ASUS Tek: Hungary Expansion Business Environment Analysis Report

This report provides a comprehensive analysis of ASUS Tek's potential business expansion into Hungary. It begins with an introduction to business organizations and environments, followed by a background of ASUS Tek, including its mission, vision, competitors, and financial performance. The report then delves into the Hungarian business environment, utilizing PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors. Furthermore, the report applies Porter's Five Forces model to analyze the competitive landscape within the Hungarian electronics industry, evaluating competitive rivalry, supplier power, and other relevant forces. The analysis aims to inform strategic decision-making and provide insights into the challenges and opportunities associated with ASUS Tek's expansion plans.

Business Organisations
and Environments
In a Global Context

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Background of ASUS tek ......................................................................................................3
Background to business environment ....................................................................................6
Application of an appropriate analytical approach.................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Business organisation is an individual or a group of individual who are working together
for achieving a common goal. Furthermore, the business organisation is formed to provide their
products and services in the market as well as to their customers for earning the money.
Whereas, the business environment is a term which defines the factors and forces that influences
the operational activities of a firm. The present assignment is based on ASUS Tek company
which is Taiwan based multinational company. The management of company have decided to
expand their business in hungry country with setup a new manufacturing plant. It will requires to
analysing the business environment in effective manner which can be possible through pestle
analysis, porter's five forces model and other tools. The analysis of the environmental factors and
forces will be discussed in the report.
TASK 1
Background of ASUS tek
AsusTek is a multinational computer and electronic company with headquarters in taipei,
Taiwan. The company provide a variety of products such as desktops, laptops, mobile phones,
Wi-Fi routers, motherboards and many more to their customers. The company was founded in
April 1989 by group of individuals who were Ted Hsu, M.T. Liao, Wayne Tsiah, T.H. Tung. The
firm is providing their products and services in more than 30 countries around the world. The
company has 17000 employees who are providing their services in these nations. The company
has launched their first product as PhysX accelerator card in 2005. as per the financial report of
the year 2017 the net revenue of the company was 428.73 billion dollar approx. The company
was ranked as 31st in infotech100 of business week and also appears in Asia's top 10 IT
organisations. The company has also listed their shares in Taiwan stock exchange and London
stock exchange (Overview of ASUS, 2019). As per the sales figures of global market, 2017 the
company is the 5th largest electronics vendor in the world. The background informations of the
firm are given as under :
Mission- ASUS Management focuses on the technologies and innovations. As per their
mission statement “ the company wants to provide effortless and joyful life to everyone”
Vision- The vision statement of ASUS is “To provide innovative solutions that
encourage people and business to reach their full potential ”

Competitors – Lenovo, Apple, Dell, Samsung, HP, Acer are the main rivals of the ASUS
tek which brings a large number of challenges towards the firm.
Size- The company operates their business operations in 30 countries across the world
with more than 4000 service centres in these nations. They have 17000 employees who are
providing services to their customers in order to satisfying them in effective manner.
Products- Company offers a large variety of products such as laptops, desktop
computers, motherboards, tablets, mobile phones, graphic cards etc.
Incentives – The management of ASUS provide incentives to their employees as per
their performance. Which increases the skills and efficiencies of their employees and they
provide better services to their customers.
Organisational structure – The employees of the firm has to follow a proper
organisational structure in which the decisions are made by the board of directors along with the
shareholders of firm then Jonney shih CEO of the firm has to communicate the roles and
responsibilities to the departments (Yin, 2012). The image of organisational structure is given as
under:
Source – Organisational structure of Asustek, 2017
Illustration 1: Organisational structure of Asustek, 2017

Financial performance- ASUS tek has a good financial position in the market place as it
is shown as under:
Interpretation – As per the above image, the company has generated more than $433
billion in year 2017 which is a sign of financial growth of firm.
Balance sheet of ASUS tek at the end of year 2017

Interpretation – the company has attained a better financial position in the marketplace
as their liability has been decreased at the end of 2017 year as comparing with the year 2016
which is a positive sign for the financial growth of ASUS tek.
Background to business environment
Business environment is consisting various influencing factors which may affect the firm
in positive or negative manner. The factors can impact on the business operations in internal or
external level. Internal factors includes customers, competitors and suppliers of the firm.
Whereas the external factors are related with the environment of a firm that consists political,
economical, social etc. The organisations who operates their operations at global level such as

