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 2-4
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
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Evolution of GlobalizationGlobalization 2.0
• Companies are globalizing
• Reduction in transportation and telecom-munications costs
• Mainly Europe and America involved
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Evolution of Globalization
• Individuals and small groups are globalizing
• Fast changes
• Emergence of new industries
Globalization 3.0
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Evolution of Globalization: Summary
• “10 Flatteners”o Key factors enabling globalization 3.0
• The World is Flat (Thomas Friedman)
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Flattener #1: The Fall of the Berlin Wall
• November 9, 1989
• Fall of communism
• People from the former communist countries gained more freedom
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Flattener #5: Open Sourcing
• Software and source code freely available to everyone
• Wikipedia a huge success
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Flattener #6: Outsourcing
• Outsourcing companies profited from the drop in telecommuni-cations costs
• Companies can now use talented engineers from anywhere
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Flattener #7: Offshoring
• Companies set up entire factories in countries such as Chinao Mass production
o Low Costs
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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
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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
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Challenges of Operating in the Digital World
• Globalization also created a set of unprecedented challenges:o Governmental challenges
o Geoeconomical challenges
o Cultural challenges
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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
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Geoeconomic Challenges• Time Zone Challenges
o Real time meetings across continents difficult
o Working around the clock possible
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Geoeconomic Challenges II.
• Infrastructure-Related Challengeso Traditional infrastructure – roads, electricity
o Connectivity – reliable Internet connections
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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
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Going Global: International Business Strategy in the Digital World
Multidomestic Business Strategy
Global Business Strategy
Transnational Business Strategy
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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
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Global Business Strategy
• Centralized
• E.g.: Coca-Colao Same core product
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Transnational Business Strategy
• Some operations centralized while others decentralizedo Flexibility
• Difficult to manage
• E.g.: Unilever
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Business Strategies & ISs
• Different types of information systems can support these Business Strategies
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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
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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