RENAULT's Expansion: Business Environment Analysis in Hungary Report

This report provides a comprehensive analysis of RENAULT's potential expansion into the Hungarian market. It begins with an overview of RENAULT, a French multinational automobile manufacturer, detailing its history, vision, mission, and strategic objectives, including its innovation policy, distribution network, and investment strategies. The report then delves into the external business environment of Hungary, utilizing a PESTLE analysis to examine political, economic, social, technological, legal, and environmental factors influencing RENAULT's operations. Key considerations include Hungary's political system, economic indicators like GDP and unemployment, social demographics, technological advancements, legal frameworks, and environmental policies. Furthermore, the report applies Porter's Five Forces model to assess the competitive landscape of the Hungarian automotive market, focusing on buyer power and other forces. The analysis aims to inform RENAULT's decision-making process for market entry and expansion, highlighting potential challenges and opportunities. The report concludes with a summary of the findings and recommendations for RENAULT's strategic approach to the Hungarian market, emphasizing the importance of adapting to the local business environment and competitive dynamics.

Business
Organisations and
Environments in a
Global Context

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
.........................................................................................................................................................9

INTRODUCTION
Business environment is an concept that includes internal and external factors which
impact on the entire activities of the company in both positive and negative way. In this, internal
factors consist customers workers, management whereas government rules and regulation,
competitors are the part of external factors (Lasserre, 2017). In context of this, the global
business environment define as the environment in context of different sovereign nations, factors
related with the exogenous that directly influence the decision making process of company.
Present report is based on RENAULT, is French multinational auto-mobile manufacture
company produce a range of cars and vans to offer large number of customers in various
countries. Company is looking to expand its business in HUNGARY with the aim of attaining
success at market place. Report will covered the external business environment of the chosen
country that directly impact on the entire operational activities of RENAULT. Along with this,
report is also includes analytical approach for RENAULT to evaluate the market trends to
expand their business in HUNGARY in most effective way.
MAIN BODY
Overview of business organization
RENAULT is one of the famous auto-mobile manufacture company in the world. It is
French multinational company that established in 1899 by Louis Renault and his brother Marcel
and Fernand with the purpose of serving best quality services to the customers. Mainly the
company produce cars and vans along with this in past firm also has manufactured tanks,
tractors, trucks and auto-rail vehicles.
Furthermore, in 2016 company was ninth biggest auto-maker in the world. The
headquartered of this company is located in Boulogne- Billancourt. RENAULT owns automobile
Dacia and RENAULT Samsung motors. In context of this, the main vision statement of
RENAULT is to raise the brand image and also increase the desire for RENAULT among
customers. With the help of this, company can easily provide better customers services and
satisfaction. This will contribute in capturing larger market share form its rivals in upcoming
time frame. Along with this, mission of RENAULT is to make as well as sustain image of the
company more profitable and competitive in market place (Del Giudice and Maggioni, 2014).
Company also want to make their customer base more strong by enhancing their positive
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experience towards its offerings. By this, RENAULT can easily capture future opportunities for
expanding their business activities at global level.
RENAULT group also work on the various strategies with the aim of meeting their set
objectives in systematic manner. All these can be understood by following points:
 RENAULT follow the innovation policy for making their cars and vans more effective
and best.
 Company also ensure that the excellence of the distribution network in context of
customers relations for making their base of consumer more strong and competitive as
well.
 RENAULT also focus on controlling investment and research and development
expenditure with the aim of maximize their profitability level (Wetherly, 2014).
 Company also wants to maintain their position in Europe and also pursue their brand
growth internationally.
In addition of this, RENAULT wants to expand their business in HUNGARY with the
aim of enhancing their brand image. As company opening a new RENAULT car factory in
HUNGARY for increasing their market share by serving quality products. But before expanding
their business they needs to evaluate as well as determine the impact of external environment of
the selected country. With the assistance of this, they can easily operate their business at market
in most effective way and also generate more revenue. Along with this, company also needs to
analyse the competition in new market before implementing their operational activities. By this,
company understand the market trends and condition for establishing their competitive image at
market.
External environment of HUNGARY
It is important for business organization to evaluate the external business environment
before expand their activities in another countries. With the assistance of it company can easily
enhance the chances of attaining success. In context of RENAULT, it is looking for expanding
its business in HUNGARY for establishing their competitive image at market place.
Hungary is situated in Central Europe and its Neighbouring countries are Slovakia,
Ukraine and Romania. Mainly, its climate is continental which directly influenced by the oceanic
climate from the west. Since 20011, the population of Hungary has been declining. Thus, it is
important for RENAULT to effectively evaluate the factors that directly impact on entire
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business activities of company in Hungary (Murray, Skene and Haynes, 2017). For determining
the external environment, company use PESTLE analysis which may help them in expanding
their business activities in Hungary. These can be understand by the following points:
Political factors:
Hungary political system is multiparty parliamentary democracy. After the process of
transition in 1989 and 1990, country is more liberal (Crane and Matten, 2016). Now Hungary is
stable democratic nation but on the other side, still there are some serious issues like reforms
continue to push the credibility. As per current government, centre right Fidesz Hungarian Civic
Union includes 2/3rd majority that provide power to change the constitution. Along with this, the
main focus of Hungary government is to effectively maintain the better relation with their
neighbouring countries with the aim of introducing the reforms. In context of this, structural
reforms define the long term fiscal sustainability which may improve the economic condition of
the nation. Government of Hungary is also provide better support to effectively manage the
budget deficit to minimise the expenditure and maximizing the revenues as well. Apart from this,
its controversial policies like media is law that may change the moral and ethical standard of the
nation. Currently, the EU has also includes the infringement proceedings of various laws.
Although, Hungary is facing challenges so that the political risk will reduce the mid and long
term of the laws. Thus, it is important for RENAULT to consider all the challenges before
opening new car factory in the country. It also may contribute in making the operational
activities more effective and appropriate as well. This will help them in increasing their chances
of attaining success.
Economical factors:
Hungary's economic condition is appropriate as compare to the last years which is
characterized by the poverty rights, business freedom, trade freedom and many more. Along with
this, the government of economic is also support Hungary domestic consumption and at the same
time also provide benefits to the business at the time of expanding their activities in the Hungary.
Mainly, it is member of number of international business organization that directly contribute in
enhancing overall growth of international business (Pestle analysis, 2012). In 2000, the GDP of
Hungary is steadily increased from 123.74 billion USD up to 195.48 billion USD. In 2009 due
to financial issues crisis, it followed by a drop to 184.35 billion USD. Furthermore, Hungary is
strong export oriented economy as it is dependent on EU countries. In 2009, the inflection was at
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4.21% that increased to 4.85% in 2010. Furthermore, Hungary is also suffering from the high
rate of unemployment. Thus, it is important for the business organization to bring innovation
within their services so that it can easily invite large number of customers towards its offering
and at the same time also make their customers base strong as compare to its rivals.
(Source: Hungary Gross Government Debt, 2011)
Social factors:
In Hungary, ethnic groups are Romany, Serb, Slovak and so on. Along with this, almost
90 % are ethnic Hungarians. In this context, freedom of religion, Roman Catholics are the largest
group includes in this factor (Teece, 2014). Furthermore, there are some another religions like
Lutheran, Calvinist, Jewish and another small share are also consider on Hungary social factor.
Due to less minimum birth rate, demographics related with the age that is reason of worry. This
is the main reason they, in Hungary the workforce is minimum. Apart from this, due to loss in
income taxes, government revenues is also down. In this country, the literacy rate is consider as a
highest because in this government take various initiatives to enhance the education level of the
local people. Apart from this, Hungary also needs to continuously shift towards more effective
and skilled industry with the aim of enhancing their market share as compare to its rivals like
Asian economics. Thus, it can be stated that effective education is important to attain the
competition at market place rather than basic skills.
Technological factors:
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Illustration 1: Hungary Gross Government Debt

