ASSIGNMENT ON COMPARISON OF INDIAN BUSINESS ENVIRONMENT WITH HUNGARIAN BUSINESS ENVIRONMENT

SUBMITED TO, Prof. Sanjeev Jain

SUBMITTED BY, Siddhartha Mishra 11PGDM105 Sec- B

Contents
1. Introduction a. India b. Hungary 2. Comparison of SPENT Analysis of India and Hungary a. Social b. Political c. Economical d. Natural e. Technological 3. Few Economic Facts About India And Hungary 4. Conclusion

Introduction of India
India, officially the Republic of India is a country in South Asia. It is the seventh-largest country by geographical area, the 2 most populous countries, and the most populous democracy in the world. The Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal on the east, India has a coastline of 7,517 kilometers .It is bordered by Pakistan to the west, People's Republic of China, Nepal, and Bhutan to the north, and Bangladesh and Myanmar to the east. India in the vicinity of Sri Lanka, Maldives, and Indonesia in the Indian Ocean. Home to the Indus Valley Civilization and a region of historic trade area and vast empires, Indian subcontinent was identified with its commercial & cultural wealth for much of its long history. Four major religions, Hinduism, Buddhism, Jainism and Sikhism originated country, while the Zoroastrianism, Judaism, Christianity and Islam arrived in the first millennium of CE and shaped the region's diverse culture. The British East India Company from the early eighteenth century and colonized by the United Kingdom from the mid-19 century, India became an independent nation in 1947 after a struggle for independence that was marked by widespread non-violent resistance. India is a republic consisting of 28 states and 7 union territories with a parliamentary system of democracy. It has the world's 12th largest economy at market exchange rates and the fourth largest in purchasing power. Economic reforms since 1991 have transformed it into one of the fastest growing economies; however it still suffers from high levels of poverty, illiteracy, disease, & malnutrition. A pluralistic, multilingual, and multiethnic society.

India at Glance
1. Population 2. Area 3. Geographical location : : 1,150,000,000 (1.15 billion) 3.3 million square kilometers : Lies between latitudes 8 4' & 37 6 ' north and longitudes 68 7 ' and 97 25' east 7600 km 17 major languages, 844 dialects Hinduism, Islam, Christianity, Buddhism, Sikhism, Jainism Jan gana mana written by Rabindranath Tagore Vande Mataram, composed in Sanskrit by Bankimchandra Chatterji Replica of the Lion Capital of Sarnath Horizontal tricolour in equal proportion of deep saffron on the top, white in the middle and dark green at the bottom. In the centre of the white band is a wheel. Tiger (Panthera Tigris) Peacock Lotus Banyan Mango Rupee (One Rupee=100 paisa) Hockey

4. Coastline length 5. Languages 6. Major religions

: : :

7. National anthem

8. National Song 9. National emblem 10.National flag

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11. National animal 12. National bird 13. National flower 14. National tree 15. National fruit 16. National currency 17. National Sport

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Introduction of Hungary
The Republic of Hungary is located between Western Europe and the Balkans (Data monitor). Its population accounts for approximately 10 million inhabitants; the capital is Budapest (Data monitor). Its central location, and its growth potential, represents a quite appealing destination for business growth opportunities. This paper examines an analysis on macroeconomic aspects following the so-called PEST analysis, drafts a country evaluation and concludes in an analysis to identify business opportunities.

Official name: Hungarian Republic Location: East-Central Europe Area: 93,030 square km Population: 10,197,119 Density of population: 108 person/square km, 63%of population live in cities Capital: Budapest , area of 525 Km2 (1,775 million inhabitants) Language: Hungarian / Magyar Administration: 19counties, 23 towns with county rights Length of borders: 2246 Km Number of neighboring countries: (borders with Austria , Slovakia , Ukraine , Romania , Serbia , Croatia , Slovenia )

