2
Chapter
Fueling Globalization through
Information Systems
“The idea of charging for calls belongs to the last
century.”
Niklas Zennström, Skype
MGT 330 - Information Systems for Managers
2-1
Learning Objectives
MGT 330 - Information Systems for Managers
2-2
Learning Objectives
MGT 330 - Information Systems for Managers
2-3
Globalization
• Globalization
created a new world
characterized by:
o Worldwide
communication
o Collaboration
without barriers
MGT 330 - Information Systems for Managers
2-4
Evolution of Globalization
• Mainly
•
•
•
Globalization 1.0
European
countries are
globalizing
Power is the
primary driver
Industries
changed
Slow pace of
change
MGT 330 - Information Systems for Managers
2-5
Evolution of Globalization
•
•
•
Globalization 2.0
Companies are
globalizing
Reduction in
transportation
and telecommunications
costs
Mainly Europe
and America
involved
MGT 330 - Information Systems for Managers
2-6
Evolution of Globalization
Globalization 3.0
• Individuals
•
•
and small
groups are
globalizing
Fast
changes
Emergence
of new
industries
MGT 330 - Information Systems for Managers
2-7
Evolution of Globalization: Summary
• The World is Flat (Thomas Friedman)
• “10 Flatteners”
o Key factors enabling globalization 3.0
MGT 330 - Information Systems for Managers
2-8
Flattener #1: The Fall of the Berlin Wall
•
•
•
November 9, 1989
Fall of
communism
People from the
former communist
countries gained
more freedom
MGT 330 - Information Systems for Managers
2-9
Flattener #2: Netscape Browser
THEN
• August 9,
1995
• First
•
NOW
MGT 330 - Information Systems for Managers
mainstream
browser
Gave
individuals
access to
the Internet
2-10
Flattener #3: Work Flow Software
•
•
•
Applications that
allow people
worldwide to
communicate
XML allows
applications to
“talk” to each
other
New possibilities
for information
sharing
MGT 330 - Information Systems for Managers
2-11
Flattener #4: Supply Chaining
• Integration of
•
•
retailers,
suppliers, and
customers
RFID tags
used
Wal-Mart
became an
early leader
MGT 330 - Information Systems for Managers
2-12
Flattener #5: Open Sourcing
• Software and
source code
freely
available to
everyone
• Wikipedia a
huge success
MGT 330 - Information Systems for Managers
2-13
Flattener #6: Outsourcing
•
•
Outsourcing
companies
profited from the
drop in
telecommunications costs
Companies can
now use talented
engineers from
anywhere
MGT 330 - Information Systems for Managers
2-14
Flattener #7: Offshoring
• Companies set
up entire
factories in
countries such
as China
o Mass production
o Low Costs
MGT 330 - Information Systems for Managers
2-15
Flattener #8: In-Sourcing
• Delegation of
company’s key
operations to a
subcontractor
o E.g.: UPS
provides
complete
supply chain
solutions to
companies
MGT 330 - Information Systems for Managers
2-16
Flattener #9: In-Forming
• In-Forming is to
•
individuals what
outsourcing,
offshoring, and
in-sourcing is to
companies
Individuals have
access to
massive amounts
of information
MGT 330 - Information Systems for Managers
2-17
Flattener #10: The Steroids
• Technologies that
support different
types of
collaboration
o Greater mobility
o Convergence
MGT 330 - Information Systems for Managers
2-18
Learning Objectives
MGT 330 - Information Systems for Managers
2-19
Opportunities of Operating in the
Digital World
• Opportunities of
Reaching New
Markets
o Former Eastern
Bloc countries
provide new
opportunities for
international
companies to
reach new
customers
MGT 330 - Information Systems for Managers
2-20
Opportunities of Operating in the
Digital World
• Opportunities of
a Global
Workforce
Engineering Graduates in the US,
Europe and India
o Low
communications
costs
o Highly-skilled
labor pool
MGT 330 - Information Systems for Managers
2-21
Learning Objectives
MGT 330 - Information Systems for Managers
2-22
Challenges of Operating in the
Digital World
• Globalization also created a set of
unprecedented challenges:
o Governmental challenges
o Geoeconomical challenges
o Demographic challenges
o Cultural challenges
MGT 330 - Information Systems for Managers
2-23
Governmental Challenges
• Political System Challenges
o Political stability
• Regulatory Challenges
o Tariffs
o Embargoes
o Export regulations
o Quotas
MGT 330 - Information Systems for Managers
2-24
Governmental Challenges II.
• Data-Sharing Challenges
o Transborder data flow regulations
• Internet Access and Individual Freedom
o Content blocking by governments/censorship
• China – Use of VoIP restricted
• Germany – Sites with fascist symbols prohibited
o Internet access blocking
• Cuba, North Korea
MGT 330 - Information Systems for Managers
2-25
Geoeconomic Challenges
• Time Zone Challenges
o Real time meetings across continents difficult
o Working around the clock possible
MGT 330 - Information Systems for Managers
2-26
Geoeconomic Challenges II.
• Infrastructure-Related Challenges
o Traditional infrastructure – roads, electricity
o Connectivity – reliable Internet connections
• Challenges Related to Economic Welfare
o GDP growth not distributed evenly
throughout the world
MGT 330 - Information Systems for Managers
2-27
Demographic Challenges
• Differing rates of population growth
MGT 330 - Information Systems for Managers
2-28
Demographic Challenges II.
