Information Systems Today: Managing in the Digital World 2-1

2“The idea of charging for calls belongs to the last century.”

Niklas Zennström, Skype

Fueling Globalization through Information Systems

Chapter

Information Systems Today: Managing in the Digital World 2-2

Learning Objectives

Information Systems Today: Managing in the Digital World 2-3

Learning Objectives

Information Systems Today: Managing in the Digital World 2-4

Globalization

• Globalization created a new world characterized by:o Worldwide

communication

o Collaboration without barriers

Information Systems Today: Managing in the Digital World 2-5

Evolution of Globalization

• Mainly European countries are globalizing

• Power is the primary driver

• Industries changed

• Slow pace of change

Globalization 1.0

Information Systems Today: Managing in the Digital World 2-6

Evolution of GlobalizationGlobalization 2.0

• Companies are globalizing

• Reduction in transportation and telecom-munications costs

• Mainly Europe and America involved

Information Systems Today: Managing in the Digital World 2-7

Evolution of Globalization

• Individuals and small groups are globalizing

• Fast changes

• Emergence of new industries

Globalization 3.0

Information Systems Today: Managing in the Digital World 2-8

Evolution of Globalization: Summary

• “10 Flatteners”o Key factors enabling globalization 3.0

• The World is Flat (Thomas Friedman)

Information Systems Today: Managing in the Digital World 2-9

Flattener #1: The Fall of the Berlin Wall

• November 9, 1989

• Fall of communism

• People from the former communist countries gained more freedom

Information Systems Today: Managing in the Digital World 2-10

Flattener #5: Open Sourcing

• Software and source code freely available to everyone

• Wikipedia a huge success

Information Systems Today: Managing in the Digital World 2-11

Flattener #6: Outsourcing

• Outsourcing companies profited from the drop in telecommuni-cations costs

• Companies can now use talented engineers from anywhere

Information Systems Today: Managing in the Digital World 2-12

Flattener #7: Offshoring

• Companies set up entire factories in countries such as Chinao Mass production

o Low Costs

Information Systems Today: Managing in the Digital World 2-13

Learning Objectives

Information Systems Today: Managing in the Digital World 2-14

Opportunities of Operating in the Digital World

• Opportunities of Reaching New Marketso Former Eastern

Bloc countries provide new opportunities for international companies to reach new customers

Information Systems Today: Managing in the Digital World 2-15

Opportunities of Operating in the Digital World

• Opportunities of a Global Workforceo Low

communications costs

o Highly-skilled labor pool

Engineering Graduates in the US, Europe and India

Information Systems Today: Managing in the Digital World 2-16

Learning Objectives

Information Systems Today: Managing in the Digital World 2-17

Challenges of Operating in the Digital World

• Globalization also created a set of unprecedented challenges:o Governmental challenges

o Geoeconomical challenges

o Cultural challenges

Information Systems Today: Managing in the Digital World 2-18

Governmental Challenges

• Political System Challengeso Political stability

• Internet Access and Individual Freedomo Content blocking by governments/censorship

• China – Use of VoIP restricted

• Internet access blocking

Information Systems Today: Managing in the Digital World 2-19

Geoeconomic Challenges• Time Zone Challenges

o Real time meetings across continents difficult

o Working around the clock possible

Information Systems Today: Managing in the Digital World 2-20

Geoeconomic Challenges II.

• Infrastructure-Related Challengeso Traditional infrastructure – roads, electricity

o Connectivity – reliable Internet connections

Information Systems Today: Managing in the Digital World 2-21

Cultural Challenges

•National Cultureso Concept of Time – long term vs. short termo Language

o Work Culture – work skills, habits and attitudes

o Education

o Religion and Beliefs

o Standards of dealing with intellectual property

Information Systems Today: Managing in the Digital World 2-22

Learning Objectives

Information Systems Today: Managing in the Digital World 2-23

Going Global: International Business Strategy in the Digital World

Multidomestic Business Strategy

Global Business Strategy

Transnational Business Strategy

Information Systems Today: Managing in the Digital World 2-24

Multidomestic Business Strategy• Low degree of

integration between subunits

• Flexible and responsive to the needs and demands of local markets

• E.g.: General Motorso Opel in Germanyo Vauxhall in Great

Britain

Information Systems Today: Managing in the Digital World 2-25

Global Business Strategy

• Centralized

• E.g.: Coca-Colao Same core product

Information Systems Today: Managing in the Digital World 2-26

Transnational Business Strategy

• Some operations centralized while others decentralizedo Flexibility

• Difficult to manage

• E.g.: Unilever

Information Systems Today: Managing in the Digital World 2-27

Business Strategies & ISs

• Different types of information systems can support these Business Strategies

Information Systems Today: Managing in the Digital World 2-28

Information Systems Strategies• Multinational Information Systems

Strategyo Often used by multidomestic companieso Decentralized systemso Communication between home office and

subsidiarieso No focus on communication between

different subsidiarieso Decentralized local data processing centers

Information Systems Today: Managing in the Digital World 2-29

Information Systems Strategies II.

• Global Information Systems Strategyo Used by companies with global business

strategyo Centralized infrastructureo Home office coordinates most of the

strategic decisionso Communication and data sharing networks

between home office and subsidiarieso Data does not stay with local subsidiaries

but flows back to the home office

Information Systems Today: Managing in the Digital World 2-30

Information Systems Strategies III.• Transnational Information Systems

Strategyo Pursued by transnational businesses

o Extensive communication between home office and subsidiaries as well as among subsidiaries

o Key data shared throughout the company

Information Systems Today: Managing in the Digital World 2-31

IS Strategies: Summary

End of Chapter Content