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MGT 330 - Information Systems for Managers 2-1
2“The idea of charging for calls belongs to the last century.”
Niklas Zennström, Skype
Fueling Globalization through Information Systems
Chapter
MGT 330 - Information Systems for Managers 2-2
Learning Objectives
MGT 330 - Information Systems for Managers 2-3
Learning Objectives
MGT 330 - Information Systems for Managers 2-4
Globalization
• Globalization created a new world characterized by:o Worldwide
communication
o Collaboration without barriers
MGT 330 - Information Systems for Managers 2-5
Evolution of Globalization
• Mainly European countries are globalizing
• Power is the primary driver
• Industries changed
• Slow pace of change
Globalization 1.0
MGT 330 - Information Systems for Managers 2-6
Evolution of GlobalizationGlobalization 2.0
• Companies are globalizing
• Reduction in transportation and telecom-munications costs
• Mainly Europe and America involved
MGT 330 - Information Systems for Managers 2-7
Evolution of Globalization
• Individuals and small groups are globalizing
• Fast changes
• Emergence of new industries
Globalization 3.0
MGT 330 - Information Systems for Managers 2-8
Evolution of Globalization: Summary
• “10 Flatteners”o Key factors enabling globalization 3.0
• The World is Flat (Thomas Friedman)
MGT 330 - Information Systems for Managers 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
MGT 330 - Information Systems for Managers 2-10
Flattener #2: Netscape Browser
• August 9, 1995
• First mainstream browser
• Gave individuals access to the Internet
THEN
NOW
MGT 330 - Information Systems for Managers 2-11
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 2-12
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 2-13
Flattener #5: Open Sourcing
• Software and source code freely available to everyone
• Wikipedia a huge success
MGT 330 - Information Systems for Managers 2-14
Flattener #6: Outsourcing
• Outsourcing companies profited from the drop in telecommuni-cations costs
• Companies can now use talented engineers from anywhere
MGT 330 - Information Systems for Managers 2-15
Flattener #7: Offshoring
• Companies set up entire factories in countries such as Chinao Mass production
o Low Costs
MGT 330 - Information Systems for Managers 2-16
Flattener #8: In-Sourcing
• Delegation of company’s key operations to a subcontractoro E.g.: UPS
provides complete supply chain solutions to companies
MGT 330 - Information Systems for Managers 2-17
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 2-18
Flattener #10: The Steroids
• Technologies that support different types of collaborationo Greater mobility
o Convergence
MGT 330 - Information Systems for Managers 2-19
Learning Objectives
MGT 330 - Information Systems for Managers 2-20
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
MGT 330 - Information Systems for Managers 2-21
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
MGT 330 - Information Systems for Managers 2-22
Learning Objectives
MGT 330 - Information Systems for Managers 2-23
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 2-24
Governmental Challenges
• Political System Challengeso Political stability
• Regulatory Challengeso Tariffso Embargoeso Export regulationso Quotas
MGT 330 - Information Systems for Managers 2-25
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
MGT 330 - Information Systems for Managers 2-26
Geoeconomic Challenges• Time Zone Challenges
o Real time meetings across continents difficult
o Working around the clock possible
MGT 330 - Information Systems for Managers 2-27
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
MGT 330 - Information Systems for Managers 2-28
Demographic Challenges
• Differing rates of population growth
MGT 330 - Information Systems for Managers 2-29
Demographic Challenges II.
• Expertise related challengeso Different
concentration of skilled workers
o Different costs of workers
MGT 330 - Information Systems for Managers 2-30
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
MGT 330 - Information Systems for Managers 2-31
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
MGT 330 - Information Systems for Managers 2-32
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
MGT 330 - Information Systems for Managers 2-33
Learning Objectives
MGT 330 - Information Systems for Managers 2-34
Going Global: International Business Strategy in the Digital World
Multidomestic Business Strategy
Global Business Strategy
Transnational Business Strategy
MGT 330 - Information Systems for Managers 2-35
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
MGT 330 - Information Systems for Managers 2-36
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
MGT 330 - Information Systems for Managers 2-37
Transnational Business Strategy
• Some operations centralized while others decentralizedo Flexibility
o Economies of scale
• Difficult to manage
• E.g.: Unilever
MGT 330 - Information Systems for Managers 2-38
Business Strategies: Summary
• Different types of information systems can support these organizational forms
MGT 330 - Information Systems for Managers 2-39
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
MGT 330 - Information Systems for Managers 2-40
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
MGT 330 - Information Systems for Managers 2-41
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
MGT 330 - Information Systems for Managers 2-42
IS Strategies: Summary
End of Chapter Content
2-43MGT 330 - Information Systems for Managers
MGT 330 - Information Systems for Managers 2-44
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 2-45
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 faultso Nanosecond bursts of high voltage sent through
wireso 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 2-46
Online Searching
• To “Google” has become a household verb meaning search
MGT 330 - Information Systems for Managers 2-47
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 2-48
Underground Gaming Economy
• Massive Multiplayer Online Role-Playing Game – MMORPGo Virtual world – players live through avatars
• Players started selling virtual tools for real money – farmerso Banned from various gaming sites due to
behavior being unethical and fear of turning users away
MGT 330 - Information Systems for Managers 2-49
E-Waste• Disposal of electronics containing hazardous
materials is a rising issue
• U.S. exports much of its e-waste to third world countrieso China banned the import in 2002o Other countries to follow
• In mid 2006, EU banned toxic ingredientso Production of “green” hardware
• US government working on making changes – currently state-level legislation most effective
MGT 330 - Information Systems for Managers 2-50
Transnational Development
• Wrigley Companyo World’s largest manufacturer of chewing gum
o Sold in 150 countries
• Good information systems key to conducting marketing researcho 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 2-51
The Automobile Industry• The automobile industry is feeling the
pressure of globalization• Failed attempts at making a “world car”
o Consumers have different tasteso Differences in infrastructures derive needso The price of gasolineo Variations in emission standards
• Cultural and economic conditions need to undergo more globalization to make a world car successful