Week 2: Globalization and Information Systems

Week 2: Globalization and Information SystemsMIS 2101: Management Information Systems

Based on material from Information Systems Today: Managing in the Digital World, Leonard Jessup and Joseph Valacich, Pearson Prentice Hall, 2007

Also includes material from The World Is Flat: A Brief History of the Twenty-first Century, Thomas L. Friedman, Farrar, Straus and Giroux, 2007

Also includes material by David Schuff, Paul Weinberg, and Cindy Joy Marselis.

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

Niklas Zennström, Skype

The integration of systems and business processes is now a global issue and opportunity

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Learning Objectives

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Learning Objectives

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Globalization

Globalization created a new world characterized by: Worldwide

communication Collaboration

without barriers

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Tom Friedman

Tom Friedman . . . Pulitzer Prize-winning New York Times foreign affairs columnist and author of the renowned book on globalization, “The World is Flat”

Tom’s book discusses the factors that have contributed to the increasing connectedness — or “flattening”— of the world

Information Technology is playing a key role

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Tom Friedman’s “The World is Flat” Video

As you watch the video, take notes and be ready to discuss:

• What was the Overall Point of the video (and the book)?

• What are the 10 Flatteners --- What are their implications according to Friedman?

• Based on the video, what does someone need to do to be successful in the 21st Century

You can also view the video on the Internet at http://mitworld.mit.edu/stream/264/

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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 Globalization

Globalization 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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The overall idea

The global economic playing field has been leveled

Competition is worldwide Few jobs or markets are constrained

by geographic boundaries There are steps you can take to

succeed in this world

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Flattener #1: 11/9/1989: The Fall of the Berlin WallWindows 3.1 released

The Wall was a physical and symbolic barrier to a flat economy

Windows removed a barrier to the creation of digital content

Started a major change from large centralized systems to small decentralized systems on a mass scale.

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Flattener #2: Netscape went public

Triggered New services Dot com boom Overbuild of fibre optics

Boston, Bethesda, and Bangalore are now neighbors.

Companies no longer control collaborative development of technology products

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Flattener #3: Hardware and software interoperability

Easier for applications to work with other applications (with some exceptions)

“Smokestacks” like AOL and CompuServe replaced or redesigned

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Flattener #4: Outsourcing

Outsourcing: Moving Jobs

Outsourcing companies profited from the drop in telecommunications costs

Companies can now use talented staff from anywhere

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Flattener #5: Offshoring

Offshoring: Moving entire operations

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Flattener #6: Uploading* Open source products:

developed collaboratively and free Wikipedia Open office

Creation/distribution of material by anyone

Potentially threatening to Microsoft, The New York Times, Record Labels, and others

* Listed as “Open Sourcing” in the book

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Flattener #7: Supply Chaining

Integration of retailers, suppliers, and customers

Increases efficiency. (Why?)

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Flattener #8: In-Sourcing

Delegation of company’s key operations to a subcontractor

What does UPS do in this area?

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Flattener #9: Informing

Individuals have access to massive amounts of information

What types of information are easily available to you now that weren’t 10 years ago?

How has this affected car dealers?

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Flattener #10: The Steroids

Technologies that support different types of collaboration Greater

mobility Convergence

of media and technoloigies

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Discussion

What does someone need to do to be successful in the 21st century?

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Learning Objectives

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Opportunities of Operating in the Digital World

Opportunities of Reaching New Markets 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 Workforce Low

communications costs

Highly-skilled labor pool

Engineering Graduates in the US, Europe and India

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Learning Objectives

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Challenges of Operating in the Digital World

Globalization also created a set of unprecedented challenges:

Governmental challengesGeoeconomical challengesDemographic challengesCultural challenges

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Governmental Challenges

Political System Regulatory Internet Access and Individual

Freedom

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Geoeconomic Challenges

Time Zone Challenges Real time meetings across continents difficult But working around the clock possible

Infrastructure-Related Challenges Roads, electricity, communications services

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Demographic Challenges

Expertise related challenges Different

concentration of skilled workers

Different costs of workers

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Cultural Challenges

Risk taking Language Work skills/habits Intellectual property concepts

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Learning Objectives

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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 Motors Opel in Germany Vauxhall in Great

Britain

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Global Business Strategy

Centralized Used to achieve

economies of scale E.g.: Coca-Cola

Same core product Some different

tastes made for local markets

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Transnational Business Strategy

Some operations centralized while others decentralizedFlexibilityEconomies of scale

Difficult to manage E.g.: Unilever

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Information Systems Strategies

Multinational Information Systems StrategyOften used by multidomestic companiesDecentralized systemsCommunication between home office and

subsidiariesNo focus on communication between different

subsidiariesDecentralized local data processing centers

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Information Systems Strategies Global Information Systems Strategy

Used by companies with global business strategy

Centralized infrastructureHome office coordinates most of the

strategic decisionsCommunication and data sharing networks

between home office and subsidiariesData does not stay with local subsidiaries

but flows back to the home office

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Information Systems Strategies

Transnational Information Systems StrategyPursued by transnational businessesExtensive communication between

home office and subsidiaries as well as among subsidiaries

Key data shared throughout the company

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Cases

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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

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Transnational Development

Wrigley Company World’s largest manufacturer of chewing gum Sold in 150 countries

Good information systems key to conducting marketing research Russian marketing research branch initiated the

development of a marketing research work flow automation system

After successful testing, system was implemented in other marketing research branches

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The Automobile Industry

The automobile industry is feeling the pressure of globalization

Failed attempts at making a “world car”Consumers have different tastesDifferences in infrastructures derive needsThe price of gasolineVariations in emission standards

Cultural and economic conditions need to undergo more globalization to make a world car successful