MIS 2000
Globalization and
Information Systems
Updated Nov. 2012
Outline
• Globalization (concept, pros & cons)
• Trans-National Corporation (TNC)
• Role of information systems and computer networks in TNC
• Summary
•
NOTE: This topic relates to previous topics, such as supply chain,
e-commerce, and all IS types studied.
Dr. Bob Travica
Globalization and IS
Globalization Concept
•
Globalization is the process of reducing economic and other boundaries
between countries.*
•
Examples of economic boundaries
– closing of markets (consumer, supply) by legislation, high import taxes, or
complicated import procedures.
– making it impossible or hard for foreign enterprises to run production or
sales operations in a given country
– preventing entry to foreign labor.
•
Globalization started with economic changes in China and political/economic
changes in Europe, but attempts at global business go back in the far past.**
Dr. Bob Travica
Globalization and IS
Globalization Pros & Cons
• Pros/Cons depend on the standpoint.
• Economies in transition (China, India, East Europe) have experience
growth (especially China) – more jobs, purchasing power increase,
more tax money. But local business faces tough competition, and
there is a sharper differentiation between haves and have-nots.
• Parts of the world not included in globalization (Africa).
• 50% of world lives on less than $2/day.
• Developed economies: Corporations benefit from offshore operations.
But labor faces a job loss and reduced wages (absolutely, or pressure
to do more work for the same wage); the middle class shrinks.
More…
Dr. Bob Travica
Globalization and IS
Globalization Pros & Cons – Digital Divide
• Sources of informing and learning are globally accessible via
Internet. But there is still a large gap between more and less
developed countries in terms of the development level of information
technologies and systems. This gap is called digital divide.
http://globaladvances.com/blog/wp-content/uploads/2009/02/africa2008top.jpg
Dr. Bob Travica
Globalization and IS
IS and Computer Networks in Globalization
Production (China)
Production (US)
Suppliers
(Ch, Can, Bra)*
Sales
(Eur, Aus, NAm, LAm)
• All these operations belong to one firm.
• IS and computer networks are necessary for doing business globally
– the key enablers of global production, supply and sales processes.
• The key enabler of this highly dispersed organization is IS and
computer networks (private, Internet).
Dr. Bob Travica
Globalization and IS
Transnational Corporation (TNC)
•
Definition: TNC is a company that performs the sourcing, production, and
sales processes globally.
•
The global capabilities of TNC rest on intensive use of advanced
information systems and computer networks.*
•
TNC is a key maker of globalization.
•
TNC is the key player in global economy (presence, revenues, impact).
•
TNC operates in various industries (manufacturing, finance, drugs,
consulting, software, news media, manufacturing)*
More…
Dr. Bob Travica
Globalization and IS
Special capabilities characterize TNC:
• Global Efficiency: TNC treats world as a single market, works
everywhere with the same efficiency.
• Local Responsiveness: TNC is responsive to local markets needs,
although its planning and production is at many locations.
• Superior Knowledge: TNC combines centralized and decentralized
development of knowledge, shares it across locations, and adapts
it to local needs.
Of raw materials, product parts,
labour, capital
To other firms
Global Sourcing
To consumers
IS &
Computer
Networks
Dr. Bob Travica
Globalization and IS
Where row materials,
labour is cheaper,
taxes lower
Living in TNC-driven Economy
• To survive and prosper in the global economy, a company needs
to be able to do business or compete with TNC. This provides
access to global markets.
• To engage with a TNC, a firm must have a proper technological
capability (various modern information systems and computer
networking capability).
Dr. Bob Travica
Globalization and IS
Summary
•
Globalization is the process of reducing economic and other barriers
between nation-states.
•
Globalization has been uneven, bringing differing benefits and costs to
different players. Digital divide still is significant.
•
TNC is a company that performs the sourcing, production, and sales
processes globally. It depends crucially on advanced IS and computer nets.
•
TNC is a key globalization maker and player with superior capabilities of
global efficiency, local market responsiveness, and knowledge development
and sharing.
Dr. Bob Travica
Globalization and IS