ASUS tek have to face various challenges from these kind of factors. As the management of
ASUS has decided to expand their operations in hungry nation where the environment is
complex in nature so that the managers of cited firm have to analyse the factors in more careful
manner. It will be possible by conducting a PESTLE analysis which is briefly explained as
follows:
Political- This factor is related with the political conditions of a nation which is caused
by the ruling government of the country (Mohamed and Kaur, 2012). It can influence the
decisions of ASUS managers to move their business activities in Hungry, as they can face
several challenges which are related with the fluctuation in tax and trade policies.
 Opportunities – As the political conditions are stable in Hungary which encourage the
managers of ASUS tek to expand their business in the nation. In addition to this, Nation
has also an effective legal framework due to which, they have no need to make changes
in their expanding decisions.
 Threat- The tax rates on electronics in Hungary market is 30% which is very high than
other countries. It may provide difficulties to the ASUS tek in their expansion towards
Hungary.
Economical – These are the factors which are related with economical situations of a
country which includes GDP, exchange rates etc. the growth and sustainability of expansion of
ASUS tek is very much based on the income level of local people. Which can affects the firm
during expansion in both ways either positive or negative manner.
 Opportunities – Hungary is the 35th largest export economy of the world which has
skilled labour force. As the GDP and FDI rates of the nation are well known in the world.
It can be provide opportunities to the managers of ASUS tek in their expansion. With the
help of it, they can provide better employment to the individuals of nation which will
increases the economic condition of the nation across the world.
 Threats – The Income level of the residential are very low in the Hungary nation which
can affects negatively on the operations of ASUS tek.
Social – It consists various kinds of factors which are related with the market trends and
taste or preferences of customers. It will largely impact on the demand of offerings of firm and
also affect the availability and interests of individuals at work (Laszlo, 2017).

 Opportunities- The nation has skilled workforce which provide a huge opportunities to
the firm in their expansion. With the help of it, the firm will better sustain in the
marketplace for a long time period.
 Threat- The understanding about technologies are very low in the nation which can
affect negatively to the operations of ASUS.
Technological – This part is related with advanced tools and technology through which a
firm can get competitive advantage in the marketplace. It also helps the firm in reducing the cost
of their operations and increase the quality of their product which is provided to the end users.
 Opportunities – Hungry is the 32nd innovative county in world and country has also
high tech firms and research centres which can provide a huge profitability to the firm in
future time.
 Threats- Company have to recruit talented staff members who have a long experience in
IT sector. Which will increase the cost of firm in future period.
Legal – Every nation has their own rules and regulations which have to follow by the
firm at the time of expansion. As the company has decided to move their business operations in
Hungary market so they must follow the laws of Hungary nation. In Hungary there are various
laws such as fair trading law, Employment and labour law 2018, Minimum wages act 2017 etc.
which protects the employees as well as organisation in effective manner. For achieving
sustainability and growth, management of ASUStek have to follow this rules.
 Opportunities- The managers of ASUStek have opportunities if they will follow the
minimum wages act and employment and labour law 2018 they will easily makes a good
image in the mind of employees (Groves, 2011). The workforce will also ensure about
their job and provide effective services in their given tasks. Data protection will also
provides facility to their staff members as their informations will be secured in the data
base of the firm.
 Threat- Increasing labour cost in Hungary market increases the cost of ASUS which will
reducing their profitability and revenue. There are many competitors such as BHE bonn,
videoton etc. Who may gave them tough competition in the marketplace of Hungary
nation.

Environmental- Hungary is the most known European country in the world. The climate
of country includes warm, dry summer and cold winters in which the firm can easily expand
their businesses. Following are the opportunities and threats of this factor:
 Opportunities - The company can easily move their business in the Hungary as the
climate remains unchanged which can provide opportunities to them in form of
maintaining regularity of staff. As the Company have their own CSR which will increase
the profitability of firm in new marketplaces.
 Threats- The country has air and water pollution which are the most important
environmental problems which can harmful for the health of the employees of ASUS tek.
Due to this problem, company have to face various difficulties such as improper health of
their workers, infectious diseases which restricts them in their expansion. It will also
affect the revenues of ASUS tek.
Application of an appropriate analytical approach
Analytical approach is an effective and essential approach which encourage the managers
of organisation to make small parts of a complex problem in order to solve it. Management of
Asus tek wants to expand their business operations in hungary market. Before expanding the
business activities managers of cited firm have to analyse the competition in the marketplace
which can be possible through porter's five forces model. As the electronics industry of hungry is
largest electronics manufacturer which is providing 34% of output in the economy of nation.
With the help of this model, managers of Asus tek will make proper decisions and effective
strategies. Which will be helpful in gaining competitive advantage in marketplace. For getting
sustainability and growth, management have to use this model which can be more understood by
as under:
Competitive rivalry- The electronic market of the nation is growing rapidly because
there are a large number of competitors' such as Videoton, Flextronics, Samsung etc. In this
industry, which are providing maximum output in the nation's economy(Clark, 2012). These
players can gave a tough competition in their expansion towards Hungary market. As the
competitors are providing their services in the market from a long time period so Managers of
ASUS tek have to face various challenges which can reduce their profitability and sustainability.
Therefore the power of competitors are high.
Strategies adopted by ASUS tek to tackle huge rivalry:

