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PESTLE-Analysis for the Armenian Market

PESTLE-Analysis for the Armenian Market. Alnatura As presented by: Julia Bednorz, Sybille Bachelier, Valeria Futorian, Sebastian Sehmisch and Madeleine Komander. Structure Introduction of the company Presentation of the country Introduction oh the Pestle Analysis 3.1 Political aspects

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PESTLE-Analysis for the Armenian Market

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  1. PESTLE-Analysis for the Armenian Market Alnatura As presented by: Julia Bednorz, Sybille Bachelier, Valeria Futorian, Sebastian Sehmisch and Madeleine Komander

  2. Structure Introduction of the company Presentation of the country Introduction oh the Pestle Analysis 3.1 Political aspects 3.2 Economical aspects 3.3 Social aspects 3.4 Technological aspects 3.5 Legal aspects 3.6 Environmental aspects 4. Conclusion

  3. Introduction of our company Alnatura Founded in 1984 by Prof. Dr. Götz Rehn Volume of sales of 2016/2017 was 770 Mln. Euros (1% more than in the previous year) 3,014 workers – 177 trainees and students Seat in Bickenbach in Hessen Approximately 1200 organic products The main 3 guidelines for our products: Full-fledged ingredients and value preservation Exclusion of additives and white sugar Regular controls

  4. 2. Presentation of Armenia Geographically in Asia but historically considered as part of Europe 29.700km² (similar to Belgium) Borders: Georgia, Azerbaijan, Turkey and Iran Landlocked country • Currency: Dram (AMD) • Parliamentary democracy. President: Armen Sarkissian • 3 million inhabitants • Capital: Yerevan (1M inhabitants) • Important diaspora

  5. 3. Introduction of the PESTLE-Analysis Strategic Marketing tool to analyze the external surroundings of a company Identification of relevant, influencing factors in: → an unknown market (can be a whole nation) → specific branch or business area Based on a specific project the company is planning to realize General overview but always in relation to the companies market and intention P E S T L E Politic Economic Social Technological Legal Ecological

  6. Visualization of the PESTLE results Results always provide information for extended research No operational tool for inferable final decisions The real benefit of PESTLE depends on how the company will use the new information

  7. 3.1 Politics Conflicts and relations with neighbour countries Conflict with Azerbaijan Closed borders with Turkey Strong economic cooperation with Iran and Russia Political and Economic organizations UNO, European Council, Eurasian Economic Union… Very friendly relations with EU and its members CEPA (November 24th, 2017): • Better investment climate • More business opportunities • Better value for money • Reduction of barriers to trade

  8. Corruption ‘Serious challenge” - UN development programme Present in every field of the economical and political environment Civil society, businesses and medias have no power “Velvet Revolution” April-May 2018 New Prime Minister, anti-corruption campaign

  9. 3.2 Economic Current Situation: → GDP: 3.600 $ per head in 2016 → Average monthly wage: 355 € (415 $) → Poverty rate: ≈ 30% → Unemployment Rate: 18% → Poorly developed infrastructure, especially the National Railway Network → Food industry as one of the most important sectors of Armenia → Export < Import

  10. Economic Trends: Upswing since 2017 Over 5% economic growth Government Program → improved basic conditions → public investments → Investor advertising ⇒ Euphoric atmosphere Public debt increased Political conflicts No changes in poverty rates ⇒ No strong stability of the trends in long-term 22/5000 Development of the GDP in USD per head in Armenia from 2008 - 2018

  11. 3.3 Social Unemployment • ¼ jobs in Armenia are low paying jobs > a need for more middle-income jobs • 29.4 % poverty in Armenia in 2016 • only the estimated unemployment rate, the actual rate of unregistered unemployed people is close to 30% • unemployment rose again in this quarter to 18% from 16,8% one year ago Agriculture Contributes to 20% to country’s GDP and 40% to employment of the country Religion 92.5 % belong to Armenian Apostolic Church 2.3% to other Christian Churches 4% are non-religious

  12. Demography: 0-14 years: 18.94% 15-24 years: 12.89% 25-54 years: 43.43% 55-64 years: 13.41% 65 years+: 11.33% > age 16-24 > 76,8 % are unemployed > age 25-34 > 43 % are unemployed Social media Facebook monthly users - 1 million with a daily audience of 750 thousand audience of Instagram is rapidly growing with 250 thousand active monthly users in Armenia and a monthly growth of 15-20 percent popular among the younger users

  13. 3.4 Technology Internet provided through Georgia/Russia, approx. 62% of the population use it Well developed online resources, such as e-governance or networks for agricultural advisory services, e.g. VERCON Heavy interest and investment in food producing and food processing sectors E.g. Model farms, technological breeding programs, modern processing and packaging technologies

