1.

The PESTEL Framework

Political: (a) Soviet system and Communism (supply and distribution only in other Eastern bloc countries, destroy winemaking). (b) Privatization of hectare state-owned winery from Hungarian government. (c) International winemakers invested in Hungarian vineyards. (d) European Union gives Hungary a great access to other member countries. (e) Hungarian government did not support the nation's wineries Economic: (a) Trade-off between quality and quantity, wine making -> capital intensive. (b) Economic value limit capital commitment, create price premium with high quality Socio-cultural: (a) Eating habits changes (multimedia promotion and years). (b) Consumers criteria for choosing wine. (c) Wine history - Hungary (p.6) Environmental: Hungary's weather conditions yearly(warmer sunnier summer and less cloud cover and autumnal rain) led to more consistent growing conditions allowing slow ripening that maximizes flavor and aromas. (Success factor in the strategy quality) Legal: (a) Alcohol distribution system: complex and highly fragmented. (b) Internet-based alcohol sales between states. (c) Wine wholesale license: complicated, costly, took over 5 years 2. Porter's five forces framework

The threat of entry & Barriers to entry: (Low threat of entry - High barriers to entry) Threat of entry can consider as Low because barriers to entry are high. High barriers because (a) import and distribution licenses is a lengthy procedure, (b) Economies of scale in the specific industry is not the key issue, of course it is important to produce as much as possible in a premium cost but in that case the important thing is the quality of the final product. So the experience could be considered as an advantage for new entrants since they have already know how to do things more efficiently in terms of choosing quality wines instead of huge quantities. (c) Supply and distribution could be through direct ownership or through customer or supplier loyalty. (d) Differentiation means providing a product/service with higher perceived value than the competition. Wines are differentiated regarding quality, taste, region, cost etc. Threat of substitutes (substitutes are products/services that offer similar benefit to an industrys products/services, but by a different process). Threat of substitutes is high. According to exhibit 3 and exhibit 5 of the case study the per capita consumption by beverage type shows that per capita the consumption of wine is less than other beverage like beer (extra industry effects). Additionally there are multiple choices/alternatives inside the wine industry that the consumer could prefer because of their lower prices (price/performance ratio). The bargaining power of buyers: High. Low switching costs, since the buyer can easily switch between one supplier and another in order to pressure the suppliers for better prices. Additionally in some cases the buyer could supply himself and that makes him powerful, since he can do the suppliers job himself. Where the amount of customers is high the power

of the buyer is also high since they are more likely to search for the best price and therefore squeeze suppliers for more trivial purchases. The bargaining power of suppliers: Medium to Low. Regarding wine industry there are so many suppliers for a buyer that the power of the supplier is minimized. If a buyer decides to switch between suppliers, the cost it may not a large issue but the quality is. Of course in this case it is depend of the needs and requirements of the buyer. Rivalry between competitors: Equal size, Aggressive leadership, Mature or declining market, High fixed costs, High exit barriers, Differentiation level 3. Industry structure/Lifecycle

According to five force analysis we conclude that the barriers o entry tends to be high and experience benefits are important. Products seems to standardize in terms of taste and quality, even there are differentiation on price and region. Buyers become powerful since they can easily switch between suppliers and they can also do the suppliers job. Regarding market share in the industry, there is a providing leverage against buyers, since they offer differentiated wines in terms of taste, kind, region, quality, price etc. The cost key is not there for the industry. Even there is the trade-off between quality and quantity in the case of MMI the key is the quality in a premium price. In my opinion the industry seems to be at the maturity stage. 4. Market Segmentation Age, Income, Location, Lifestyle Choice criteria Product similarity, price, quality Industry, Profitability Choice criteria, Distribution channel Quality

Characteristics of people/organization Purchase/ use situation Users need and preferences for product characteristics

5.

Stakeholders

(a)All in exhibit 6: High power High interest. (b) Customers: High power Low interest. (c) Political: Medium to High power (legislation) Low interest. (d) Suppliers: Medium power Medium interest. (e) Competitors: High power Medium interest. 6. Competitor/Strategic group analysis

Strategic groups are organizations within an industry or sector with similar strategic characteristics, following similar strategies or competing on similar bases. MMIs competitors are other companies larger or equal size than MMI and single market distributors. MMIs similarities with its competitors are the offering products. The differences are focused on the quality and the variety of the products.