EUROPEAN BUSINESS

European Business

European Business

Question 1

Conduct a STEEPLE analysis (Sociological, Technological, Economic, Environmental, Political, Legal & Ethical considerations) of Hungary.

Answer

The retail industry suffers a significant impact due to dynamic market trends. The performance of such an industry is determined by the external environment. However, there is not much that companies can do to influence these factors. Nonetheless, companies look to adapt themselves in the dynamic environment to meet the changing needs and gain competitive advantages. As far as new products are concerned, it is essential to conduct STEEPLE analysis to assess the factors which can influence the target market. These factors are examined below:

Sociological

Hungary's population has been on a decline since the last decade. Further data from the Hungarian Central Statistical Office provide that, there are few children, and the society has become older. Even, though, companies have been introducing wide varieties of products and services, but the number of prospective customers has been decreasing. Hungary's typical family has a maximum of two children. Parents tend to give everything to their children. As a result, companies aim to produce products which are attractive to children and so, their parents would buy for them (Ta´rsasa´g 2005, pp. 65).

Research organizations consistently conduct studies to investigate children's role within the household. Data from the 2007 results revealed that children often go for shopping with their parents as shopping has become a family trip. Children find those products attractive which have colorful packaging, household products with toys, and which they can recognize from advertisements. Other than children, there are adolescents. Young people, who are between 20 to 25 years of age, have emerged. They mostly spend on themselves, live independently, and earn good money. They are flexible to change and adapt quickly to changing fashion. As a result of changing needs of the consumers, there has been a rapid growth in hyper and supermarkets, in Hungary. Customers look to shorten the time spent on shopping through one-stop shops. Customers can get almost everything of their needs from such supermarkets. There are hypermarkets like Tesco, Auchan and Metro, which have been operating not only in Budapest, but across the entire country's urban areas. Small grocery stores have been affected due to the growth in hyper and supermarkets. Due to which, their number has been gradually declining from 21959 to 21340. On the other hand, the number of hyper markets has gone up from 109 to 123 in 2007. This increment is considerably significant due to the small size of the country. As far as the market share of hypermarkets is concerned, it is about 30% of the entire retail market. Moreover, supermarkets have a market share of about 18% (Bruckmeier 2009, pp. 114).

Technological factors

Consumers from the Hungarian market have become increasingly health conscious, and prefer products which have good quality. The same applies for both goods and services. Customers want quality, whether its food from a restaurant, or a retail outlet experience. The trend has become similar to that of the Western ...