COMPARISON OB BUSINESS ENVIRONMENT OF INDIA AND HUNGARY ON THE BASIS OF SPENT ANALYSIS 1. SOCIAL
INDIA Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. In the India, for example, the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees because their staff is living longer. It also means some firms have started to recruit older employees to tap into this growing labor pool. It describes the characteristics of the society in which the organization exists. Literacy rate, customs, values, beliefs, lifestyle, demographic features and mobility of population are part o the social environment. It is important for managers to notice the direction in which the society is moving and formulate progressive policies according to the changing social scenario India is the second most populous nation in the world with an approximate population of over 1.1billion people. This population is divided in the following age structure: 0-14 years 31.8%, 15-64 years 63.1% and 65 years and above 5.1%. There has a (i)Mobility (ii)Income distribution (iii)Population demographics

(iv)Attitude to work and leisure (v)Standard of education and skills (vi)Working conditions

HUNGARY
Ethnic groups in Hungary comprise of Magyar, Romany, German, Serb, Slovak, Romanian, whereas the ethnic Hungarians (Magyar) accounting for almost 90 % (USDS). There is a freedom of religion, whereby the Roman Catholics are the biggest group (Data monitor). Other Religions, such as Calvinist, Lutheran, Greek Catholic, Jewish and others represent just a small share (USDS). Demographics in regards to age show, that the countrys aging population is a cause of worry, which is mainly due to reduced birth rates; this results in a reduced workforce and at the bottom line to a drop in government revenues due to a loss in income taxes (Data monitor). The literacy rate in Hungary is considered as one of the highest in the world, which is due to several government initiatives to improve education (Data monitor). To retain market share in the face of competition from the Asian economies, which have lower costs, the country needs to continue its shift towards a more skilled industry (Data monitor). Basic skills alone are insufficient to remain competitive. Hungary Population: The total population in Hungary was last reported at 10.0 million people in 2011 from 10.0 million in 1960, changing 0 percent during the last 50 years. Ethnic groups: Hungary include Magyar (nearly 90%), Romany, German, Serb, Slovak, and others.

Religion: Majority of Hungary's people are Roman Catholic; other religions represented are Calvinist, Lutheran, Jewish, Baptist, Adventist, Pentecostal, and Unitarian. Language: Hungarian & Magyar are the predominant language. Age structure 0-14 years: 14.6% (male 767,824/female 721,242) 15-64 years: 68.7% (male 3,361,538/female 3,444,450) 65 years and over: 16.7% (male 622,426/female 1,058,582) Literacy Definition: age15and over can read and write Total population: 99.4% Male: 99.5% Female: 99.3%

2. POLITICAL INDIA
These are related to the legal environment in which firms operate. In recent years in the India There have been many significant legal changes that have affected firms' behavior. The introduction of discrimination and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organizations actions. Legal changes can affect a firm's costs and demand. This consists of legislation that is passed by the parliament and state legislatures. Examples of such legislation specifically aimed at business operations include the Trade mark Act 1969, Essential Commodities Act 1955, Standards of Weights and Measures Act 1969 and Consumer Protection Act 196. In India take many type of permission to the sate govt or central govt. In India many type of act like license permission, copyright permission, and many types of other permission. (i)Employment law (ii)Trade and product restrictions (iii)Health and safety regulations (iv)EU and international laws (v)Monopolies commission

HUNGARY
Hungarys political system is a multiparty parliamentary democracy (Data monitor). It emerged out of the former Soviet bloc Communist nations; after the transition process in 1989 and 1990 into a more liberal country, Hungary is now a stable democratic country (Data monitor). Although there are still serious problems, reforms continue to push the credibility of Hungary (Data monitor). In the current government, the so-called centre-right Fidesz-Hungarian Civic Union (Fidesz) holds a two third majority, which gives the party enough power to push through changes in the constitution (EIU April 2011). The current president is Pal Schmitt; the prime minister is Viktor Orban (Fidesz) (EIU June 2011). The administrative power is shared and consists of the executive, the judiciary, and the legislature (Data monitor). The governments main focuses are to maintain strong relations with neighboring countries, to introduce reforms, and to strengthen the countrys integration into the European Union (EU) (Data monitor). Structural reforms aim to enable the long-term fiscal sustainability and to improve the countrys economy as a whole, as well as the external trade (Data monitor). To manage the budget deficit, the government is concerned in increasing revenues 1 and cutting expenditures 2 (Data monitor). However, Hungarys entrance in the Euro zone is not likely to happen before 2020. Hungarys controversial policies such as the media law and the changes in the constitution in terms of moral and ethical standards (e.g. its antigay and anti-abortion stances) resulted in international criticism from other countries and might lead to a further separation between the left- and right-winged parties in the country (Data monitor). Recently, the EU has started infringement proceedings over a number of laws,

