual Report of Hungary
2002. [Online], Available: http://www.oecd.org/dataoecd/7/1/24987650.pdf [Accessed 31 May 2007]

De Argaez, E. (2005), Broadband Usage in USA,[Online], Available: http://www.internetworldstats.com/articles/art030.htm [Accessed 31 May 2007]

P2PNet (n.d.), UCLA Net survey released [Online] Available :http://p2pnet.net/story/571 [Accessed 31 May 2007]

World Press (2001), Hungary, [Online], Available : http://www.worldpress.org/profiles/hungary.cfm [Accessed 31 May 2007]

McKeever (n.d.), Hungary – Economic Policy Analysis [Online], Available: http://www.mkeever.com/hungary.html [Accessed 29 May 2007]

Jekkel, A. (2002). European charter for Small Enterprises – Answers to the Questionnaire 2002. [Online]Available from: http://europa.eu.int/comm/enterprise/enlargement/charter/report_2003/hungary300902.pdf [Accessed on 05 December 2003].

GLOBE Foundation of Canada (2005, Hungary: Environmental Technologies [Online], Available: http://www.globe-net.ca/market_reports/index.cfm?ID_Report=479

References: Ministry of Finance (2005), ASSESSMENT OF INCOME DISTRIBUTION IN HUNGARY USING A MICROSIMULATION MODEL,[Online], Available: http://www2.pm.gov.hu/web/home.nsf/portalarticles/58E8E9543CB9B423C1256FB90032084E/$File/10_eng_050408.pdf [Accessed 31 May 2007] OECD (2002), Annual Report of Hungary 2002 De Argaez, E. (2005), Broadband Usage in USA,[Online], Available: http://www.internetworldstats.com/articles/art030.htm [Accessed 31 May 2007] P2PNet (n.d.), UCLA Net survey released [Online] Available :http://p2pnet.net/story/571 [Accessed 31 May 2007] World Press (2001), Hungary, [Online], Available : http://www.worldpress.org/profiles/hungary.cfm [Accessed 31 May 2007] McKeever (n.d.), Hungary – Economic Policy Analysis [Online], Available: http://www.mkeever.com/hungary.html [Accessed 29 May 2007] Jekkel, A. (2002). European charter for Small Enterprises – Answers to the Questionnaire 2002. [Online]Available from: http://europa.eu.int/comm/enterprise/enlargement/charter/report_2003/hungary300902.pdf [Accessed on 05 December 2003]. GLOBE Foundation of Canada (2005, Hungary: Environmental Technologies [Online], Available: http://www.globe-net.ca/market_reports/index.cfm?ID_Report=479