 Company have to make different products with better quality
 They can collaborate with the small competitors of market who are also an important part
of this industry due to which they will easily increase their market size.
Supplier power – In the electronics industry, as there are many competitors are located
in the nation and there is a lower number of suppliers who provide raw material and other
services to the industries which are situated in the Hungary. Therefore, the power of supplier are
high which can reduce the margin of organisation. The profitability can be gained through
balancing an agreed amount with the suppliers. The bargaining power of supplier are high which
can affect the sustainability of ASUS tek during their expansion.
Strategies adopted by Marriott to tackle suppliers power:
 Through making a suitable supply chain with a large number of suppliers
 Through experimenting in the existing products of market with using different raw
materials therefore, if the prices of raw materials will be grown then they can shift it to
another products.
 Make effective relations with the suppliers because the whole business is based on them.
Buyer power- As the competition is very high in the electronics sector therefore the
buyer has several choices for buying the products which are available at low prices in the
marketplace. It encourage the players of electronics market to provide products at lower prices to
their customers so that, they can easily make a huge customer base in the marketplace. Hence, it
gave a huge impact on the profitability of cited firm which can affect them for a long period of
time. Hence, it can be said that the buying power of the customers are higher in nature.
Strategies which can adopt by the ASUS tek to tackle the buyer power
 Through building huge customer base which will help them in reducing buyer power and
gaining an opportunity for increasing their sales and production.
 Through making innovative products at lower prices can reduce the bargaining power of
buyer.
Threat of substitutes – As there are similar products which are manufactured by the
rivals in the market. So, the company should analyse the market critically through which the
product that they manufacture are different and soothing for the targetted customers. For
example- ASUS tek introduce a new mobile phone in the market place at affordable price but
after some time the competitor has launched a new product which is similar and provided to

customers at lower prices than the original product (Ball, 2012). Therefore, The threat of
substitute product in the electronic sector is very high because there are large number of players
existing in the market who are providing similar products at low prices which can affect the
sustainability and growth of ASUS tek at the time of expansion.
Strategies adopted by ASUS tek to tackle threat of substitute
 Managers have to make focus on providing services instead of product focusing.
 By analysing the market trends and needs of customers
 By providing products at affordable prices to customers.
Threat of new entrants- In order to setup a new business in the electronic market
requires a huge investment which reduces the threat of new entrants in the electronic industry.
For establishing a new venture in the electronic sector there are various rules and regulations
which have to followed by the new entrant. ASUS tek is exapnding their business operations in
Hungary market where a large number of rivals present in the market (Hines, 2012). As ASUS
tek is well established company and have a good financial position so that they can easily expand
their market in Hungary. For expansion, the managers of Asus tek have to make effective
strategies for pricing and costs which will help them in attracting new customers at new
marketplace.
Strategies adopted by ASUS tek to tackle threat of new entrants:
 By introducing new goods and services in the Hungary nation which attracts new
customers.
 By building a specific scale of economy which will be helpful in decreasing the fix cost
per unit.
 Investing more money on R&D which will help them in identifying actual needs and
preferences of customers
CONCLUSION
From the above report it has been concluded that Managers of ASUS tek have to face
various difficulties during their expansion for this, they have to analyse the market place and
needs of customers which can be possible through using analytical approaches and tools such as
porter's five forces. The managers of cited firm have to analyse the business environment of
Hungary which will help them in identifying the complexities and difficulties in the marketplace.

For this, the PESTLE analysis is most suitable method. With the help of it, they can easily make
decisions and strategies for future.