KOF Index

Topics: Purchasing power parity, Decision making, Law Pages: 6 (1911 words) Published: January 26, 2014
FDI:  is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country.  Horizontal FDI: Processes conducted at home country are replicated directly in the host country. Vertical FDI: performs value-adding activities either upstream or downstream on the processes in host country. MNE: A company with operations in multiple locations across borders. Economic System: system of production, distribution and consumption of goods and services. Mixed Economy : Economy controlled and directed by both the Private Sector and the Government/State. Capitalist Economy: A system controlled by Private firms. The investment, ownership, production, distribution and exchange of wealth is made by Private firms only. Operate mainly for Profit. Benefits of Capitalism : High growth rate of economy, provides choice to consumers, provides valuable goods and services, punishes negative traits and rewards hard work, built on democracy and does good for society Downfall of capitalism: Self interest, encourages inequality in society, monopolistic tendency, human resource exploitation, lobbying with the government to get unfair advantage. Socialism: Property or business is held in common with the private body and the government but decisions are made by the Private body itself in the name of government body. Features of Socialism: social ownership of means of production, existence of public sector, production is guided by social benefits, abolition of exploitation of workers. Benefits of socialism: better salaries, stable environment, eliminates poverty, better products, fulfills survival needs Criticism of socialism: suppression of economic democracy (people cant choose the price), slow technological advancement (owners resistive to change), minimize self management (as decisions have to be taken in consultation with govt.), reduces incentive (as they are not profit oriented so don’t bother about sales) Types of Legal Systmes:

Civil Law: also known as continental european law, this system is based on statutes passed by legislature to amend a code. It is slightly influenced by religious law such as canon law and Islamic law. Countries using civil law: France, Spain, Greece, Portugal, China Common Law: A system of laws whose sources are decisions passed by Judge’s. Every system will have a legislature that passed new laws and statutes. Common law was developed in England and later inherited by the commonwealth of nations. Eg: A law is passed based on judges decisions after a particular crime has been committed. This statute is passed by a jury and finally amended in the constitution. If rape was not a crime before, if one person suggests it is a crime, then the judges will decide if it is a crime or not. If it is, then it will be written in the books of common law. Basically, illegal offences are decided by the judges. Countries using Common law : England, Canada, India, US etc. Religious or Theocratic Law: Laws based on offences governed in the holy books. If the holy book or religious laws mention that it is wrong to do a particular thing, then punishment will be decided by a religious body. Countries that use this law : Middle eastern countries. Cultural Differences:

High Context Cultures : Where importance is given to the community and group. Decisions are made based on trust and understanding within the community. Less importance is given to the written word and more to a verbal commitment. Interactions in person are high. Eg: China, India, Latin America, japan Low context culture: Where importance is given to t he written word or documented evidence. There is hardly any importance given to emotions and very little interactions in person are made. Eg: US, Germany, Australian. Impact of Culture, HOFFSTEAD :

Power Distance: Power is distributed unequally and importance is given to...
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