stating that some of the constitutional changes are in noncompliance with EU law and that they are incompatible with the democratic system (EIU 2012). Although the country is still facing challenges, it is expected that the political risk will further decrease in the mid- and long-term. Taxation Corporate income tax Corporate tax is set at 19% (tax base is profit before taxes) and tax payable may be reduced by various tax incentives. Corporate tax can be reduced to 10% for the sum of a company's tax base that does not exceed HUF 50 million if: corporate tax benefits are not effected at least one person is employed employees are paid at least double the minimum wage on average the company is not subject of a labor law penalty VAT Rates of VAT: The general rate is 25% applied to most products and services (18% is applied to diary and bakery products, the supply of district heating to households is currently taxed at 25%) Labor Law in Hungary Contract of work The contract must be set out in writing Compulsory contents of the contract of employment: name and designation of the parties agreement on the employees job description

 on his/her basic salary and on the site at which work is to be carried out Working hours In Hungary full-time work involves eight hours work a day, and 40 hours a week. Regulations on employment or the agreement of the parties may establish longer working hours (though not exceeding 12 hours a day and no more than 60 hours a week). Minimum wages The minimum wages in Hungary is since 1. 1. 2009 the amount 71 500 forint (EUR) per month. Holiday up to the age of 25: - 20 working days from the age of 25 :- 21 working days up to the age of 31 :- an additional working day every three years up to the age of 45 :- an additional working day every two years from the age of 45 :- 30 working days

3. ECONOMICAL
INDIA
It includes interest rates, taxation changes, economic growth, inflation and exchange rates. As you will see throughout the "Foundations of Economics" book economic change can have a major impact on a firm's behavior. For example: higher interest rates may deter investment because it costs more to borrow a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency inflation may provoke higher wage demands from employees and raise costs higher national income growth may boost demand for a firm's products In order to solve economic problems of our country, the government took several steps including control by the State of certain industries, central planning and reduced importance of the private sector. The main objectives of Indias development plans were: Initiate rapid economic growth to raise the standard of living, reduce unemployment and poverty, Become self-reliant and set up a strong industrial base with emphasis on heavy and basic industries, Reduce inequalities of income and wealth, Adopt a socialist pattern of development based on equality and prevent exploitation of man by man,

As a part of economic reforms, the Government of India announced a new industrial policy in July 1991, The broad features of this policy as follows: The Government reduced the number of industries under compulsory licensing to six. Disinvestment was carried out in case of many public sector industrial enterprises. Policy towards foreign capital was liberalized. The share of foreign equity participation was increased and in many activities 100 per cent Foreign Direct Investment (FDI) was permitted. Automatic permission was now granted for technology agreements with foreign companies. Foreign Investment Promotion Board (FIPB) was set up to promote and channelize foreign investment in India. The economic factors in India are improving continuously. The GDP (Purchasing Power Parity) is estimated at about 3.965 trillion U.S. dollars in the year 2009. The GDP- real growth rate in 2009 was 6%. India has the third highest GDP in terms of purchasing power parity just ahead Japan and behind U.S. and China. Foreign direct investment rose in the fiscal year ended September 2009 to about US$ 10.532 billion. There is a continuous growth in per capita income; Indias per capita income is expected to reach Rs. 33283 by the end of 2009-2010. This will lead to higher buying power in the Hands of the Indian consumers. India GDP is now 6.5. Today India reserve Us dollar in Good condition.