  14. Energy Supply and efficiency Armenia has the needed electricity capacity but can currently only meet 35% of total domestic demand 39% percent of its energy supply stems from one nuclear plant built in 1979 Currently the government invests into and offers subsidies for renewable energy At the same time it imports most energy supplies as nuclear fuel, coal and natural gas Very low efficiency compared to other developed countries High vulnerability to energy supply disruptions

  15. 3.5 Legal Employment in Armenia Labour code (2004) Value of contract > Role of the state Working Hours 40 (max. 48) per week 8 (max. 12) per day Vacation or monetary compensation Maternity leave 140 Days (70 + 70) 155 Days (70 + 85) : difficult delivery 180 Days (70 + 110) : >1 Child

  16. 3.5 Legal HealthandSafety

  17. 3.5 Legal Product safety General Product Safety Directive Only safe products in the market Inform consumers of any risks Assure the removal of dangerous products

  18. 33.5 Legal Financial Regulations NONE! We may invest and make as much as we want! No limitations on the conversion and transfer of money or the repatriation of capital and earning. incl. branch profits, dividends, interests, royalties, management and technical service fees. *Items must be priced in drams (AMD)

  19. 3.5 Legal CEPA Human rights Democracy Comprehensive and Enhanced Partnership Agreement (November 2017) - Differences with the EU + Trade + Jobs + Economic growth Cleaner Environment New Agreement Safety and security Fairer rules

  20. 3.6 Ecological Pollution and Waste Management Waste management is still severely underdeveloped Air pollution, especially in Yerevan, is on the rise Drinking water pollution and inaccessibility is at 28.91%, general water pollution at 35.48% Climate Change Effects are already visible, e.g. the loss of biodiversity in flora and fauna In the future: draughts, landscape shifting, expansion of deserts

  21. The government has over years worked on lessening water pollution and soil toxification, but there are few governmental projects for the improvement of waste management and general environmental improvements Annual economic growth causes environmental damages of 8-10 % of the GDP, but current budget revenues of environmental charges are only 0.25 -0.27% Until recently widespread corruption has heavily weakened many forays into stronger environmental regulations and the recalculation of environmental charges

  22. 4. Conclusion Visualization of the PESTLE results Results always provide information for extended research No operational tool for inferable final decisions The real benefit of PESTLE depends on how the company will use the new information

  23. 4. Conclusion

  24. Sources Slide 3 “Alnatura Unternehmensgrundsätze.” Alnatura. Accessed 10 July. 2018 at: https://www.alnatura.de/de-de/ueber-uns/grundsaetze “Der Mensch steht bei uns im Mittelpunkt.” Alnatura. Accessed 18 July 2018 at: https://www.alnatura.de/de-de/magazin/gedanken-und-schriften/wirtschaften-mit-sinn Slide 5 “General Information”. The Government of the Republic of Armenia. Accessed 6 July 2018 at: http://www.gov.am/en/official/ “General Information about the Republic of Armenia”. President of the Republic of Armenia. Accessed 6 July 2018 at: http://www.president.am/en/general-information/

  25. Sources Slide 6 - 7 “PESTEL - Analyse: Die wichtigsten Einflussfaktoren der Makroumwelt” (2015). Dr. Elke Theobald. Accessed 10 July 2018 at: https://www.management-monitor.de/de/infothek/whitepaper_pestel_Analyse.pdf (10.07.2018) “Die Pestel-Analyse” (2006). Dagmar Recklies. Accessed 10 July 2018 at:http://www.themanagement.de/Management/PEST-Analyse.htm Slide 8 - 9 Transparency International (2015). “The State of Corruption: Armenia, Azerbaijan, Georgia, Moldava and Ukraine”. Accessed 6 July 2018 at: https://www.transparency.org/whatwedo/publication/the_state_of_corruption_armenia_azerbaijan_georgia_moldova_and_ukraine “Armenia Corruption Report”. GAN Business Anti-Corruption Portal. Accessed 6 July 2018 at: https://www.business-anti-corruption.com/country-profiles/armenia/

  26. Sources Slide 8 - 9 “Anti-corruption digest Armenia”. Council of Europe. Accessed 6 July 2018 at: https://www.coe.int/en/web/corruption/anti-corruption-digest/armenia “Armenia Age Structure.” Indexmundi. Accessed 19 July 2018 at: https://www.indexmundi.com/armenia/age_structure.html Slide 10 - 11“Tax Summaries PWC” (2018). Worldwide Tax summaries. Accessed 12 July 2018 at:http://taxsummaries.pwc.com/ID/Russian-Federation-Corporate-Withholding-taxes “WKO” (2017). WKO. Accessed 16 July 2018 at: https://www.wko.at/service/aussenwirtschaft/die-armenische-wirtschaft.html

