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EXHIBIT 2 PESTEL ANALYSIS Political: Even the destroy of winemaking during the Communism and Soviet system the

fact that state-owned winery became private after collapse of the political system, and International winemakers invested in Hungarian vineyards and later the joint of Hungary and EU without Hungarian government to support the nation's wineries help Monarchia holding to expand and merge with other companies to form MMI and enter the US market as a strong wine-player. Political aspect is also the Strength of US government to ban/regulate alcohol and distribution. Economic:(a) Exchange rates(b) Duties and import costs (abolished within EU but exist for US) (c) Baby boomers have the disposable income (d)Cost of obtaining multiple wholesale licenses(e) Capital intensive industries Trade-off between quality and quantity, wine making limit capital commitment, create price premium with high quality (f)Lack of resources in Hungary(g)Hungarian government did not offer any trade support to the nations wineries(h) Hungarys import duty reduced to one-third due to EU Socio-cultural: (a) Eating habits changes and seek for alternative beverages (multimedia promotion and years). (b) Consumers criteria for choosing wine. (c) Consumer types(d) Baby boomers are increasing in numbers(e) Wine history - Hungary Environmental: (a) 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) (b) Cost of land/availability in old and new world 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 (d)US can be considered as 50 separate countries. A state government has the right to ban alcohol, set up state run distribution outlets Some jurisdictions prohibit direct shipping of alcohol between states Many states required an independent third-party wholesaler by law EXHIBIT 6Porter'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 prod uct. 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 medium to 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 consum er could prefer because of their lower prices (price/performance ratio). EVEN that wine has its own market Scope of increase per capita consumption from 2.5 in US to at least 8 (the case in Europe) via getting share from other beverages . The bargaining power of buyers : Bargaining Power of buyers(MMI licence in 26 states, force is weak since no concentrated buyers, not possible for buyers for backward vertical integration, chance to switch supplier since it has direct competition) The amount of licenced distributors are limited the power is also low since even they are more likely to search for the best price an d therefore squeeze MMI for more trivial purchases they will accept contracts in favor of supplier. Switching costs is not so easy since the buyer and seller are binded with high exit-cost so cant easily switch between one supplier and another in order to pressure the suppliers for better prices. 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. (Force is weak since Monarhia Holdings and Morarchia Borazati supply MMI) Rivalry between competitors: Competitive Rivalry(High entrance barriers, weak buyers power, competition not equal size, concentration on niche, satisfactory industry growth lead to dec reased rivalry. Increased rivalry because of low differentiation Industry structure/Lifecycle According to five force analysis we conclude that the barriers of 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 are not so powerful since they cant easily switch between suppliers and they can also do the suppliers job. Regarding market share in the industry, there is a pr`oviding 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 ther e 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. 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.

Market Segmentation

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

Age, Income, Location, Lifestyle Choice criteria Product similarity, price, quality

Industry, Profitability Choice criteria, Distribution channel Quality

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.