Hungary is strong technologically, as it use new and innovative technologies within their
nation. In this context, Research and development expenditure accounted for approx 1.16% of
GDP.. For example, use of mobile phone and internet usages are increased over the last years
which may help in producing quality products and services to the customers. By this company
can easily communicate with their customers and analyse their needs towards company products
and services. This will provide better support business organization at the time of manufacturing
cars for customers. Mainly this country is more attractive destination in relation with the
technology industries. For betterment of this, government also provide support and take initiated
a new medium term strategy with the aim of developing IT sectors. It provide number of
opportunities to the business organization to improve their performance level at market place.
Legal factors:
Legal framework includes the effective path way in which Hungary can easily formulate
their activities. Mainly, country follow a flat rate tax model in which all the taxpayers are give to
60% of personal income tax from income level (Lawrence and Weber, 2014). Along with this,
there are some important legal factors that may define local taxes like building tax, communal
tax, local business tax and many more that may help new business organization to effectively
operate their business. Furthermore, government of Hungary is also includes some important and
compulsory contents of the contract of employment that may help labour to improve their task
and activities also (Ostrom And et.al., 2015). Apart from this, Civil Code stipulated following
main rules in context of general contractual condition that may become actual part of actual
contract. With the assistance of this, companies can easily improve their performance level. For
attaining success, RENAULT needs to implement all the legal acts and laws at the time of
opening their new car factory. With he help of this, they can easily increase their future
opportunities in market place.
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(Source: Legal factor of Hungary, 2014)
Environmental factors:
It provide information related with the environment policies that implement by the
Hungary with the purpose of making environment eco-friendly. In context of this, there are some
major issues that faced by the Hungary is climate change, endangered species that directly affect
from the large water. Soil pollution, air pollution and water pollution are the major issues that
currently that affect the Hungary. Thus, it is important for RENAULT to use effective and light
technologies that does not affect the environment in negative way. If they use effective way and
technology in their manufacturing activities than they easily capture larger market share from its
rivals.
Porter's Five forces model:
It is one of the important model that developed by M. Porter in 1979 to effectively
analyse the competition level in the market. With the use of this, company can easily attain larger
profitability level. Thus, it is important for RENAULT to use this model for determining the
actual competition at market (Porters five forces model auto mobile industry, 2018). Mainly, this
model help company to implement effective strategy which may contribute in expanding
business in Hungary market. This can be understood by following points:
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Illustration 2: Legal factor of Hungary

