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LECTURE NOTES 2CHAPTER 2
Information Systems Today: Managing in the Digital World 2-2
Globalization
• Globalization created a new world characterized by:o Worldwide
communication
o Collaboration without barriers
Information Systems Today: Managing in the Digital World 2-3
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 2-4
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 2-5
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 2-6
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 2-7
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 2-8
Flattener #2: Netscape Browser
• August 9, 1995
• First mainstream browser
• Gave individuals access to the Internet
THEN
NOW
Information Systems Today: Managing in the Digital World 2-9
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
Information Systems Today: Managing in the Digital World 2-10
Flattener #4: Supply Chaining
• Integration of retailers, suppliers, and customers
• RFID tags used
• Wal-Mart became an early leader
Information Systems Today: Managing in the Digital World 2-11
Flattener #5: Open Sourcing
• Software and source code freely available to everyone
• Wikipedia a huge success
Information Systems Today: Managing in the Digital World 2-12
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 2-13
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 2-14
Flattener #8: In-Sourcing
• Delegation of company’s key operations to a subcontractoro E.g.: UPS
provides complete supply chain solutions to companies
Information Systems Today: Managing in the Digital World 2-15
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
Information Systems Today: Managing in the Digital World 2-16
Flattener #10: The Steroids
• Technologies that support different types of collaborationo Greater mobility
o Convergence
Information Systems Today: Managing in the Digital World 2-17
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 2-18
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 2-19
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
Information Systems Today: Managing in the Digital World 2-20
Governmental Challenges
• Political System Challengeso Political stability
• Regulatory Challengeso Tariffso Embargoeso Export regulationso Quotas
Information Systems Today: Managing in the Digital World 2-21
Governmental Challenges II.
• Data-Sharing Challengeso Transborder data flow regulations
• Internet Access and Individual Freedomo Content blocking by governments/censorship
• China – Use of VoIP restricted
• Germany – Sites with fascist symbols prohibited
o Internet access blocking
• Cuba, North Korea
Information Systems Today: Managing in the Digital World 2-22
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 2-23
Geoeconomic Challenges II.
• Infrastructure-Related Challengeso Traditional infrastructure – roads, electricity
o Connectivity – reliable Internet connections
• Challenges Related to Economic Welfareo GDP growth not distributed evenly
throughout the world
Information Systems Today: Managing in the Digital World 2-24
Demographic Challenges
• Differing rates of population growth
Information Systems Today: Managing in the Digital World 2-25
Demographic Challenges II.
• Expertise related challengeso Different
concentration of skilled workers
o Different costs of workers
Information Systems Today: Managing in the Digital World 2-26
Cultural Challenges
•National Cultureso Power Distance – differences in how societies
handle the issues of human inequalityo Uncertainty Avoidance – risk taking natureo Individualism/Collectivism – value placed on
an individual vs. a groupo Masculinity/Femininity – degree to which a
society is characterized as masculine/feminineo Concept of Time – long term vs. short termo Life Focus – quantity vs. quality of life
Information Systems Today: Managing in the Digital World 2-27
Cultural Challenges II.
• Cultural Barrierso 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
Information Systems Today: Managing in the Digital World 2-28
Cultural Challenges III.
• Other Challengeso Differences in what is regarded as
appropriate
o Standards of dealing with intellectual property
o Different standards
•E.g., writing paper, pillowcases
Information Systems Today: Managing in the Digital World 2-29
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 2-30
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 2-31
Global Business Strategy
• Centralized
• Used to achieve economies of scale
• E.g.: Coca-Colao Same core product
o Some different tastes made for local markets
Information Systems Today: Managing in the Digital World 2-32
Transnational Business Strategy
• Some operations centralized while others decentralizedo Flexibility
o Economies of scale
• Difficult to manage
• E.g.: Unilever
Information Systems Today: Managing in the Digital World 2-33
Business Strategies: Summary
• Different types of information systems can support these organizational forms
Information Systems Today: Managing in the Digital World 2-34
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 2-35
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 2-36
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 2-37
IS Strategies: Summary