First order power is direct, exercised through a multinational’s political or financial strength.
Second-order power in contrast, is indirect, derived from a multinational’s organizational know-how, technological progress, and status as a representative of cultural values or dominant market ideology.Powers of Multinational
The term MNCs is not used for a firm whose sole international involvement is the exporting of goods or services from its home baseThe essence of the multinational concept is the firm controls income generating assets in at least two countries
Involves the acquisition of foreign securities by individuals or institutions without any control over the management of the foreign entity.
It invests management control . MNCs engaged in FDI because they both own and control assets in foreign countries.
Globalizations Defined: Because it represents a new stage of world development, globalization is not well defined, and so it is difficult to say with certainty what globalization means or is likely to mean in the future. Here globalization is defined as increased permeability of traditional boundaries such as nations, timeandspace.Characteristics of Globalization: Boundary permeability or transcendence, a high rate of change, the growing number and diversity of participants, and rising complexity and uncertainty are principal features of globalization.Sources of Globalization: Many writers have argued that globalization emanates primarily from one source; the argument in this text is that a distinctive feature of globalization is that it emanates from multiple sources. The interrelationships and interdependencies among these disparate sources converge to powerofglobalization.
Global Business Participants: Large publicly owned multinational enterprises (MNEs), particularly those from the industrialized world, tend to attract most public attention. Accordingly, much of what we know about global business has been based on the experiences of these firms. In view of evidence showing that many firms other than MNEs have contributed to and benefited from globalization, it is important to include the experiences of these enterprises in accounts of globalization.
Perspectives on Globalization: Globalization is alternatively viewed as ‘business as usual’, as a force for evil, or as a force for improved social justice, and all three scenarios are potentially achievable.A New World Order: Some argue that powerful business and governments have colluded to create a New Word Order, the negative effective of which are greater inequalities, restriction of social programs, threat s to the natural environment, and greater concentration of power in the hands of a small number of very large corporations. Privacy and autonomy also may be threatened.
Transformative Social Forces: Business are viewed as having the potential to change the world for the better or for worse. Through their decisions and activities, business people and members of civil society will be those who decide which scenario will be realized.
The Impact of Globalization on Management Thought:Globalization has meant more opportunities for businesses to operate on a world wide basis, and the experience of operating globally has caused many business managers to rethink the basic assumptions of how their firms are organized and operated. This results in choices that combine management traditions from many sources to create a both/and’ mentality creating managerial hybrids.The Impact of Globalization on People : Rapid change suggests that individuals must monitor global activities and take an active role in shaping their outcomes. Knowledge of globalization may be the only way individuals can understand and anticipate global activities that affect their lives.
The Impact of Globalization on Managers: decisions and activities consistent for building a just world depend on the ability to analyze complex and rapidly changing global conditions, to see interrelationships, and to visualize a future characterized by greater diversity and a rapid pace of change.…….internationalization connotes expanding interfaces between nations sometimes implying political invasion or domination. Internationalization of business, therefore, is a concept of an action in which nationality is strongly in people’s consciousness. It means the flow of business, goods or capital from one country into anther. Globalization, by contrast, looks at the whole world as being nation less and borderless. Goods, capital, and people have to bemoving freely. (Sera, 1992, p. 89)