(Source: Porter's Five forces model, 2018)
Bargaining power of buyer: It is important factor for the company to determine the
customer's bargaining power towards the company products. In Hungary, buyer power is high
because they wants to purchase standard products to satisfy their needs and wants. Thus, it is
important for RENAULT to provide quality products to its customers at affordable price. This
may help in enhancing their brand image and customers base as well.
For improving their customers base, company needs to use new and innovative methods
within their services as per the customers requirement. This will contribute in reducing the
competition and at the same time also increase their sustainability level at market place for
longer period of time.
Bargaining power of suppliers: It is important aspect of the company because the
suppliers hold power to change their price of raw material. (Hillary, 2017). It could be profitable
for the company to change the suppliers to get best quality of raw material at affordable cost.
Thus it can be evaluated that the bargaining power of suppliers is moderate for RENAULT.
Thus, it is important for the company to use effective supply chain which may help in producing
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Illustration 3: Porter's Five forces model

quality products and services. With the help of this, company can easily build better relation with
their suppliers and enhance their profitability as well.
Threat of new entrants: . It involves, government policies, capital requirements,
promotional and distributional channels, etc. In context of RENAULT, the company can
determine the level of Hungary market and their competitors. It is also essential for company to
analyse and assess distribution channels. So, RENAULT should adopt strategies and techniques
by which they can easily beat their rivals at market place. They should also apply effective costs
than their rivals which helps them to attract more customers towards them and gain competitive
advantage. According to this, it will be difficult for companies who are small and medium sized
because more investment is needed to enter into markets. In case of RENAULT, company can
easily establish their business as they have lager market shares which is advantageous for them.
Threat of substitutes: it is threat because number of technologies advancement through
are available in market through which new companies can easily produce new products to
improve their customers base (Knight and Liesch, 2016). Thus, it is important for RENAULT
to produce more effective and quality products to improve its performance level at market place.
Competitive rivalry: Rivalry in the industry is high because number of competitors are
operate their business in Hungary. As they are implement new technologies to produce quality
products at affordable cost (Kolk, 2016). Thus, it is important for RENAULT produce unique
and quality products to their customers for sustain in market place for longer period of time.
CONCLUSION
From the above mentioned report, it has been concluded that business environment is
important for every organization to evaluate the impact of internal and external factors in the
entire activities. It is important for the company to analyse the business environment before
expanding their activities. This will contribute in enhancing the overall growth of the company.
Along with this, it is also important for the company to enhance their quality services for this
they have to use Porter's five forces model. With the help of this, they can easily analysis the
competition level at market.
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REFERENCES
Books and journals
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Del Giudice, M. and Maggioni, V., 2014. Managerial practices and operative directions of
knowledge management within inter-firm networks: a global view. Journal of
Knowledge Management. 18(5). pp.841-846.
Wetherly, P., 2014. The business environment: themes and issues in a globalizing world. Oxford
University Press.
Murray, A., Skene, K. and Haynes, K., 2017. The circular economy: An interdisciplinary
exploration of the concept and application in a global context. Journal of Business
Ethics. 140(3). pp.369-380.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Teece, D. J., 2014. A dynamic capabilities-based entrepreneurial theory of the multinational
enterprise. Journal of International Business Studies. 45(1). pp.8-37.
Lawrence, A. T. and Weber, J., 2014. Business and society: Stakeholders, ethics, public policy.
Tata McGraw-Hill Education.
Ostrom, A. L. And et.al., 2015. Service research priorities in a rapidly changing context. Journal
of Service Research. 18(2). pp.127-159.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Knight, G. A. and Liesch, P. W., 2016. Internationalization: From incremental to born
global. Journal of World Business. 51(1). pp.93-102.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Online
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forces.html>.
A Hungarian Waltz On The Wild Side. 2011. [Online]. Available
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