  27. Sources Slide 10 - 11 “Germany Trade and Invest” (2018). German Trade and Invest. Accessed 15 July 2018 at: https://www.gtai.de/GTAI/Navigation/DE/Trade/Maerkte/Wirtschaftsklima/wirtschaftsausblick,t=wirtschaftsausblick-januar-2018--armenien,did=1853134.html#container “Agriculture and Food Processing in Armenia” (2010). Samvel Avetisyan. Accessed 14 July 2018 at: https://www.chamber.org.il/media/149433/סקירה-ארמניה.pdf Slide 12 Denning, Sarah (2017). „Three Causes of Poverty in Armenia.“ The Borgen Project. Accessed 10 July 2018 at: https://borgenproject.org/causes-poverty-armenia/ “Armenia Unemployment Rate” Trading Economics. Accessed 10 July 2018 at: https://tradingeconomics.com/armenia/unemployment-rate “Religion in Armenia” World Atlas. Accessed 10 July 2018 at: https://www.worldatlas.com/articles/religion-in-armenia.html

  28. Sources Slide 13 “Armenia at a glance.” FAO. Accessed 18 July 2018 at:http://www.fao.org/armenia/fao-in-armenia/armenia-at-a-glance/en/ “Armenia” (2018). Central Intelligence Agency. Accessed 15 July. 2018 at: https://www.cia.gov/library/publications/the-world-factbook/geos/am.html Samvel Martirosyan on the most popular social media platforms in Armenia” (2016). Panorama. Accessed 11 July 2018 at: https://www.panorama.am/en/news/2016/11/26/Samvel-Martirosyan-on-the-most-popular-social-media-platforms-in-Armenia/1684769 “Armenia Country Profile”. BBC News. Accessed 6 July 2018, at: https://www.bbc.co.uk/news/world-europe-17398605

  29. Sources Slide 14 “Armenia: Capacity Building in Innovation and Technology Transfer” (2012). CLDP. Accessed 14 July 2018 at: http://cldp.doc.gov/programs/cldp-in-action/details/1036 “VERCON: ICT Strengthening Agricultural Research and Extension in Armenia”(2011). FAO. Accessed 12 July 2018 at: http://www.fao.org/armenia/programmes-and-projects/success-stories/vercon-ict-strengthening-agricultural-research-and-extension-in-armenia/en/ Alaverdyan,Davit, et al (2015).” The impact of technology evaluation programme on agricultural productivity in Armenia”. Visegrad Journal on Bioeconomy and Sustainable Development. Vol. 4, No. 2. Berlin, Warsaw: De Gruyter. Slide 15 “Armenia - Energy Sector” (2017). Export.gov. Accessed 12 July 2018 at: https://www.export.gov/article?id=Armenia-energy-sector

  30. Sources Slide 16: Employment in Armenia http://jurist.am/en/employment Slide 16 and 17: Description of national OSH regulatory framework https://eeas.europa.eu/headquarters/headquarters-homepage_en/36260/New%20agreement%20between%20the%20EU%20and%20Armenia%20will%20bring%20tangible%20benefits%20to%20citizens Slide 18: Product safety rules https://ec.europa.eu/info/business-economy-euro/product-safety-and-requirements/consumer-product-safety/product-safety-rules_en Slide 19: Armenia - Financial Sector https://www.export.gov/article?id=Armenia-financial-sector

  31. Sources Slide 20: New Agreement between the EU and Armenia will bring tangible benefits to citizens https://eeas.europa.eu/headquarters/headquarters-homepage_en/36260/New%20agreement%20between%20the%20EU%20and%20Armenia%20will%20bring%20tangible%20benefits%20to%20citizens Slide 20 - 21 Schucht, Simone, and Eugene Mazur (2004). Environmental pollution and product charges in Armenia. Paris: OECD Publishing. Stefes, C.and K. Weingartner (2015). Environmental crime in Armenia: A case study on mining. A study compiled as part of the EFFACE project.Berlin: Ecologic Institute. “Sector Overview of Armenian Economy” (2018). Invest in Armenia. Accessed 14 July. 2018 at: http://www.investinarmenia.am/en/sector-overview-of-armenian-economy

  32. Sources Slide 20 - 21 Wynn, Amira (2017). “Water Quality in Armenia”. The Borgen Project. Accessed 14 July. 2018 at: https://borgenproject.org/water-quality-in-armenia/ “Environmental issues in Armenia”. Naturvernforbundet. Accessed 9 July 2018 at: https://naturvernforbundet.no/international/environmental-issues-in-armenia/category931.html

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