In Indian economy is strong. We see in recession our economy is less affect from recession compression to western countries. These following factors: (i) Interest rates (ii) Money supply (iii) Credit control (iv) Financial markets (v) Inflation (vi) Competitors pricing (vii) Globalization

HUNGARY
Hungarys economic environment has improved over the last years and is now characterized by freedom of trade, property rights, business freedom, and freedom of investments (Data monitor). There is an ongoing liberalization into an open economy and a gradual adjustment towards Western European countries (Data monitor). E.g. it takes about an average of four days to open a new business, whereas the Organization for Economic Co-Operation and Development (OECD) average is around 14 days (Data monitor). The governments economic policies support domestic consumption and the expansion of businesses in the country (Data monitor). Hungary is a member of several international organizations 3 (Country Watch), which is contributing factors to support its international business growth. In 2000, Hungarys Gross Domestic Product steadily increased from 123.74 billion USD up to 195.48 billion USD, followed by a drop to 184.32 billion USD in 2009, which is due to the financial crisis. However,

an upwards trend seems to be indicated for the following years (See Table 1). Hungary is a strong export-oriented economy and is thus dependent on EU countries, such as Germany, as an export market (Data monitor). The economic crises led to evaporated exports in 2008 and 2009; although exports recovered in 2010 accounting for 14.10 %, it is still evident that the crisis left its . Thus, Hungary seeks to expand international trade with other countries in the Asia Pacific, Mediterranean, and Latin American regions (Data monitor). The Budapest Stock Exchange offers opportunities to raise capital and serves as a platform to trade financial instruments; however, financial risk factors are evident (Data monitor). The country experiences a high volatility in its currency, the Forint, and as a result the Forint was one of worst-performing currencies in 2011; this, paired with the increase of taxes, pushed inflation (Data monitor; Zoltan). Whereas inflation was at 4.21% in 2009, it rose up to 4.85% in. The deterioration in external growth and the financing environment resulted in a downgrade of the countrys rating to BB- with a negative outlook (IntelliNews); this strengthened the risk aversion of international investors (USDS). Hungary is suffering from a high unemployment rate, which differs regionally; in the western regions where major foreign investments are concentrated, unemployment is low; whereas unemployment is high in the north and northeast (IHS). Although a slight recovery of unemployment may be assumed over the next years to come, it is still at a high level accounting for 11.25 % in the year 2011. It still needs to be proofed, if the government initiatives on the labor market will yield results.

4. NATURAL
INDIA
Environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities. In India we know that many types of environmental problems this are basic things but more important for our environment. Also biotic factors, a biotic factors and their interaction with one another. Pollution free industrial activity i.e is necessary condition of industrial organization. Industrialization and urbanization have resulted in a profound deterioration of India's air quality. Of the 3 million premature deaths in the world that occur each year due to outdoor and indoor air pollution, the highest number are assessed to occur in India.

(i)Pollution problems (ii)Planning permissions (iii)Waste disposal (iv)Noise controls

(v)Environmental pressure groups

HUNGARY Environment Regulations In Hungary environmental protection matters have been managed by the Ministry of Environmental Protection and Water (Ministry) since 1988 The Ministry is responsible for the development of environmental policies and for international co-operation The effective day-to-day management of environment-related matters is mostly carried out by the regional organizations (agencies) of the Ministry The main, general environmental protection rules are laid down in Act LIII of 1995 on the General Rules of Environmental Protection (Environment Act). According to section 68 of the Environment Act, prior to the commencement of activities that have or may have a significant impact on the environment, an environmental impact assessment must be carried out

5. TECHNOLOGICAL
INDIA
New technologies create new products and new processes. MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances. Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organizations providing the products. Today in India 3G technology starts. A heavy infrastructure for bandwidth. BSNL and Reliance have more covered city by optical fiber. India has many Technological Projects. Good Service provider in IT sector ex TCS, Infosys and many more. Today India is a big market in mobile sectors here 5-6 player operators and new operators launch their services soon. (i) IT Development (ii)New Materials and processes (iii)Government technology funding (iv)Speed of technology transfer (v)Software upgrades