• Expertise
related
challenges
o Different
concentration
of skilled
workers
o Different costs
of workers
MGT 330 - Information Systems for Managers
2-29
Cultural Challenges
• National Cultures
o Power Distance – differences in how societies
handle the issues of human inequality
o Uncertainty Avoidance – risk taking nature
o Individualism/Collectivism – value placed on
an individual vs. a group
o Masculinity/Femininity – degree to which a
society is characterized as masculine/feminine
o Concept of Time – long term vs. short term
o Life Focus – quantity vs. quality of life
MGT 330 - Information Systems for Managers
2-30
Cultural Challenges II.
• Cultural Barriers
o Language – communication language and norms
o Work Culture – work skills, habits and attitudes
o Aesthetics – art, music and culture
o Education – attitudes towards education and
literacy
o Religion, Beliefs and Attitudes – spiritual
institutions and values
o Social Organizations – family and social
cohesiveness
MGT 330 - Information Systems for Managers
2-31
Cultural Challenges III.
• Other Challenges
o Differences in what is regarded as
appropriate
o Standards of dealing with intellectual
property
o Different standards
• E.g., writing paper, pillowcases
MGT 330 - Information Systems for Managers
2-32
Learning Objectives
MGT 330 - Information Systems for Managers
2-33
Going Global: International Business
Strategy in the Digital World
Multidomestic
Business
Strategy
Global Business
Strategy
Transnational
Business
Strategy
MGT 330 - Information Systems for Managers
2-34
Multidomestic Business Strategy
• Low degree of
•
•
integration between
subunits
Flexible and
responsive to the
needs and demands
of local markets
E.g.: General Motors
o Opel in Germany
o Vauxhall in Great
Britain
MGT 330 - Information Systems for Managers
2-35
Global Business Strategy
• Centralized
• Used to achieve
•
economies of scale
E.g.: Coca-Cola
o Same core product
o Some different
tastes made for
local markets
MGT 330 - Information Systems for Managers
2-36
Transnational Business Strategy
• Some operations
•
•
centralized while
others
decentralized
o Flexibility
o Economies of scale
Difficult to manage
E.g.: Unilever
MGT 330 - Information Systems for Managers
2-37
Business Strategies: Summary
• Different types of information systems
can support these organizational forms
MGT 330 - Information Systems for Managers
2-38
Information Systems Strategies
• Multinational Information Systems
Strategy
o Often used by multidomestic companies
o Decentralized systems
o Communication between home office and
subsidiaries
o No focus on communication between
different subsidiaries
o Decentralized local data processing centers
MGT 330 - Information Systems for Managers
2-39
Information Systems Strategies II.
• Global Information Systems Strategy
o Used by companies with global business
strategy
o Centralized infrastructure
o Home office coordinates most of the
strategic decisions
o Communication and data sharing networks
between home office and subsidiaries
o Data does not stay with local subsidiaries
but flows back to the home office
MGT 330 - Information Systems for Managers
2-40
Information Systems Strategies III.
• Transnational Information Systems
Strategy
o Pursued by transnational businesses
o Extensive communication between home
office and subsidiaries as well as among
subsidiaries
o Key data shared throughout the company
MGT 330 - Information Systems for Managers
2-41
IS Strategies: Summary
MGT 330 - Information Systems for Managers
2-42
End of Chapter Content
MGT 330 - Information Systems for Managers
2-43
Opening Case: Managing in the Digital
World: Casino Gaming
•
•
•
RFID tags will
revolutionize the
gambling industry by
providing real time
information such as
the amount held in
chips
Mobile gambling
using PDAs
Online gambling on
the rise
MGT 330 - Information Systems for Managers
2-44
Detecting Intermittent Electrical
Faults
• Hard to find intermittent electrical faults caused
by small damage to wires
• Pulse arrested sparks discharge (PASD) –
developed to help find these faults
o Nanosecond bursts of high voltage sent through
wires
o Problem areas light up and are identified
• Boeing uses the technique
• U.S. military is interested in the technology
MGT 330 - Information Systems for Managers
2-45
Online Searching
• To “Google” has become a household
verb meaning search
MGT 330 - Information Systems for Managers
2-46
Niklas Zennström: Cofounder and
Chief Executive Officer, Skype
• “The idea of charging
•
•
for calls belongs to
the last century.”
Skype has 28 million
subscribers
Among the 100 most
influential people
transforming the
world
MGT 330 - Information Systems for Managers
2-47
Underground Gaming Economy
• Massive Multiplayer Online Role-Playing
•
Game – MMORPG
o Virtual world – players live through avatars
Players started selling virtual tools for
real money – farmers
o Banned from various gaming sites due to
behavior being unethical and fear of turning
users away
MGT 330 - Information Systems for Managers
2-48
E-Waste
• Disposal of electronics containing hazardous
materials is a rising issue
• U.S. exports much of its e-waste to third world
countries
o China banned the import in 2002
o Other countries to follow
• In mid 2006, EU banned toxic ingredients
o Production of “green” hardware
• US government working on making changes –
currently state-level legislation most effective
MGT 330 - Information Systems for Managers
2-49
Transnational Development
• Wrigley Company
o World’s largest manufacturer of chewing gum
o Sold in 150 countries
• Good information systems key to conducting
marketing research
o Russian marketing research branch initiated the
development of a marketing research work flow
automation system
o After successful testing, system was implemented in
other marketing research branches
MGT 330 - Information Systems for Managers
2-50
The Automobile Industry
• The automobile industry is feeling the
pressure of globalization
• Failed attempts at making a “world car”
•
o Consumers have different tastes
o Differences in infrastructures derive needs
o The price of gasoline
o Variations in emission standards
Cultural and economic conditions need to
undergo more globalization to make a
world car successful
MGT 330 - Information Systems for Managers
2-51