MIS 2000

Globalization and Information Systems

Updated Nov. 2012

MIS 2000

Globalization and Information Systems

Updated Nov. 2012

OutlineOutline

• 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 ConceptGlobalization 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 & ConsGlobalization 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.

Dr. Bob Travica Globalization and IS

More…

• 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

Globalization Pros & Cons – Digital DivideGlobalization Pros & Cons – Digital Divide

IS and Computer Networks in GlobalizationIS and Computer Networks in Globalization

Dr. Bob Travica Globalization and IS

Production (US)

Sales(Eur, Aus, NAm, LAm)

Production (China)

Suppliers(Ch, Can, Bra)*

• 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).

Transnational Corporation (TNC)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)*

Dr. Bob Travica Globalization and IS

More…

Dr. Bob Travica Globalization and IS

Global Producing

Global Sourcing

Glo

bal

Sellin

g IS & Computer Networks

To other firms

To consumers

Of raw materials, product parts, labour, capital

Where row materials,labour is cheaper, taxes lower

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.

Living in TNC-driven Economy 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

SummarySummary

Dr. Bob Travica Globalization and IS

• 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.