HUNGARY
R&D expenditures accounted for around 1.16 % of GDP in 2010 (See Table 5). The technological sector experienced improvements over the last years; e.g. Internet usage and mobile phone penetration were increasing (Data monitor). The country is an attractive destination for

high technology industries (Data monitor); also the government initiated a new medium-term strategy to oversee IT developments (EIU September 2011). IT spending will remain limited by a tight fiscal situation; however, the country is benefiting from EU initiatives to assimilate Hungary into the EUs new Information Age (BMI 2012b). Thus, in the midterm it is expected, that - driven by the technological change - more companies will outsource their IT environment to emerging IT markets such as Hungary (BMI 2012b). National Office for Research and Technology (NKTH) is a government office responsible for the Hungarian Government's science, technology and innovation policy. NKTH has the following responsibilities and missions: Elaborating the government strategy in the field of research, technology development, and innovation, Forming the means and tools for the R&D and innovation policy at government level, Preparing documents concerning the national science and technology policy, Representing Hungarian interests in international and EU S&T affairs, Co-coordinating the activity of the Research and Technology Innovation Fund, Supervising the Agency for Research Fund Management and Research Exploitation, Raising public understanding and awareness in research and innovation.

Recent technological developments in Hungary The new technology developed by Cellum allows using mobile telephones as MasterCard bank cards in Hungary. Hungary is the first country in Europe to implement the new technology. Development in the field of renewable resources The Hungarian National Renewable Action Plan has targeted to increase the share of renewable energy sources to 147% until 2020.

Economy stats: Hungary vs. India

Hungarian Economy stats Aid as % of GDP 0.6% Ranked 102nd. 100% more than India Business efficiency 59.867 Ranked 31st. 1% more than India Economic freedom 2.35 Ranked 49th. 57% more than India GDP $175,000,000,000.00 Ranked 53rd in 2006. GDP growth > annual % 4.12 annual % Ranked 97th in 2005. GDP (per capita) $17,402.11 per capita Ranked 45th in 2006. 4 times more than India GDP per capita in $1,682.00

Indian Economy stats 0.3% Ranked 113rd. 59.053 Ranked 33rd. 1.5 Ranked 123rd. $4,164,000,000,000.00 Ranked 5th in 2006. 23 times more than Hungary 9.23 annual % Ranked 14th in 2005. 124% more than Hungary $3,751.99 per capita Ranked 121st in 2006. $625.00

1900 Ranked 20th. 169% more than India GDP per capita in $2,480.00 1950 Ranked 22nd. 3 times more than India GDP per capita in $5,596.00 1973 Ranked 25th. 6 times more than India GDP > PPP $167,584,000,000.00 Ranked 46th. Ranked 38th. $597.00 Ranked 49th. $853.00 Ranked 50th. $3,362,960,000,000.00 Ranked 4th. 19 times more than Hungary $477,000,000,000.00 Ranked 12th. 9 times more than Hungary

Gross National Income

$49,161,600,000.00 Ranked 45th.

Gross National Income (per $ GDP)

$32.93 per $100 Ranked 80th. 129% more than India

$14.37 per $100 Ranked 160th.

Human Development Index

0.862 Ranked 35th. 43%

0.602 Ranked 128th.

more than India Income category Upper middle income Income distribution > Poorest 10% 4.1% Ranked 11th. 17% more than India Income distribution > Richest 10% 20.5% Ranked 111st. Poverty > Share of all poor 0.02 % of world's poor people Ranked 63rd. Technological achievement 0.46 Ranked 22nd. 130% more than India Low income 3.5% Ranked 22nd.

33.5% Ranked 38th. 63% more than Hungary 41.01 % of world's poor Ranked 1st. 2050 times more than Hungary 0.2 Ranked 59th.

CONCLUSION

Through the above data and comparison, we could say that in spite of huge GDP and huge demographic dividend INDIAs business environment is not as efficient as HUNGARY. Hungary has more developed technology, better income distribution, better per capita income and better GNI. But due to the current changed business strategies INDIA is now the hot favorite of worlds most powerful business organizations.